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Who Got What in a Slowing Economy

A Freddie Mac representative justified Syron's compensation, which also included an $8.3 million stock award, in an e-mail, citing improved customer service, his leadership in the subprime crisis and his role in stabilizing the mortgage markets. Given the decline in the Freddie Mac share price since the stock award was made, the $8.3 million is now worth on paper approximately $1.46 million, based on a reading of the company's proxy.

Daniel H. Mudd, Fannie Mae president and chief executive, saw his pay drop 15 percent last year, according to the company's proxy. Still, Mudd received $14.2 million in 2007, including a $10 million direct stock award. The drop in the Fannie Mae share price has resulted in a paper loss of nearly 66 percent of Mudd's $10 million award. His salary last year was $986,923 and he received $2.2 million in cash from a long-term incentive plan. The board of directors in 2007 eliminated executive perks such as private jets for personal use, financial services advice and a personal driver.

Malon Wilkus, chairman, president and chief executive of American Capital in Bethesda, earned $21.9 million last year including $6.2 million in salary, bonus and incentive pay. American Capital, a business development corporation that essentially operates as a publicly traded private-equity firm, broke into the Standard & Poor's 500-stock index last year. The company's stock did not do well, however, losing 28 percent of its value in 2007. American Capital paid out $655 million in dividends last year, a 44 percent increase over 2006.

Allied Capital of the District, a financial firm similar to American Capital, paid William L. Walton, its chairman, president and chief executive, $11 million last year including a $1.5 million salary and a $5.3 million bonus. Allied Capital stock had a difficult year, losing about a third of its value during 2007. According to Allied Capital's proxy, Walton earned his compensation by achieving "numerous strategic investment and operational goals and objectives," including paying out $407 million in dividends (an increase of 14 percent over 2006), investing $1.8 billion and generating $268.5 million in net realized capital gains, among other things.

In accordance with certain tax advantages, American Capital and Allied Capital are both required to pay out a high percentage of their income in dividends.

Compensation experts say 2008 will be a crucial year for the shareholder revolution that was supposed to bring greater transparency and accountability to executive compensation. Although finance companies bore the brunt of the economic downturn so far, the twin ills of inflation and slow growth are spreading across other industries.

"This year, 2008, is really where we are going to find out whether the rubber meets the road as far as pay for performance," said Patrick McGurn, special counsel at RiskMetrics Group, which advises institutional investors on corporate governance. "By any stretch of the imagination, this is going to be a significantly down year for performance for every sector of the economy. The question is whether the boards of directors are going to keep faith with shareholders or return to the practices of the past, including lowering the performance bar so executives can clear it more easily."

Although Washington's growing financial sector dominated corporate payouts, many executives across the region appeared to do very well -- with or without bonuses.

The biggest winners were executives at Lockheed Martin. Robert J. Stevens, the Bethesda defense contractor's chairman, president and chief executive, earned $26 million last year, of which $14 million was in cash payments from salary, bonus and incentive plans.

"Since 2005, our stock has increased 65 percent and since 2003, it has increased 105 percent," Jeffery Adams, a Lockheed spokesman, wrote in an e-mail. "For the three-year period 2005-2007, our market capitalization increased by $19 billion . . . if our named executive officers keep producing superior results, they will continue to be highly paid."

The six highest-earning Lockheed executives were paid a total of $52.8 million last year. That is equal to about 8 percent of the $615 million in gross dividends that Lockheed paid to its shareholders in 2007. The $52.8 million also represents 1 percent of the $5 billion that Lockheed Martin generated for its shareholders last year in dividends and capital appreciation, according to the company.

Martine A. Rothblatt, founder and chief executive of United Therapeutics and the second-most highly compensated leader of a public company in the Washington region, had a 2007 compensation package that was close to a conventional stock-option reward.

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