Sempra Energy (NYSE: SRE) shares are off some 10 percent from their 52-week highs after profits slipped more than 20 percent, natural gas margins tightened, and liquefied natural gas business losses widened. Meanwhile, its generation business suffered from higher taxes and a three-month outage. Chief executive Donald Felsinger is also feeling the pain as he recevied a six percent pay cut, receiving just $7.3 million this year.

Felsinger received a base salary of $1 million along with $2 million in nonequity incentive payments and $91,219 in above-market returns on deferred compensation. He also received restricted stock and options valued at $3.9 million and $306,170 in other compensation, including a $93,483 401(k) contribution, $103,873 in insurance premiums, and $68,558 in tax reimbursements.

Interestingly, the stock price actually improved 10 percent in 2007 before dropping sharply at the beginning of 2008. This means that the executive's pay was tied to internal performance measures rather than external performance measures. This can be a good thing in some cases - like this one - but bad in other cases when executives fail to take actions to unlock shareholder value.

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