Rich Rewards For the Region's Corporate Elite

It pays, more than ever, to be at the top.

The median total compensation for the 100 highest-paid executives in The Washington Post's annual survey of executive pay was $5.25 million in 2004, up slightly from $5.13 million the year before.

Last year, 294 executives of area companies received packages worth $1 million or more, compared with 270 executives in 2003 and 190 in 2000, according to The Post's study of top-level compensation at 157 local companies that publicly report pay and benefits.

The median total compensation -- which includes salary and bonus, long-term benefits, perks and the projected value of option grants -- for all executives in the 2004 survey was $704,713, compared with $668,049 in 2003. The median is the midpoint of the survey, with half below and half above. The survey covered 764 executives in 2004 compared with 728 in 2003.

Dale B. Wolf, 50, president and chief executive of Coventry Health Care Inc. of Bethesda, had the richest compensation package of any Washington area executive in 2004. His salary, bonus, perks and stock options put his total compensation at $32.3 million. The biggest portion of Wolf's pay was stock options, which The Post valued at $30.6 million, assuming an annual stock price increase of 5 percent over the life of the options.

Richard D. Fairbank, chief executive of Capitol One Financial Corp. of McLean, was second in total compensation, at $29.5 million. Fairbank received no salary or bonus. Nearly all his compensation package was options.

Of the executives who took home the most cash in 2004, the top four were the senior executives of Friedman, Billings, Ramsey Group Inc., an investment bank based in Arlington County. At the top of the list for cash, co-chief executives Eric F. Billings and Emanuel J. Friedman each pulled down $10.7 million in 2004, $9.4 million of that in the form of a cash bonus. Friedman, who was forced to resign this spring from the firm he co-founded, is being investigated by the Securities and Exchange Commission.

In general, raises for chief executives at area companies tracked increases in shareholder value. Of the 117 local chief executives in place at least two years on Dec. 31, the average cash pay increase last year was 17 percent, and the average total return to shareholders was 20 percent.

But there were exceptions -- 21 chief executives at companies whose shareholders lost money in 2004 received cash pay increases, and 10 of those received double-digit cash pay increases.

Of the 100 highest-compensated executives, 97 were men. The highest-paid woman at a public company in the Washington area was Joan M. Sweeney, chief operating officer of Allied Capital Corp., a Washington corporate finance company. Sweeney was paid $8.5 million, including $1.5 million in cash and options worth an estimated $5.5 million.

Rewards and Incentives

Companies with executives at the top of the lists for total compensation or total cash argued that the rewards were earned as pay for performance.

At Coventry Health Care, Wolf was promoted from chief financial officer to chief executive in January, one of the career turning points when boards of directors often award senior executives with a super-size increase in compensation.