CAT Followed Through With CEO 54% Pay Cut

An Associated Press analysis of a Securities and Exchange Commission filing shows that Caterpillar, based in Peoria, IL, delivered the executive compensation reductions it promised in December 2008 as part of the company’s broad cost-cutting plan.

Chairman and CEO Jim Owens received compensation worth $6.8 million in 2009, 54% less than the previous year. The company gave out no short-term bonuses and significantly less stock-based compensation since company profit fell well short of the board’s $2.50 per share goal. The board said Caterpillar faced “the most significant recessionary industry conditions since the 1930s” in 2009.

Caterpillar’s 2009 profit plummeted nearly 75% to $895 million, from $3.56 billion in 2008. The company slashed 19,000 full-time jobs and eliminated about 18,000 contract and part time workers in 2009, as customers stopped buying equipment and rode out the recession with the inventory on hand. Caterpillar officials had said executive compensation would be cut up to 50% in 2009, and merit pay increases were suspended for managers and support staff.

Don’t feel too sorry for Owens, he did receive stock options and restricted stock grants worth nearly $4 million last year as the board was reportedly pleased that the company had still delivered $1.43 earnings per share during the recession. The board also praised Owens’ leadership and efforts to improve the company’s balance sheet in the face of a $19 billion drop in sales.