CEOs Play By Own Rules

When it comes to compensation for CEOs, the rules of the rest of the workforce don’t apply: In good and bad years, paychecks skyrocket.

Even with increased scrutiny of executive compensation, the pay for CEOs is often cushioned from the real-world losses of their companies. Boards offer them huge salaries and bonuses and help them pay for expenses such as commuting to work and advice on how to manage their money. They get bonuses for taking a job and staying on the job.

In a CEOs world, “the board basically gives the executive whatever he or she has the chutzpah to ask for,” said Rakesh Khurana, an associate professor at Harvard Business School.

The stock for Primus Telecommunications Group Inc. sank 69 percent last year and continues its downward trajectory. But chief executive K Paul Singh enjoyed a $360,000 bonus as well as a $170,757 raise to top his previous year’s salary of $400,000.

He took home a cash total of $930, 757, which is about 133 percent more than the previous year, according to a Washington Post survey.

In June, the Nasdaq Stock Market served notice that Primus faces delisting because its stock has fallen below Nasdaq’a $1-a-share minimum price. The stock plunge wiped out nearly $850 million of investors’ equity.

Likewise, the chief executive of broadcaster Radio One Inc. also saw a hefty pay hike even though the price of the company’s share fell.

Alfred C. Liggins III, chief executive of broadcaster Radio One Inc., the son of the company’s chairman, went home with 36 percent more in cash compensation — $1.15 million. Meanwhile, the company’s share prices fell 16.5 percent last year.

A company that analyzes executive compensation for major investors and advises them how to vote in board elections, recommended that shareholders withhold votes from several Radio One directors. The company’s advice was based on “the disconnect between the company’s stock performance and the CEO’s compensation.”

Because elections for board members are not easily contested, significant changes to executive compensation are slow to come, said Jesse Fried, a law professor at the University of California, Berkeley.

Former chief executive William W. George said the inflated perks on top of astronomical compensation also arise out of a sense of entitlement.

“Executives make a lot of money, so they ought to be able to pay for those things themselves . .,” he said. “How far do you want to go? Groceries?”