San Diego is home to 35 rich executives, almost all white men, who receive millions in compensation for running our community's largest publicly traded companies. They have made some of their money from salary and bonuses, but the mountain of wealth each has accumulated is the result of stock and option awards. For years, income earned by executive officers has been reported by business news organizations. However, the value of stock and options awarded has been difficult for nonanalysts to determine. The identity and value of many perks have gone unreported.

Benefits such as health insurance and retirement savings are well known. But the perks suggest that executives may be financial wards of their companies. Some executives enjoy health benefits in retirement; payouts for voluntary or involuntary termination; use of the corporate jet (spouses usually fly free); use of the company car or chauffeured limousine; an interest-free loan to purchase a home; country or tennis or workout club memberships; personal health coaching; a home-security system; season tickets for sports teams or theater/music venues; legal fees; trust and estate-planning fees; bodyguards; expense allowances; and, for the very special, the crew and upkeep of a private yacht.

Born in 1934, in the wake of the 1929 stock market crash, the U.S. Securities and Exchange Commission was mandated by Congress to provide investors with reliable information about publicly traded companies. In 2006, the SEC adopted new rules requiring what they claim is "intelligible disclosure" of the compensation packages given to top officers.

A company reports executive pay as well as pension benefits and severance packages on the proxy statement, Schedule 14A. No easy read, the form is accompanied by a 372-page SEC-authored guide. Every company's proxy statement is posted on the Securities and Exchange website; they can run to 100 single-spaced pages, with patience-draining footnotes and tables.

To research what they should pay executives, companies hire outside consultants to compile data about competitive pay rates and to give opinions as to the reasonableness of awarding bonuses and options. The company's board then establishes the executive's contract. Since the marketplace for top managers (chief executive officers, chief financial officers, chief operating officers, presidents, and vice presidents) is highly competitive, contracts need to be sweet enough to attract the best people -- this, the mantra of every board. Word gets out, like a job advertisement: if you worked here, you, too, would be making this much.

Between 1994 and 2005, Mercer Human Resources Consulting reports, the median CEO salary has risen very slightly while total CEO pay has grown 6.5 percent per year. The chief factors driving this growth are stock options and other equity grants. The Corporate Library notes that the average CEO compensation of the S&P 500 companies in 2006 was $14.78 million.

According to an Internal Revenue Service rule, companies can deduct from their taxable income only $1 million of an executive's compensation. An exception is made for performance-based pay -- bonuses and equity awards made under a plan that satisfies a number of conditions, one of which is that pay must be based on pre-established goals.

The new SEC rules have spurred shareholders who are demanding that executives be held accountable for their pay. Many shareholders want companies to adopt a pay-for-performance plan: the more homers you hit for your ball club, the more you get paid; the fewer homers, the less you get paid. Investors are asking, is there any way to determine whether these executives are worth what their corporate boards are paying them?

One idea for making executives accountable is to allow shareholders a nonbinding advisory vote on executive pay plans. Another idea is to require compensation committees to simplify and to state their incentive programs clearly. Still another, favored by most shareholders, is to tie the executive's compensation to the growth of the company's stock. With the new rules, it is easier to compare an executive's pay with the stock growth. By this measure, many San Diego executives seem grossly overpaid while a few are making a (relative) pittance.

Part One

Executive compensation for San Diego's highest-paid executives

For each executive below, the salary, bonus, stock and option awards, change in pension value, and other compensation are provided. In most cases, the compensation is for fiscal year 2006. The category "other compensation" comprises the perks, whose identity and value, if worth more than $10,000, must be listed on the proxy statement. The value realized from options that were exercised in 2006 is also shown.

A stock option is the right to purchase a set number of shares in the future at a set price, called the grant price, usually the price of the stock the day the option was granted. Typically options must be held between three and ten years before they vest, when the person can exercise the options, i.e., purchase the shares. If the grant price is $10, and the stock price goes to $20, the executive makes $10 per share once he or she exercises the options and then sells the shares. The longer a person is with the company and the more the stock price grows, the more valuable the options become.

Executives are also compensated by the tax gross-up, a reimbursement of taxes paid on another perk, such as moving expenses. When the executive is reimbursed for expenses, the reimbursement must be reported as income on the executive's tax form, and this generates a tax liability. That tax is paid by the company. A spokesperson for a shareholder watchdog group called the tax gross-up the "Leona Helmsley provision . . . the ultimate in piggishness."

In 2006, Steve Francis of AMN Healthcare earned $350,000 in compensation and took home $52.1 million in profit after he sold shares in AMN. That year, three of San Diego's largest companies, in terms of market capitalization (the number of shares multiplied by the share's price), were Qualcomm, Sempra Energy, and Science Applications International Corporation (SAIC). According to Forbes, the CEOs of these three were among the top 500 highest-paid executives in America: Qualcomm's Paul E. Jacobs ranked 95; Sempra Energy's Donald E. Felsinger, 149; and SAIC's Kenneth C. Dahlberg, 305.

Only executives of publicly traded companies, whose compensation is reported on the proxy statement, are included below. There are San Diegans who run private companies and make tens of millions every year -- for example, John Moores of the Padres or David Copley of the San Diego Union-Tribune. Their compensation is not covered by the Securities and Exchange Commission's rules.

I. AMN Healthcare Services

• Steve C. Francis
• Chairman
• Salary $189,000
• Stock & option awards $136,000
• Other comp $25,000
• Total $350,000
• Exercised options $52.1 million

Francis is the chairman of the board of AMN Healthcare Services, a health-care staffing company. A cofounder of the company in 1985, 53-year-old Francis was the CEO from 1990 to 2005. In 2005, he was a candidate for mayor of San Diego, losing in the primary election. He is considering a run for mayor again in 2008.

Throughout 2006, Francis cashed in his options, exercising them in batches of 50,000 and selling them the same day. The company notes that 2006 was the first year that Francis exercised stock options.

He was also awarded 5555 restricted stock units (RSUs) and 4445 stock appreciation rights (SARs); the fair value of these awards was $36,000. Francis owns 216,922 shares, which on September 21, 2007, were worth $4.1 million.

Susan R. Nowakowski

• CEO
• Salary $550,000
• Bonus $605,000
• Stock & option
• awards $1.3 million
• Other comp $29,000
• Total $2.5 million
• Exercised options $7 million

Nowakowski, 43, owns 300 shares, which on September 21 were worth $5652. She also owns 55,000 units of stock awards that have not vested, worth, according to the proxy, $1,514,700, as well as 289,405 exercisable options and 303,250 options that are not yet exercisable. Other compensation consists of "matching contributions to the Company's Executive Non-Qualified Excess Plan, the Company's 401(k) Plan and life insurance premiums." AMN Healthcare Services "generally does not provide its named executive officers with perquisites."

II. Qualcomm

Paul E. Jacobs

• CEO, director
• Salary $1 million
• Bonus $1.7 million
• Stock & option
• awards $24.9 million
• Other comp $141,000
• Total $27.7 million
• Exercised options $15.8 million

Paul Jacobs, 45, is the son of Qualcomm cofounder and chairman of the board Irwin M. Jacobs. Qualcomm makes wireless telecommunications products and services.

In 2006, Jacobs was granted 900,000 stock options at the grant price of $44.02. If the stock price grows 5 percent per year over ten years, according to the proxy statement, he will realize $24.9 million.

Jacobs owns 1,559,615 shares, some held in trusts, worth $63.7 million on September 21.

The son's stock is small potatoes compared to his father's stock wealth. Irwin Jacobs owns 26,904,101 shares, some held in trusts. The shares on September 21 were worth $1.1 billion. This year, dividend payments on those shares totaled $14.5 million.

Like most companies, Qualcomm has a voluntary deferred compensation plan: executives can defer 100 percent of their income "on a pretax basis." They stow their income in an account where it will go untaxed until they retire or choose to use it.

Steven R. Altman

• President
• Salary $749,000
• Bonus $1.1 million
• Stock & option
• awards $17.2 million
• Other comp $116,000
• Total $19.2 million
• Exercised options $10.8 million

Altman's 179,288 shares were valued at $7.3 million on September 21. In 2006 he was granted 620,000 stock options at the issue price of $44.02. With the stock price rising 5 percent over ten years, the value of his stock options will grow to $17.2 million.

Sanjay K. Jha

• COO
• Salary $688,000
• Bonus $1 million
• Stock & option
• awards $15.6 million
• Other comp $107,000
• Total $17.4 million
• Exercised options $8.4 million

Jha, who is chief operating officer and president of Qualcomm CDMA Technologies, owns 23,891 shares, which on September 21 were worth $975,000. In 2006, Jha was granted 565,000 stock options. Over ten years, with the stock price growing 5 percent a year, he will make $15.6 million.

On September 4, Jha exercised the option to buy 7500 shares, paying a grant price of $16.11 per share. The price of the stock that day for everyone else ranged from $39.44 to $40.23. When Jha sold the shares, his one-day profit was $178,875.

Roberto Padovani

• Executive vice president
• Salary $459,000
• Bonus $325,000
• Stock & option awards $8.3 million
• Other comp $61,000
• Total $9.1 million
• Exercised options $9.3 million

Padovani is executive vice president and chief technology officer at Qualcomm. In 2006, he was granted 300,000 stock options. If the stock price grows 5 percent per year over ten years, he will realize $8.3 million.

William E. Keitel

• CFO
• Salary $577,000
• Bonus $710,000
• Stock & option
• awards $13.1 million
• Other comp $84,000
• Total $14.5 million
• Exercised options $6.5 million

Keitel, executive vice president and chief financial officer, owns 5794 shares, which on September 21 were worth $237,000. In 2006, he was granted 475,000 stock options. At a 5 percent rise per year over ten years, the value of his stock options will be $13.1 million.

III. Sempra Energy

Donald E. Felsinger

• Chairman, CEO
• Salary $943,000
• Bonus $1.9 million
• Stock & option
• awards $4.4 million
• Change in pension
• value $1.9 million
• Other comp $404,000
• Total $9.5 million
• Exercised options $4.2 million

Sempra Energy is an energy services company, which owns San Diego Gas & Electric. Felsinger owns 481,166 shares, valued at $28.8 million on September 21. During his 35 years with the company, his pension benefits have grown to $16.5 million. Felsinger has also participated in a deferred compensation plan, which earned 6.3 percent interest in 2006. His plan's aggregate balance on December 31, 2006, was $14.5 million.

Felsinger's "other compensation" includes medical, disability, life and personal liability insurance premiums; car allowances, mileage reimbursement, and the hourly rate of drivers; as well as event gifts, mementos, and residential security alarm services. The lion's share of Felsinger's perk payout was a tax gross-up, a reimbursement for the taxes he paid on the rest of his "other compensation."

If Sempra were to fire Felsinger -- other than for cause (gross negligence on the job, moral turpitude, or significant acts of dishonesty) -- he would receive the sum of his annual base salary and a bonus; his incentive-based awards would immediately vest and become exercisable; his health insurance would continue for two years; he would receive free financial planning and outplacement services; he would get two years of service credit added to his pension; and, as long as he divulged nothing confidential about Sempra, he would receive another year's worth of insurance and medical benefits along with a lump-sum payout equal to his salary and bonus.

Summing up all that, Sempra declares that Felsinger will get $32.2 million if he is fired and $47.2 million if his ouster is due to a "change-in-control," that is, the company merges with or is taken over by another company, one person or group acquires 20 percent or more of the share voting power, or a majority of the board is ousted. (Other top Sempra executives get similar but scaled-down severance packages. One study found that in 44 percent of executive contracts, the executive gets a severance payment even if he or she is convicted of fraud or embezzlement.)

In 2007, a group of shareholders proposed that the board limit "excessive pension benefits" for senior corporate executives. At issue was a "supplemental" plan that based benefits on salary, bonus, and other compensation rather than on salary alone. According to the rebels, the expanded plan provided benefits "far greater than those permitted under the Company's tax-qualified pension plan." The group termed it "overly generous and unjustifiable." They wanted to keep the extra plan but only if salary was the sole determinant of benefits.

The board of directors argued against the shareholders' proposal. They said that basing the pension on salary and bonuses was "a very common business practice." Such a plan is "fair and reasonable and has contributed significantly to superior corporate performance and shareholder returns." And if the company offered no such supplemental retirement plan, they would "be at a significant competitive disadvantage in attracting and retaining highly qualified executives." The board recommended a no vote. The board won: shareholders voted 76 to 24 percent against the proposal.

Neal E. Schmale

• President, COO
• Salary $745,000
• Bonus $1.2 million
• Stock & option
• awards $2.4 million
• Change in pension
• value $1.6 million
• Other comp $323,000
• Total $6.3 million
• Exercised options $2.7 million

Schmale owns 378,088 shares, which on September 21 were worth $22.6 million. His pension benefits are $6.5 million. In his deferred compensation plan, Schmale has saved $9 million. Were Schmale to be fired, he would receive $6.1 million, and were he to be ousted because of "change-in-control" of the company, he would get $35.5 million.

Edwin A. Guiles

• Executive vice president
• Salary $595,000
• Bonus $834,000
• Stock & option
• awards $1.8 million
• Other comp $235,000
• Total $3.5 million
• Exercised options $4.5 million

Guiles's 251,126 shares were valued at $15 million on September 21. His pension benefits are $9.8 million. In his deferred compensation plan, Guiles has $3.2 million. If fired, Guiles would receive $2.9 million. If ousted because of a "change-in-control" of the company, he would get $25.3 million.

IV. Other High-Paid Executives

SAIC

Kenneth C. Dahlberg

• CEO, chairman
• Salary $1 million
• Bonus $1.3 million
• Stock & option
• awards $3.6 million
• Other comp $1.5 million
• Total $7.4 million

Science Applications International Corporation is, according to its website, "a leading provider of scientific, engineering, systems integration and technical services and products to all branches of the U.S. military, agencies of the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security and other U.S. Government civil agencies." Dahlberg has been the CEO of SAIC for four years and chairman of the board for three. SAIC became a publicly traded company in October 2006.

Dahlberg's "other compensation" included a $1.5 million special cash dividend and $14,805 of matching funds and profit-sharing contributions. In addition, there were sums for financial planning, tax preparation, and "airline or social club memberships." The market value of his unvested stock awards is $1.8 million. He has $3.7 million in a "key executive stock deferral plan." And his severance package, structured much like other companies' severance deals, gives Dahlberg $14.4 million if he "is involuntarily terminated without cause or resigns for good reason within a 24-month period following a change of control." Dahlberg owns 327,089 shares, some held in a retirement plan and in trusts. On September 21, his shares were worth $6 million.

Amylin Pharmaceuticals

Ginger L. Graham

• CEO, director
• Salary $559,000
• Bonus $755,000
• Stock & option
• awards $4.4 million
• Other comp $69,000
• Total $5.8 million
• Exercised options $555,000

Amylin, named after a hormone produced in the pancreas by the same cells that secrete insulin, develops medicines for the treatment of diabetes and obesity. In 2006, Graham was CEO of Amylin; she's currently on the board of directors. Her "other compensation" included $726 for a life insurance premium and "$68,290 for certain living expenses, including tax gross-ups of $35,290, related thereto." Graham owns 1,289,583 shares, which on September 21 were worth $64 million.

Daniel M. Bradbury

• CEO, director
• Salary $457,000
• Bonus $463,000
• Stock & option awards $3.4 million
• Total $4.3 million
• Exercised options $1.9 million

Replacing Graham at Amylin in 2007 is Daniel M. Bradbury. Bradbury's tenure began this March; he had been president for almost one year and chief operating officer for the previous four years. On September 21, Bradbury's 1,135,685 shares had a value of $56.3 million. Starting with Amylin in 1994, Bradbury has accumulated options over the years. The company's stock price went south before it went north, which means the grant price of many of his options is low. The stock price in early 1992 was around $20 a share, tumbled in 1998 to 38 cents, and now is nearing $40.

Leap Wireless

S. Douglas Hutcheson

• CEO, president, director
• Salary $541,000
• Bonus $800,000
• Stock & option awards $4.1 million
• Other comp $22,000
• Total $5.5 million

In 2007, the shareholders of Leap Wireless approved the issuance of 3.5 million shares of common stock. This added to the 4.8 million authorized in 2004. The board argued that more stock was necessary "to provide long-term incentive grants on an ongoing and regular basis to motivate, reward, and retain key employees who create shareholder value." In the past, according to the proxy statement "equity awards have been issued to approximately 150 of our approximately 2,000 employees and to our five non-employee directors."

The chief beneficiaries are the top six executives of the company: the winner is S. Douglas Hutcheson. His outstanding options and unvested stock awards total 389,000 shares. Hutcheson owns 38,733 shares, which on September 21 were worth $3.1 million.

In 2006, Hutcheson's salary went from $350,000 to $550,000 in February and to $575,000 in May. For the year, he received $541,346. The compensation committee gave these raises after comparing Hutcheson's salary to CEO salaries at other wireless companies as well as "to recognize his proven ability to successfully manage our rapid growth." His bonus was $700,000, or 129 percent of his salary; he also got another $100,000 discretionary bonus.

If Hutcheson, who's been at the helm since 2005, quits or is fired for cause, he gets $179,178; if there's a "change-in-control" at Leap and he stays on, he gets $8.6 million; if there's a "change-in-control" and he's fired soon after new management takes over, he gets $14.9 million.

Pico Holdings

• Ronald Langley
• Chairman
• John R. Hart
• CEO
• Salary $1.1 million
• Bonus $4.2 million
• Other comp $29,000
• Total $5.3 million

Pico Holdings owns and operates real estate properties. In 2006, Langley and Hart earned the same amount. Langley is the beneficial owner of 8.94 percent of the company's shares. According to the proxy statement, of his 1,684,693 shares, 17,986 "are held in the Company's 401(k) Plan. Mr. Langley owns a membership interest in PICO Equity Investors Management, LLC, which has voting control of 1,666,667 shares of the Company."

Hart is the beneficial owner of 8.95 percent of the company's shares, or 1,685,750 shares. The proxy says, "19,083 of these shares are held in the Company's 401(k) Plan. Mr. Hart owns a membership interest in PICO Equity Investors Management, LLC, which has voting control of 1,666,667 shares of the Company." In addition, 19,940 shares of the company are held "in a deferred compensation plan Rabbi Trust for Mr. Hart."

Jack in the Box

Linda A. Lang

Chairman, CEO

• Salary $700,000
• Bonus $1 million
• Option
• awards $3.1 million
• Other comp $112,000
• Total $4.9 million
• Exercised options $1.1 million

Lang's "other compensation" included a $13,500 car allowance and $41,049 for financial planning services. Under "Other Benefits and Perquisites," the proxy statement says, 'The Company does not own or lease a Company airplane, purchase country club memberships, provide officers with the use of permanent residences, home security systems or defray the cost of personal entertainment or family travel."

Invitrogen

Gregory T. Lucier

• Chairman, CEO
• Salary $905,000
• Bonus $288,000
• Stock & option
• awards $3.6 million
• Other comp $20,000
• Total $4.8 million

Invitrogen is a biomedical technology firm. Lucier owns 68,649 shares, which on September 21 were worth $5.7 million.

Gen-Probe

Henry L. Nordhoff

• Chairman, CEO, president
• Salary $645,000
• Bonus $470,000
• Stock & option
• awards $3.5 million
• Other comp $64,000
• Total $4.7 million
• Exercised options $3 million

Gen-Probe makes products for use in the clinical diagnosis of human diseases. Nordhoff's 13,665 shares were worth $913,000 on September 21. His "other compensation" included travel expenses to attend a company retreat ($6677) and travel expenses for his spouse ($13,261). In 2000, Niall M. Conway, an executive vice president, was given a $100,000 interest-free loan "to assist him with the purchase of his initial residence in San Diego."

Illumina

Jay T. Flatley

• CEO
• Salary $463,000
• Bonus $149,000
• Stock & option awards $3.7 million
• Total $4.3 million

Illumina develops and manufactures tools and systems for genetic analysis. Flatley owns 568,382 shares, including some owned by his children. Flatley's shares were worth $30 million on September 21.

ResMed

Peter C. Farrell

• CEO
• Salary $614,000
• Bonus $470,000
• Stock & option
• awards $2.9 million
• Other comp $171,000
• Total $4.2 million
• Exercised options $2.5 million

ResMed produces products to treat sleep disorders and other respiratory disorders. ResMed paid $70,834 for Farrell's use of the private jet, which included universal weather monitoring costs, on-board catering, and landing/ramp fees. Expenses for Farrell's car include $48,848 for depreciation, registration, and insurance; "personal use of corporate club memberships" ran $7103. The value of Farrell's 987,292 shares on September 21 was $43.3 million. He also owns 586,000 options that are exercisable in 60 days, which, when added to the shares he owns, amounts to 2 percent of the company's outstanding stock.

NuVasive

Alexis V. Lukianov

• Chairman, CEO
• Salary $400,000
• Bonus $450,000
• Stock & option
• awards $2.4 million
• Other comp $26,000
• Total $3.3 million
• Exercised options $11,540

NuVasive is a medical device company. On September 21, Lukianov's 88,027 shares were worth $3.2 million. Perks at NuVasive comprise automobile allowances of $500 to $1000 per month, health club memberships ("initiation dues plus $250 to $1000 per month"), life insurance premiums, and entertainment.

Senomyx

Kent Snyder

• CEO, president, director
• Salary $400,000
• Bonus $134,000
• Stock & option
• awards $2.7 million
• Total $3.2 million
• Exercised options $479,000

Senomyx, a biotechnology company, uses taste-receptor-based assays to develop flavors for food and beverage products. Snyder's 71,036 shares were worth $883,000 on September 21.

Neurocrine Biosciences

Gary A. Lyons

• CEO, president, director
• Salary $600,000
• Stock & option
• awards $2.5 million
• Other comp $10,000
• Total $3.1 million

Neurocrine Biosciences develops drugs to treat neurological and endocrine diseases and disorders. Lyons owns 376,565 shares, which on September 21 were worth $3.9 million.

Realty Income

Thomas A. Lewis

• CEO, director
• Salary $350,000
• Bonus $685,000
• Stock & option
• awards $1.7 million
• Other comp $406,000
• Total $3.1 million

Realty Income is a commercial retail real estate business. Lewis owns 471,316 shares, including 170,816 shares owned by the Lewis Revocable Living Trust; on September 21, the shares totaled $13.3 million. William E. Clark Jr., cofounder and CEO of Realty Income for nearly 30 years, is now the chairman. His 886,836 shares, some owned by his trust and some by his wife's trust, on September 21 were worth $25 million.

BioMed Realty Trust

Alan D. Gold

• Chairman, CEO, president
• Salary $420,000
• Bonus $766,000
• Stock & option
• awards $1.2 million
• Other comp $96,000
• Total $2.5 million

BioMed Realty Trust is a real estate investment trust. Gold owns 1,561,207 shares, about three-fourths of which are defined as "limited partnership units." On September 21, the value of Gold's shares was $38.7 million. His "other compensation" included an automobile allowance of $12,000 and dividends of $64,650 "paid on unvested stock."

Cypress Bioscience

Jay D. Kranzler

• Chairman, CEO
• Salary $529,000
• Stock & option
• awards $1.6 million
• Other comp $42,000
• Total $2.2 million
• Exercised options $510,000

Cypress Bioscience provides products for disorders of the central nervous system. Kranzler's 256,724 shares were valued at $3.9 million on September 21. He also owns 1,629,671 options that are exercisable in 60 days, which, when added to the shares he owns, amounts to 5.6 percent of the company's outstanding stock.

Callaway Golf

• George Fellows
• CEO, president, director
• Salary $850,000
• Other
• comp $1.2 million
• Total $2.1 million

Callaway Golf makes golf clubs and golf balls. On September 21, Fellows' 22,456 shares were worth $356,000. His perks included a $639,000 reimbursement for relocation expenses and a $545,000 tax gross-up. "Consistent with the Company's position as a leader in the golf industry," the proxy states, "many executives are provided subsidized country club memberships and free use of the Company's products."

Imperial Capital Bancorp

• George W. Haligowski
• Chairman, CEO, president
• Salary $590,000
• Bonus $970,000
• Change in pension value $33,000
• Other comp $395,000
• Total $2 million
• Exercised options $805,000

Imperial Capital Bancorp is the holding company for Imperial Capital Bank. Haligowski's perks included $108,710 for "club memberships and meeting attendance-related expenses" and $60,960 for "chartered air transportation service." Imperial Capital also provides its executives with "use of a Company-owned automobile or automobile allowance." Haligowski's 193,573 shares include 164,308 "vested supplemental executive retirement plan ("SERP") account shares held in the Rabbi Trust we established," according to the proxy statement, as well as "29,265 shares held for Mr. Haligowski in his deferred compensation plan account in the Rabbi Trust." On September 21, Haligowski's shares were worth $6.2 million. Together with his 97,500 shares of options exercisable in 60 days, he owns 5.23 percent of the company's outstanding stock.

Cymer

Robert P. Akins

• Chairman, CEO
• Salary $548,000
• Bonus $853,000
• Change in pension
• value $103,000
• Other comp $18,000
• Total $1.5 million
• Exercised options $1.7 million

Cymer manufactures "excimer light sources," the "deep ultraviolet (DUV) photolithography sources" used in the semiconductor industry. Akins owns 25,794 shares, which on September 21 were worth $1 million.

Novatel Wireless

• Peter V. Leparulo
• CEO
• Salary $415,000
• Bonus $277,000
• Stock & option awards $626,000
• Total $1.3 million

Novatel Wireless provides devices and services for broadband wireless access. Leparulo was CEO until November 2006, when he became executive chairman and Brad Weinert became acting CEO. As of September 21, Leparulo's 64,085 shares were valued at $1.5 million.

DJO Incorporated

Leslie H. Cross

• CEO
• Salary $499,000
• Bonus $237,000
• Stock & option awards $522,000
• Total $1.3 million
• Exercised options $5.2 million

DJO manufactures devices for orthopedic, spinal, and vascular regeneration and rehabilitation. The value of Cross's 70,475 shares on September 21 was $3.4 million.

Nanogen

Howard C. Birndorf

• Chairman, CEO
• Salary $505,000
• Bonus $148,000
• Stock & option awards $496,000
• Other comp $34,000
• Total $1.2 million

Nanogen makes advanced diagnostic products in the health-care industry. Birndorf, a cofounder of the company, owns 565,552 shares, which on September 21 were worth $605,000. The company provides "Mr. Birndorf with administrative assistant services for personal matters," worth $28,750 last year, "and we have from time to time reimbursed Mr. Birndorf for the Company's use of his personal aircraft for business related travel." Nanogen's stock has fallen from a high of $13.68 on February 2, 2004, to 39 cents on December 21, 2007.

Cubic Corporation

Walter J. Zable

• Chairman, CEO, president
• Salary $686,000
• Bonus $250,000
• Other comp $70,000
• Total $1 million

Cubic Corporation manufactures defense electronics, military surveillance and combat-training systems, and automatic fare-collection systems. Zable, who is 92 years old, owns 40 percent of the company. According to the proxy statement, he is "deemed a 'Control' person of the Corporation." Zable owns 10,679,891 shares, which on September 21 were worth $484 million.

Encore Capital Group

• J. Brandon Black
• CEO, president, director
• Salary $385,000
• Bonus $354,000
• Total $739,000

Encore Capital Group provides bankruptcy services to the finance industry. The value of Black's 5000 shares on September 21 was $59,000.

Part Two

Pay for Performance

Most proxy statements contain some version of the following rationale for executive compensation. These statements are found in a section typically titled "Compensation Philosophy and Objectives." This one is taken from the proxy statement of DJO Incorporated, whose market capitalization as of October 1 was $1.2 billion. In 2006, its top five executives earned a total of $6.8 million.

"We compete in an aggressive and dynamic industry and, as a result, hiring and retaining quality employees are key factors to our success. Our compensation programs for executive officers are designed to (1) attract talented individuals who are capable of growing the Company, (2) retain key individuals, (3) motivate executive officers to increase the Company's performance for the benefit of stockholders, and (4) reward executive officers for exceptional individual contributions to the achievement of our business objectives. Our compensation programs are also designed to provide a direct, meaningful link between the Company's annual business plan and individual performance and compensation earned."

One way to evaluate an executive's worth is to link the stock price in a given year to the total compensation paid, a method that has several caveats. Variables such as the size of the company and profitability also affect pay. An executive's efficiency might be better measured by his or her performance over five years. But not all of these executives have been at the helm that long.

The stock price growth and drop in 2006 for San Diego companies whose executive pay is listed show wide variations. Six companies -- Qualcomm, Sempra Energy, BioMed Realty Trust, Callaway Golf, Cubic, and Imperial Capital Bancorp -- pay dividends, which contribute to total shareholder return. Also, earnings may rise while the stock price falls, as happened at Qualcomm in fiscal year 2006.

Mergers and acquisitions, an economy's boom and bust cycles, and political instability affect stock price. If a stock soars or plummets one year, an adjustment may come the next. One study found that on any given day 75 percent of a stock price's movement is determined by the movement of the group to which it belongs: utility stocks go up and down together, for example.

Despite all these variables, linking the stock price to the executive's pay is a simple way of considering compensation during a year of calm and steady growth. Two thousand six, at least on the economic front, was a healthy year; the S&P 500 index rose nearly 12 percent. The year carried no egregious shifts in world or national economies or politics that directly accounted for why these stock prices rose or fell.

Most efficient executives based on stock-price growth in 2006

Jay Flatley at Illumina was by far the most efficient CEO. Illumina grew 165.4 percent, for which it paid Flatley $4.3 million.

Jack in the Box's Linda Lang oversaw stock growth of 79.3 percent and was paid $4.9 million.

DJO's Leslie Cross was a real bargain. DJO's stock grew 55.1 percent, while Cross earned $1.3 million.

Leap Wireless paid S. Douglas Hutcheson $5.5 million; he oversaw stock growth of 53.7 percent.

ResMed's Peter Farrell earned $4.2 million; the stock grew 28.8 percent.

NuVasive paid Alexis Lukianov $3.3 million; he presided over stock growth of 26.2 percent.

Cypress Bioscience's Jay Kranzler received $2.2 million, while the stock grew 25.2 percent.

Realty Income paid Thomas Lewis $3.1 million; he oversaw stock growth of 24.8 percent.

Imperial Capital Bancorp's George Haligowski earned $2 million, and the stock grew 20.2 percent.

Cymer paid Robert Akins $1.5 million; he presided over stock growth of 19.4 percent.

BioMed Realty Trust paid $2.5 million to Alan Gold, and Gold helped the stock grow 17.7 percent.

Sempra Energy's stock price grew 21.5 percent in 2006, for which its top five executives were paid $25.2 million. According to Sempra's proxy statement, the company's cumulative five-year return to shareholders -- stock-price appreciation plus dividends -- has been 168 percent. In comparison, the average return of companies in the S&P 500 Utilities index has been 55 percent and in the S&P 500 index 35 percent.

Executives whose company stock price grew between 1.7 and 7 percent

Callaway Golf paid George Fellows $2.1 million, and he oversaw stock growth of 3.8 percent.

Walter Zable at Cubic earned $1 million; the stock rose 3.3 percent.

Gen-Probe's Henry Nordhoff made $4.7 million, and the stock grew 5.2 percent.

Ronald Langley and John Hart of Pico Holdings each made $5.3 million. They helped push the stock up 5.7 percent.

Kent Snyder was paid $3.2 million by Senomyx; the stock rose 7.1 percent.

Least efficient executives based on decline in stock price

By far the least efficient executive for the year was Gary Lyons. Neurocrine paid Lyons $3.1 million; he oversaw a stock price plunge of 83.6 percent.

Another inefficient executive is Howard Birndorf, a founder and longtime chairman and CEO of Nanogen. The company paid Birndorf $1.2 million, while the stock slipped 28.1 percent.

Encore Capital Group paid J. Brandon Black $739,000, while the stock went down 26.5 percent.

Novatel's Peter Leparulo earned $1.3 million, while he oversaw a stock price drop of 18.9 percent.

Invitrogen paid Gregory Lucier $4.8 million. The stock dipped 14.7 percent.

Amylin Pharmaceuticals' Ginger Graham received $5.8 million. Under her leadership the stock fell 9.8 percent.

Qualcomm executives also score low. In fiscal year 2006, the stock price fell 13 percent, while each of the top five executives was given a larger salary and bonus: Jacobs got a 131 percent raise; Altman, a 78 percent raise; Jha, a 69 percent raise; Keitel, a 55 percent raise; and Padovani, a 26 percent raise.

All this stock-price fluctuation invites a few questions. Why is an executive whose company's value rises significantly in one year (Cross, DJO; Kranzler, Cypress Bioscience) paid comparatively so little? Why does an executive whose company's value treads water or rises slightly (Fellows, Callaway Golf; Nordhoff, Gen-Probe) receive the same or more money? Why does an executive whose company's value drops spectacularly (Lyons, Neurocrine; Birndorf, Nanogen) given the same or more compensation? Why do boards whose companies may go bankrupt or be sold sign such generous severance packages for their top executives?

And last, what possible incentive could there be for corporate board members, themselves current and former executives and beneficiaries of sweetheart pay deals, to negotiate tougher contracts? If the executives they hire and guarantee anywhere from $10 to $100 million over time have led the spectacular boom in the American economy in the last 25 years -- from 777 to 13,400 points on the Dow Jones Industrial Average (1625 percent) -- why would anyone controlling such a system want to alter it?