"Countrywide Financial Corp., once the nation’s biggest home lender, which originated more than $450 billion in mortgages annually, or about one-fifth of all home loans, embodies the subprime mortgage crisis more than any other company.

“It seems like CEOs hit the lottery even when their companies collapse,” said Rep. Henry Waxman, the California Democrat who chairs the U.S. House Oversight and Government Reform Committee, at the March 7 hearing on CEO pay and the mortgage crisis. No CEO epitomizes that better than Countrywide Chairman and Chief Executive Officer Angelo Mozilo.

At the mortgage lender, stock-option compensation rewarded executives for short-term stock performance even while they pushed lending practices that were not sustainable over the long run. During the height of the real estate bubble between 2004 and 2007, Mozilo cashed in on these short-term gains by exercising stock options valued at $414 million, prompting an informal U.S. Securities and Exchange Commission (SEC) investigation into the sales. As a result, he already had pocketed a tidy profit by the time the long-term consequences of his decisions finally caught up with the company’s share price.

In 2004, Countrywide became the largest U.S. mortgage lender, in part, by using aggressive sales techniques and by lowering lending standards. Like other lenders, Countrywide also introduced exotic mortgages that allowed borrowers to qualify for larger mortgages. As the housing boom peaked in 2005, an increasing percentage of Countrywide’s borrowers were sold “pay option ARMs,” a nontraditional mortgage the lender first offered to its borrowers in 2001.

A pay option ARM is an adjustible rate mortgage loan that allows the borrower a choice of payment methods, including a minimum payment option that is less than the interest owed. Borrowers who select the minimum payment option have the difference between the interest they owe and the interest they actually pay added to their outstanding loan balance each month in a situation known as “negative amortization.” Over time, borrowers who pay the minimum payment also face elevated interest rates.

As the real estate bubble deflated in the second half of 2007, Countrywide suffered $1.6 billion in mortgage-related losses. By the end of the year, more than 5 percent of Countrywide’s $28.42 billion in pay option ARMs were at least 90 days overdue and 71 percent of its pay option ARM borrowers were making minimal payments. Countrywide also disclosed that only about one-fifth of its borrowers had fully documented their incomes before receiving the loans.

In August 2007, deteriorating credit market conditions forced Countrywide to seek outside financial help by selling $2 billion in convertible shares to Bank of America. As the mortgage credit crisis worsened, Countrywide risked losing both its investment-grade rating and also violating its bank loan covenants. In January 2008, Countrywide announced a $4 billion merger with Bank of America, at a loss of $20 billion in market value from the previous year.

Before this end-game transpired, Mozilo had doggedly bargained a very lucrative employment agreement at the end of 2006, despite the vocal criticism it received. In fact, in an e-mail to Countrywide’s compensation consultant, Mozilo complained that “Boards have been placed under enormous pressure by the left-wing, anti-business press and the envious leaders of unions and other so-called “CEO Comp Watchers.” At the time, Mozilo also proposed to collect a $3 million pension while he remained an employee of Countrywide.

On the Friday before Christmas 2006, Mozilo and Countrywide finalized his new employment agreement. The annual pay terms included a base salary of $1.9 million, an incentive bonus of between $4 million to $10 million, an equity award of $10 million and continuation of Mozilo’s other perks and fringe benefits. The new contract also promised him the $37.5 million in severance benefits.

But when the financial success that made it possible for him to get such an employment agreement proved so fragile that the entire company had to be sold at a fraction of its previous market capitalization, Mozilo could no longer avoid making some concessions. Facing growing public criticism, Mozilo announced that he would voluntarily give up his $37.5 million golden parachute that he would receive when Bank of America completed its acquisition of Countrywide. Reflecting the changed financial conditions, the company also canceled its plans to host a ski trip for mortgage bankers at the Ritz-Carlton ski resort in Avon, Colo., where rooms start at $725 a night. The itinerary reportedly included dinner at Spago, the famous restaurant whose menu includes Kobe steak as an entrée for $105.

But Mozilo will not be leaving Countrywide empty-handed. He is entitled to an enhanced supplemental executive retirement plan with a lump sum worth $22.4 million, a pension plan with a present value of $1.3 million and $20.6 million in deferred compensation. And while Countrywide shareholders have seen the value of their investment fall 85 percent since February 2007, Mozilo also will keep his $414 million in stock options that he exercised between 2004 and 2007. On top of that, Mozilo, who intends to retire after Bank of America Corp.’s (BAC's) pending takeover of Countrywide this year, will receive $10 million worth of stock in BAC, according to filings with the SEC."

Goldman Sachs (NYSE: GS) chief executive Lloyd Blankfein received $74 million last year, but nobody can be heard calling for his head. The 53-year old Blankfein may have made $314,894 per day in 2007, but his success in avoiding the subprime collapse (and even profiting from it!) saved the company billions.

Surprisingly, some investors are still pushing a say-on-pay proposal that prompted the executive to go on the offensive. In fact, the executive commented that he didn't want anyone "less sophisticated" in the financial industry making decisions on his pay. And perhaps he is right, since he already appears to be one of the most underpaid on Wall Street.

Blankfein and his predecessor Hank Paulson were paid a total of $136 million between 2003 and 2007 while the firm racked up $34.3 billion in profits. The pay as a percentage of profits came in at just 0.4%, which is one of the lowest ratios on Wall Street. As a comparison, Bear Stearns' CEO made 2.2% of its profits over a five year period.

Still many investors and shareholder advocates are insisting that unearned compensation should be returned to shareholders. Whether or not this is fair compensation given the history of these executives remains to be seen.

Related Companies
Lehman Brothers Holdings Inc. (LEH)
Merrill Lynch & Co., Inc. (MER)
Morgan Stanley (MS)

"Charles O. Prince resigned as chairman and chief executive officer of Citigroup last November, after accepting responsibility for the bank’s $5.9 billion write-down related to its exposure to risky mortgages that led to a 57 percent drop in its third-quarter profits. “Given the size of the recent losses in our mortgage-backed securities business, the only honorable course for me to take as Chief Executive Officer is to step down,” he said, in a Nov. 5, 2007, press release announcing his resignation.

Yet, when he walked away, he received a compensation package that was larger than what he received in 2006. His 2007 compensation included $1 million in salary, $1.5 million in annual perquisites for five years and a discretionary bonus of $10.4 million. Although Prince, who spent his entire career at Citigroup, had no employment contract, the board let him retain more than $28 million in unvested stock and options that became vested immediately. Prince can exercise the options over the next two years, in keeping with his separation agreement. He also received pension and retirements benefits with a present value of $1.8 million.

Shortly after Prince departed, Citigroup posted a loss of $9.83 billion for the fourth quarter of 2007, the biggest loss in its 196-year history, after rising defaults forced the company to write down the value of its mortgage portfolio. The nation’s largest bank cut its dividend for the first time and was forced to seek a $12.5 billion infusion of cash from foreign investors.

In January, the new CEO, Vikram Pandit, announced the bank would lay off 4,200 employees globally. By March, Citigroup’s stock had plummeted to its lowest level since 1998, dropping to around $22, amid concerns the bank might have to seek more capital from foreign investors again.

Under pressure from the AFL-CIO over its risk management practices, Citigroup said that C. Michael Armstrong, would step down as chairman of its audit and risk management committee this summer. Armstrong, who has headed the committee since 2004, oversaw more than $22 billion in write-offs from mortgage-related investments by Citigroup. The chairmen of other board committees also will step down as part of a new rotation policy, Citigroup said.

The Corporate Library, a corporate governance research firm, gave Citigroup a D rating, citing concerns about Prince’s compensation package despite the company’s poor performance. Even so, Prince maintained that "Citigroup has worked hard to align management’s interests with the interests of shareholders."

The company’s 2008 proxy reveals that may be far from the case. Citigroup’s Personnel and Compensation Committee uses the Independent Compensation Committee Adviser LLC (ICCA) to review the compensation of its top executives and ensure that it is competitive with the pay packages of a group of peer companies. But the committee cited the mortgage meltdown as reason not to benchmark its 2007 executive compensation to that of peer companies, thus flying blind in making compensation decisions.

Citigroup’s proxy notes that "ICCA concluded that in light of the extraordinary financial upheavals that occurred at the end of 2007, there was limited meaningful guidance regarding contemporary compensation practices, as compensation data from 2006 and 2007 compensation surveys became an unreliable predictor of actual competitor compensation practices for 2007."

Prince became CEO of Citigroup on Oct. 1, 2003, and resigned Nov. 5, 2007. During his tenure, Citigroup’s total return was –2.5 percent a year, compared to a 12 percent a year return for the Standard & Poor’s (S&P's) 500 index during the same time.

The company’s stock closed at $29.44 at year-end, and shareholders lost 43.27 percent in 2007, compared with a –25.68 percent return for peers, and 5.15 percent return for the benchmark S&P 500. The company’s performance also lagged that of peers and the benchmark S&P 500 over the three-year and five-year periods ending Dec. 31, 2007."

UnitedHealth Group Inc. (NYSE: UNH) executives may soon find themselves under fire after an investment firm suggested that shareholders have a non-binding say on executive compensation. These plans are designed to put pressure on boards to reduce executive compensation by demonstrating shareholder sentiment, and are typically frowned upon by management as a result.

Walden Asset Management, a large UNH shareholder, intends to introduce the proposal at the health insurer's annual meeting in June. The proposal was also co-sponsored by a number of additional organizations, including Tides Foundation, the Funding Exchange network of social justice foundations, the Sisters of St. Joseph of Boston, and Gun and Thomas Denhart.

The shareholders demand that the board allow investors to vote on an advisory resolution to approve the compensation of top executive officers. The move follows more than 60 similar proposals put forth in 2007 alone, averaging a 43% vote. Unfortunately, only eight of the resolutions actually received the majority vote needed to pass.

"We believe that existing U.S. corporate governance agreements...do not provide shareholders with sufficient mechanisms for providing input to boards on senior executive compensation," Walden Asset Management said in a statement, disclosed in UnitedHealth's Schedule 14A proxy statement.

The AFL-CIO's "2008 Executive PayWatch" ends with examples of extravagant executive pay in firms that contributed to the on-going U.S. mortgage crisis. The first such look is Bear Stearns CEO James Cayne:

"The near-collapse of the Wall Street firm Bear Stearns Cos. Inc. illustrates the danger of focusing executive compensation on company performance without considering the amount of risk undertaken to achieve that performance. Much of the risk that executives undertook was hidden on the firm’s balance sheet until the mortgage crisis revealed the true worth of the assets was considerably less than their book value. Bear Stearns narrowly avoided bankruptcy by agreeing on March 16 to a shotgun marriage with JPMorgan Chase & Co., presided over by the federal government. The price? A mere $236 million, a fraction of Bear Stearns’ previous stock market value of $20 billion in January 2007.

Under pressure from Bear Stearns employees and shareholders JPMorgan Chase increased its bid on March 24 from $2 to $10 per share. Bear Stearns CEO James Cayne, who held 5.82 percent of the investment bank’s total outstanding shares, was one of the biggest beneficiaries of the increased price. A day after Bear Stearns’ directors agreed to the increased offer from JPMorgan Chase, Cayne unloaded his entire holdings at $10.84 a share, creating a $61.3 million profit.

Given Bear Stearns’ reputation on Wall Street for savvy risk management, it is ironic that Bear Stearns’ own hedge funds helped trigger the subprime mortgage meltdown that ultimately cost the firm its independence. In June 2007, Bear Stearns bailed out two of its troubled hedge funds that had invested in collateralized debt obligations. By combining subprime loans into a single security, these collateralized debt obligations supposedly transformed high-risk debt into investment grade credit ratings. The financial pages of the past year show that this kind of magical transformation is illusory.

The Wall Street Journal described the fire-sale price of Bear Stearns as having “shaken American capitalism.” In a deal orchestrated by Treasury Secretary Henry Paulson, the Federal Reserve agreed to lend JPMorgan Chase up to $30 billion in exchange for liquid mortgage securities held by Bear Stearns. The bailout was the first time since the Great Depression that the Federal Reserve lent money to a company that was not a bank.

In many ways, the near-collapse of Bear Stearns resembled a classic “run on the bank” financial panic from the 1930s. As concerns about the quality of its subprime mortgage investments spread, Bear Stearns could no longer raise short-term funds by selling mortgage-backed assets on the securities repurchase market. When rumors spread that Bear Stearns could become insolvent, many of its lucrative hedge fund clients began pulling their prime mortgage accounts.

Facing criticism for his hands-off approach to the mortgage credit crisis, Cayne announced his resignation as CEO in January 2008. While Bear Stearns’ hedge funds were losing more than $1.6 billion last summer, he was busy playing golf and at a bridge tournament. Both the U.S. Securities and Exchange Commission and the U.S. Attorney’s office are investigating the collapse of the Bear Stearns' hedge funds.

Cayne’s compensation peaked at the height of the real estate bubble. In 2006, he received a $17 million bonus, $14.8 million in restricted stock, $1.7 million in stock options and more than $6.1 million in other compensation, including preferential earnings under the Capital Accumulation Plan for executives. The compensation committee determined the size of the 2006 executive bonus pool based on Bear Stearns’ after tax return on equity. Cayne did not receive any bonus or units under the Capital Accumulation Plan last year. But he realized $10.3 million from vesting stock awards in 2007.

In hindsight, it appears that Cayne’s compensation was not adequately tied to risk-adjusted performance measures. For example, Bear Stearns’ decision to link executive pay to return on equity can encourage executives to use increased leverage. The board of directors may not have paid sufficient attention to the amount of mortgage-related risk that Bear Stearns was undertaking as it did not establish a finance and risk committee until Jan. 10, 2007.

The real estate crisis hasn’t been all bad news for Cayne. He didn’t need to take out a mortgage to buy his $25.8 million luxury condo at the Plaza on Fifth Avenue at Central Park."

General Motors (NYSE: GM) Chief Executive Rick Wagoner received $14.4 million in 2007, which is up 41% from the $10.2 million that he made in 2006. Ironically, this high compensation comes at a time when the auto maker has worked to cut costs and shed billions in retiree benefits. Meanwhile, GM itself lost $38.7 billion in 2007, but much of that can be attributed to a huge non-cash loss of tax credits that the company had been holding on its balance sheet.

Mr. Wagoner's base salary for 2007 came in at $1.6 million while he also received $1.8 million in incentive plan compensation and $230,688 for perquisites and benefits, including personal security. The bulk of the executive's pay came from stock options and grants awarded to him throughout the year at favorable prices. Stock awarded for this upcoming year, however, is contingent on performance goals being met.

At least one shareholder has voiced concerns about this compensation. John Lauve announced his intention to nominate 10 candidates for election to the board, but he has nominated candidates each year since 2000 without success. He has never conducted a proxy solicitation for his candidates and therefore they have never been put on the ballots. Other stockholder concerns deal with topics like cutting greenhouse gas emissions, disclosing political contributions, heathcare return, executive compensation, cumulative voting and special stockholder meetings.

After examining the scale of CEO pay relative to the average worker and how CEO pay often has little correlation to performance, the AFL-CIO's "2008 Executive PayWatch" calls attention to CEOs control over their own salaries:

"Some CEOs may have far greater control over their pay than anybody previously suspected. Angelo Mozilo, chairman and chief executive officer of Countrywide Financial Corp., brought in a second compensation consultant to renegotiate his package in 2006 when the first one said his pay package was inflated.

In an e-mail message, Mozilo complained to John England of Towers Perrin, who helped redo his pay package: “Boards have been placed under enormous pressure by the left-wing anti-business press and the envious leaders of unions and other so-called ‘C.E.O. Comp Watchers.’” Mozilo’s renegotiated contract with Countrywide included an annual salary of $1.9 million, an incentive bonus of between $4 million and $10 million, perks and fringe benefits, as well as $37.5 million in severance benefits. Under public pressure, Mozilo subsequently agreed to give up the severance package.

Excessive CEO pay is fundamentally a corporate governance problem. The board of directors is supposed to protect shareholder interests and ensure that CEO pay reflects performance. However, at approximately two-thirds of companies, the chief executive officer also chairs the board. When the same person serves as both chairman and CEO, it is impossible to objectively monitor and evaluate his or her own performance.

CEOs also dominate the election of directors. The vast majority of directors are hand picked by incumbent management. Because of the proxy rules, it is prohibitively expensive for long-term shareholders to run their own director candidates. Moreover, even if a majority of shareholders withhold support from directors, they still are elected to the board at many companies.

Ultimately, shareholders have to be able to trust their boards of directors to set responsible CEO pay packages. For this reason, CEO pay will be reformed only when corporate boards become more accountable. Until then, CEOs will continue to influence the size and form of their own compensation, and CEO pay will continue to rise."

In the second installment of coverage of the AFL-CIO's "2008 Executive PayWatch" report, the disparity between pay and performance - not just the sheer amount of compensation - is critiqued:

"Boards of directors are responsible for setting CEO pay. Frequently, however, directors award compensation packages that go well beyond what is required to attract and retain executives and reward even poorly performing CEOs. These executive pay excesses come at the expense of shareholders, as well as the company and its employees.

According to a recent study by ERI Economic Research Institute and The Wall Street Journal, executive compensation grew substantially faster than corporate earnings in the past year. The study of 45 randomly selected public companies found that executive compensation increased 20.5 percent from a year ago, while revenues grew just 2.8 percent.

During the past 12 months, overall total compensation of the highest-paid executive increased 20.5 percent while revenues increased 2.8 percent, the study found. As of February 2008, the average top executive received overall total compensation of $18,813,697, according to the study. In comparison, the median pay for workers rose only 3.5 percent to $36,140 in 2007, from $34,892 the previous year, according to the U.S. Bureau of Labor Statistics.

Moreover, while performance-based bonuses for chief executives of large public companies dropped in 2007, companies more than made up for that decline by giving out bigger discretionary bonuses and other payments not tied to a specific financial target, according to a recent study by Equilar, the executive compensation research firm.

Equilar found that the median value of bonuses tied to performance fell 18.6 percent in 2007, from $949,249 to $772,717. Thanks, however, to sizable increases in discretionary awards and multi-year performance awards, overall CEO bonuses for 2007 inched up 1.4 percent to a median value of $1.41 million from $1.39 million in 2006."

Management consultant and author of the book “So… You Call Yourself a Leader: 4 Steps to Becoming One Worth Following” Ken Siegel had an article in Forbes this week titled “CEO Pay As A Tool For Employee Disengagement.”

With median pay for CEOs of the biggest S&P 500 companies at $15.7 for last year, Siegel writes:

“While many of these CEOs and their boards will say they are worth it, few if any are sending the right message--or even a decent message--to their troops…The true reality is that top-level executives are living in an unconscionable fog. And when the fog lifts, the resentment of the underpaid, overworked employees will remain. The resentment harbored by these workers is deep and not forgotten. As soon as they can, they will leave...

There really is no way to defend a huge salary to the average worker… The best explanation is by actively leading the company, supporting the employees and sharing in the pain as well as the gain. Communicating the real issues facing the company and digging into the ranks, down to the lowest level, to find solutions to problems is a start; then, recognizing great work by those in the field and on the assembly line to solve problems--and financially rewarding those people, as well as one's self.

To do this takes communication, and it takes confronting the real problems facing the company to all. It takes creating task forces, including management, workers and others, to address problems. In essence, it takes turning the tables, and letting everyone know that the CEO gets paid "the big bucks" for a reason: to support the company, its jobs, its people--ultimately its shareholders; and that they may suffer a similar fate, together, in the event of failure…

To have a high salary and pull it off without resentment within the company--especially when the business is performing poorly--takes courage, transparency, and, above all, humility. All those human qualities will engage the troops--yet they are too rarely demonstrated, and even more infrequently observed.”

Aetna Inc. (NYSE: AET) Chief Executive Ronald Williams received $40.2 million in 2007 after the company's shares moved up more than 50% on the year before dropping again in 2008. The majority of the executive's compensation came from stock option grants, which he exercised during the past year to the tune of $32.8 million. Meanwhile, Mr. Williams is also eligible to receive an additiona $10.8 million in the future in the form of stock rights.

Ronald Williams is largely credited with turning around a troubled Aetna, but 2008 has erased much of his progress in 2007. The executive received a $1.096 million salary in 2007 with an annual bonus of $1.9 million and restricted stock valued at around $4.29 million. Mr. Williams "other compensation" totalled $104,162 for personal use of company aircraft and vehicles along with financial planning services and 401(k) contributions.

Shareholders saw improvements being made in 2007 with revenues increasing some 10% and operating earnings rising 20%. This is indicative of a turnaround in the form of increased operating efficiency and cost cutting measures. Investors may be a little bitter about the year so far in 2008, but the company insists that they need to pay executives to attract, motivate, and retain highly qualified individuals.

Related Companies
UnitedHealth Group, Inc. (UNH)
WellPoint, Inc. (WLP)
CIGNA Corporation (CI)

Citigroup Inc. (NYSE: C) shareholders haven't been immune to the credit crisis, but executives are another story. Vikram Pandit, Chief Executive Officer of the firm, is facing widespread criticism over pay after his first annual meeting with shareholders since he took office after the financial crisis began.

Over a thousand people packed into Citigroup's annual meeting at the Hilton Hotel in New York with many of them cheering as shareholders got into line to slam executive compensation packages in the face of billion dollar sub-prime write-offs. Many of the comments made were off-base, but others posed serious questions that need answers.

Former Chief Executive Charles Prince walked away with an exit package worth $42 million in stock awards, pension payments and bonuses. Meanwhile, Gary Crittenden made $19.3 million even as shares halved during the past year as the company reported a series of major losses and write-offs.

Some shareholders attending the meeting may have stepped over the line by saying that (referring to executives) "people that could do that job are a dime a dozen ... there are probably plenty in here that could do it." Others accused the executives of doing "nothing to earn their money", charging that shareholders were being robbed.

Citigroup responded by stating that it believes the credit crisis is over half done through and that it is continuing to shed non-core assets at an aggressive rate in order to cut costs and increase efficiency. However, the bank that has already lost more than $30 billion in the credit crunch so far may have to do more than just talk.

Related Companies
Wells Fargo & Company (WFC)
Bank of America Corporation (BAC)
JP Morgan Chase & Co (JPM)

The AFL-CIO, one of America's most prominent unions, just released its report titled "2008 Executive PayWatch." This is the first in a multi-part look at the findings of the report:

"The chief executive of a Standard & Poor's 500 company made, on average, $14.2 million in total compensation in 2007, according to preliminary data from The Corporate Library. Problems with executive compensation came to a head in 2007 with large severance packages given to CEOs of companies at the center of the mortgage crisis. The International Monetary Fund estimates that the financial turmoil set off by the collapse of the mortgage market could total nearly $1 trillion. Yet, chief executive officers of the firms most responsible for causing the crisis collected hundreds of millions of dollars in pay last year. This highlights the need for further reform to protect companies and their investors."

Not surprisingly, the AFL-CIO report draws the obvious disparity between worker and executive compensation:

"A reasonable and fair compensation system for executives and workers is fundamental to the creation of long-term corporate value. However, compensation for top executives has grown at an unprecedented rate in the past two decades resulting in a dramatic increase in the ratio between the compensation of executives and rank-and-file employees.

The chief executive officers of large U.S. companies averaged $10.8 million in total compensation in 2006, more than 364 times the pay of the average U.S. worker, according to the latest survey by the United for a Fair Economy."

This is certainly not news to individuals that follow the industry, but coming from a prominent union it may draw increased attention. In up-coming posts, the focus will turn specifically to executive compensation in companies in the mortgage and housing sectors.

XTO Energy (NYSE: XTO) shares may have reached new highs following the rise in energy prices, but many shareholders are still outraged by its executives' pay checks. Chairman Bob Simpson was ranked among the nation's top paid executives last year and is set to make the list this year as well. Simpson will take home $3 million less, but is still set to receive around $56.6 million this year.

Simpson saw his annual cash bonus rise to $35.5 million while his salary also increased to around $1.3 million, but the value of his stock related compensation decreased to $19.5 million as the company's earnings slid in 2007. The executive also received $137,648 in reimbursements for personal use of a corporate aircraft along with a car allowance of $47,800 for the year. Finally, that is all topped off with $75,054 in "other compensation", according to a proxy filed with the SEC.

This may seem like a stretch, but XTO Energy was quick to note that the stock is up 5,700 percent since it went public in 1993. More recently, shares are up 36.5% last year and an additional 32.2% so far this year. The company also noted that it has recently become the fifth largest holder of natural gas in the United States, signaling a continued rise to power in the industry as a large player. XTO has also been rapidly expanding in the areas in which it operates.

Shareholders are arguing, however, that the increase is due more because of the energy market than actions take by the company specifically. Rising oil prices have been the result of increased demand and steady supply thanks to recent decisions by Saudi Arabia to reduce their exports. As a result, some shareholders are now proposing a new provision that requires directors to stand for election every year.

In the end, Simpson is one of the co-founders of the company with a large ownership stake. Despite his hefty compensation, the stock has managed to post impressive returns even when compared to its industry. As a result, perhaps shareholders should hold off on their criticism until he starts taking such large raises amid a downturn in the natural gas market. Then they will see the true test of a good executive.