How much are executives really paid?

'Fair-value'
You'll also find perks under "Other Annual Compensation." When companies hand out perks worth more than $50,000 or 10% of salary and bonus, they're required to disclose the entire amount. The SEC plans to lower this threshold to $10,000, but some firms already divulge everything, says Doubleday. Analog lists no perks for Fishman in 2005.

The compensation table also discloses stock option awards. In 2005, Analog gave Fishman options to buy 400,000 shares. To ascertain the value of that grant, go to table 2, where companies are required to disclose either a grant's "fair value" or its potential payout under two scenarios, a 5% and a 10% annual rise in the stock price. Since the 5% and 10% projections tell you nothing about the current value of the stock option award, Beresford ignores them and calculates an approximate fair value instead. He scans the most recent annual report for the footnote on "stock-based compensation." There, Analog publishes a fair value for its employee stock options of $10.85 a share in 2005. To calculate the fair value of Fishman's options grant, simply multiply this $10.85 per share by the 400,000 options in his package. The result, $4.34 million, is very close to the fair value of $4.33 million that Analog voluntarily discloses in a separate table.

How much of that $4.3 million should you include in Fishman's 2005 paycheck? Since the grant spans five years, it's reasonable to include only one-fifth, or $866,000. Do the same exercise with past options grants, counting only the portion of each that vests in 2005, says John LaBarca, senior analyst at the Center for Financial Research & Analysis in Rockville, Md. The total estimate, $10.3 million, brings Fishman's pay package to $12.7 million (not including the $7.7 million of interest missing from the table). Paul Hodgson, senior research associate at the Corporate Library, takes a simpler approach. When calculating annual pay, he disregards options grants and factors in the "value realized" from exercising options instead. In a table, Analog reveals that Fishman netted $2.85 million this way in 2005. Whatever method you use, be consistent. And count grants or exercises, but not both.

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The last column of Analog's Summary Table reveals that Fishman earned $65,165 in "All Other Compensation" in 2005. This is the company's matching contribution to his retirement savings.

The fine print also indicates that Fishman is entitled to a golden parachute if he leaves or is forced out within two years of a takeover or merger. Analog voluntarily reveals that as of Jan. 1, 2006, Fishman would have received $9.6 million. If the SEC gets its way, firms will be required to publish such estimates starting next year. For now, though, most proxies merely describe how much bonus and salary a CEO stands to receive in severance. Up to three times the most recent salary and bonus is common. But the biggest payouts often come from provisions such as accelerated vesting of stock options and reimbursement for a 20% excise tax on parachutes with more than three years of compensation. While you'll find details in a "change in control" agreement attached to the 10-K or in an 8-K filed in the year the agreement was signed, you're unlikely to get enough information to value the package.

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