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A Bad Year for CEO Bonuses?


A Bad Year for CEO Bonuses?

For chief executives seeking annual bonuses, this will be a tough year.

Trouble in the economy made it difficult, if not impossible, for even the best managers to meet goals that corporate boards set for chief executives at the start of 2008. And even if corporate boards want to reward CEOs for doing a good job in a bad environment, it doesn't look good to give something extra to executives while employees are being laid off and shareholders have seen stock prices plunge.

The latest example is Merrill Lynch (MER) Chief Executive John Thain. The Wall Street Journal reported on Dec. 8 that Merrill's board is resisting Thain's request for a bonus of up to $10 million. In 2008, Merrill's stock price plunged, it had to sell itself to Bank of America (BAC), and thousands of employees face layoffs. But Thain can argue he helped avoid an even worse crisis for the firm.

This slide show examines which high-profile CEOs should get a candy cane—or coal—in their stockings. In looking at which execs do or do not deserve a 2008 bonus, we used criteria including profit growth in the past year and stock performance relative to competitors. Another, more subjective factor is public relations and employee morale. A company's image would take a hit if a chief executive gets a multimillion-dollar bonus while other costs are being slashed and employees are losing their jobs. The final decisions on CEO bonuses will be made in the next few months by corporate boards, and the size of bonus payouts must be disclosed in the spring.

(Year-to-date share performance is as of Dec. 2, 2008. Compensation figures reflect total pay, including salary, bonuses and equity compensation for the last fiscal year, according to data provider Capital IQ.)