By Nanette Byrnes

Executive Pay 2009: The Naughty and Nice

"Ho ho ho" or "bah, humbug?" What if Santa used executive pay to help compile a list of the companies and CEOs who were naughty or nice? Which of them would find something pleasant in their stocking—and which a lump of coal?

To help us assess executive compensation over the past year, we contacted several pay experts with lists of who's been naughty or nice. As one might expect in the glare of global recession, outrage over Wall Street bonuses and AIG retention pay, and nationally televised Presidential references to executive "fat cats," the consultants we consulted were able to name a few companies and CEOs they regarded as having been quite restrained this year. These executives did such things as give up golden parachutes, defer bonuses, and even flew coach.

Pay czar or not, more than a few on our list really don't deserve presents this year. They've already taken good care of themselves.

Many of the this year's no-no practices are left over from the boom times, reflections of 2008 and its roaring first nine months, not dour 2009, points out pay expert Paul Hodgson of the Corporate Library. He hopes to see more restraint in CEO pay packages this spring, when new executive compensation numbers start popping up in company proxies.

Pearl Meyer, whose firm Steven Hall & Partners consults with companies about pay issues, says boards are "administering compensation on a much more conservative basis." According to Meyer, 70% of large corporations have changed their compensation plan in the past two years, placing much more focus on operating performance, return on capital, revenue, customer satisfaction, and other metrics that tie pay to performance with greater sophistication than the traditional approach of compensating in line with stock performance.

Not everyone believes we're about to witness a revolution in corner office pay practices. "There were individual companies that took positive steps," this year, says Hodgson, "either cutting base salary or determining that bonuses weren't earned in the year. But I think overall we expected a bigger effect on compensation, given the recession."

Will company proxies filed in the coming year feature more modest executive pay? "In theory, yes," says Hodgson, "but my feeling is CEO pay is the last thing to react to a poor economy—and the first to recover."

A note on our sources: Many names on our list came from the Corporate Library's work on executive pay. But credit also goes to footnoted.org, another sleuth of SEC documents, for discovering examples of excess as well as restraint. Unless noted, the companies and executive on the Naughty list did not respond to requests for comment.