How Thick Are Their Wallets?

New Rules Expose Total Executive Pay, But Comparisons Can Be Misleading

The chairman and chief executive of credit card issuer Capital One Financial, Richard D. Fairbank, was the most highly paid executive at a Washington area public company last year with total compensation of $37.4 million.

Or was he?

The perennially complex exercise of measuring executive compensation became much more contentious this year as new disclosure rules scrambled the way companies tally the numbers. Companies such as Capital One say the totals they were required to report in public filings don't really describe what their executives took home last year.

The disclosures, which regulators mandated in response to the growing outcry about executive pay, shed light on previously murky forms of compensation such as pensions, perks and golden parachutes, giving a fuller picture of boardroom rewards.

For the first time, it became clear how much executives stand to receive in retirement, a major component of many pay packages. For example, former Gannett chairman Douglas H. McCorkindale, who retired in mid-2006 after a 35-year career at the newspaper company, amassed pension plans worth about $25 million on top of $21.2 million in deferred compensation. All but about $1.7 million of his pension money was accumulated through a special plan for executives rather than the standard employee plan.

It also became clearer how lucrative it can be to serve on a corporate board -- and how much incentive outside directors have to hold onto their seats. At defense contractor Lockheed Martin, some board members earned about $580,000 last year including stock appreciation -- but not counting the $1 million the company donated to their favorite charities.

For many executives, annual pay paled beside the amounts they had the potential to receive if they were fired. Sprint Nextel reported that if chairman and chief executive Gary D. Forsee had been forced out after a hypothetical buyout of the company, he could have received a parachute worth $73.8 million. In addition, the company would have reimbursed him for $16.1 million in taxes.

As in past years, the privileges of being a top executive could be myriad: use of a company car, club memberships, tickets to entertainment events, home security systems, personal access to the corporate jet, hotel spa services, pension credit for more years of service than they actually worked, dividends on stock awards that haven't vested, guaranteed returns on retirement savings and payments for financial planners to help manage their money.

Shareholders paid for accountants to prepare executives' tax returns -- and then they helped pay the taxes, corporate filings show.

Coventry Health Care, a managed care company based in Bethesda, provided chairman and former chief executive Allen F. Wise $20,655 for an auto lease, $563,796 for other transportation such as aircraft costs and trip catering, and $77,468 to cover taxes on perks.

Wise's compensation "was developed to ensure a smooth transition" when he gave up the job of chief executive in January 2005 and became chairman, Coventry Vice President Drew Asher said by e-mail, adding that Wise will no longer receive those perks after this year.

In the bright light of disclosure, some companies were reconsidering compensation policies. Lockheed said it will give executives bigger salaries in place of certain perks -- an extra $40,000 for chairman and chief executive Robert J. Stevens -- and no longer will allow outside directors to steer million-dollar charitable contributions.