SiliconBeat

“One clear sign of the challenging economic environment we face is the decision by executives to take a pay cut,” according to a survey of executive pay practices by Equilar, the Redwood City information services firm that mines SEC filings for compensation data.

Of course, another “clear sign” might be the accelerating rate of layoffs. Newly announced plans to eliminate another 166,348 jobs from payrolls in December were tallied by Challenger, Gray & Christmas, the largest December job-cut total since the outplacement consultancy began tracking layoffs in 1993.

The Equilar report suggests various reasons executives might be going the pay-cut route: pressure from shareholders and politicians, a rapid need to conserve cash in a credit-tight
environment, or “a decision to share some of the pain with rank-and-file employees when
broader pay cuts and workforce reductions are announced.”

“Whatever the reasons, it is now readily apparent that a trend is developing in this area,” according to Equilar, which showed 14 instances of public companies cutting executive pay in
December, up from 12 in November, which was up from an average of 2.8 companies in the five months before that.

A summary of the survey cited three recent examples of executive pay cuts, two of which were
at high-tech companies. On Dec. 17, both both Motorola and Western Digital filed plans to
cut their chief executives’ salaries. Both were characterized as voluntary, whereas the
third example, FedEx, included no such qualifier.

Western Digital, the Southern California disk drive manufacturer, made the biggest cuts, cutting its CEO’s pay by a third from $900,000 to $600,000. Motorola’s two co-CEOs volunteered to take a 25 percent cut, from $1.2 million to $900,000. And FedEx’s CEO had his
$1.4 million base pay reduced by 20 percent.

In its latest newsletter, Equilar wrote that for “the past few weeks, a large number of clients have inquired about emerging equity compensation trends for 2009.”