The economic slowdown is already hitting executives where it really hurtsin their own wallets.


For the first time since 1996, executives of publicly traded companies in Spokane and North Idaho, on average, saw their paychecks shrink last year, though only slightly.


An annual Journal of Business analysis of the compensation of about 70 such executives found that their overall average pay, including perks and long-term incentive payouts but not stock options, dipped about 1 percentto about $266,000in fiscal 2000, based on figures disclosed by the companies in their most recent annual proxy statements. Counting just salary and bonuses, the average executives pay was stagnant last year, declining 0.2 percent to about $242,000.


And theres a first this year. Topping the Journals list of the 40 highest-paid public company employees is a woman, and she doesnt work in the natural-resource or high-technology sectors that typically dominate the top echelon. Shes Georgia Shonk-Simmons, president and CEO of Sandpoint-based Coldwater Creek Inc., the big clothing and specialty goods retailer. Her 2000 compensation totaled $633,465, up 35 percent from 1999.


Shonk-Simmons barely edged out Itron Inc. President and CEO LeRoy Nosbaum for the top spot. Nosbaums overall pay doubled last year to $632,798, due to his promotion in March 2000 to those posts and to performance bonuses.


Neither was in the top 10 last year.


Absent from this years analysis were two former CEOs whose overall compensation had driven annual executive pay over the $1 million mark. They were former Avista Corp. Chairman T.M. Tom Matthews, who left Avista last year and had 1999 total compensation of about $1.1 million, and Johnny M. Humphreys, the longtime Itron chief who retired in 1999 but led last years list with compensation of $1.26 million, due mostly to parting gifts.


Because the pay of those two executives and others who have left their posts here werent included in comparative figures in this years analysis, the absence of their million-dollar pay had no impact on this years average decline.


That decline is indeed unusual. In the three previous fiscal yearsand for that matter in most years the Journal of Business has conducted the annual analysisexecutive pay here has grown at a healthy pace. In fiscal 1999, overall executive pay here grew 4.1 percent and salaries and bonuses shot up 8.4 percent. The year before that, the percentage increases were 13.3 percent and 9.1 percent, respectively.


By way of comparison, The Wall Street Journal reported this spring that overall compensation among CEOs of the nations largest companies jumped 8.2 percent in fiscal 2000, to $2.9 million, while salaries and bonuses for those executives grew a healthy 10 percent, to $1.8 million. Both those percentage increases were below the gains such CEOs had a year earlier, but were still well above the average white-collar workers pay increase last year, which was 4.2 percent. (Note that the Wall Street Journal uses medianor midpoint in a rangerather than average, in its comparative calculations for executives. Median overall pay in the Spokane study fell a substantial 6 percent in 2000, while median salaries and bonuses dropped even more, 7.3 percent.)


Drawing conclusions from comparisons between national and local studies might be difficult, however, since the Spokane area has relatively few public companies, which means the ebbs and flows of the individual fortunes of such companiesand thus the prosperity of their executivescan sway overall averages noticeably.


More changes coming


One conclusion that can be drawn, says Spokane executive headhunter Jeannine Marx, is that the relatively soft local economy already is having an effect on executive pay here.


She predicts that the effect could be even more apparent in this years corporate proxies, most of which will be filed with the U.S. Securities and Exchange Commission beginning next spring.


Its inevitable that the salaries reflect the economy, says Marx, who owns JM Recruiting here. The economic downturn that we see reflected here (on this years list) will hit more noticeably next year.


Last year actually was a mixed bag for the 17 companies whose proxy statements were analyzed by the Journal this year. On average, their net incomes grew more than 136 percent, but that average was skewed by a huge jump in earnings by Avista due to energy-trading gains. Coeur dAlene Mines Corp., Potlatch Corp., Hecla Mining Co., Gold Reserve Corp., and Key Tronic Corp. all posted losses for 2000, and in each of those cases, their CEOs took cuts in overall compensation. But so, too, did the top executives of Sterling Financial Corp., Avista, and WestCoast Hospitality Corp., all of which posted net profits in 2000. On average, the stock prices of the companies analyzed this year fell about 10 percent.


Fewer and smaller bonuses were given in 2000. The average was about $31,000, with 45 executives getting nothing, compared with an average of $47,500 a year earlier and just 30 receiving no bonus. Long-term payouts and other compensation also declined. Salaries were stagnant.


Marx also sees another recent trend on the Journals list becoming more pronounced in the future. That is the mix of names and companies represented at its top. Five years ago, mining executives and execs of Washington Water Power Co. (now Avista) took 6 of the top 10 spots on the list. This year, the highest-paid Avista employee, Chairman, President, and CEO Gary Ely, is ranked 17th, with overall compensation of $332,983$300,000 less than Shonk-Simmons. Ely, however, was promoted to president and CEO late in the year, after Matthews resigned, and wasnt named to the additional post of chairman until this year.


Meanwhile, Coeur dAlene Mines, Hecla, and Potlatch each placed just one executive in the top 10, leaving the top of the list dominated by such companies as Coldwater Creek and Itron, with a normal showing of Sterling Financial Corp. Chairman and CEO Harold Gilkey at No. 8.


Also, due to changes at the individual companies, six of the top 10 executives listed last year left their posts during the 1999 fiscal year or since, and thus arent on this years list.


I think next year youll see the names on this list change again, says Marx, who predicts that natural resources companies will continue to be pushed farther down the list of highest-paid executives by execs of companies in other industries, such as technology. Watch also for employers such as Ambassadors International Inc. and WestCoast Hospitality Corp. to begin climbing the list, she says.


As for Georgia Shonk-Simmons arrival at the top, Marx says its a good sign, but that her ranking might not stick next year given the ever-changing fortunes of the companies analyzed for the list.


Its great to see a woman at the top of the list, because it sends a message that the glass ceiling can be broken, says Marx. Its a vote of confidence for women executives.


Still, Shonk-Simmons is one of only three women listed among the top-paid executives in the fiscal 2000 proxies of the 17 companies analyzed by the Journal this year.


The top executives


In addition to Shonk-Simmons and Nosbaum, the top 10 also includes Dennis Wheeler, chairman, president, and CEO of Coeur dAlene Mines, at No. 3; followed by L. Pendleton Siegel, chairman and CEO of Potlatch; Tom Scott, chief operations and information officer at Coldwater Creek; Russell Fairbanks Jr., general counsel at Itron; Donald Robson, CFO and treasurer at Coldwater Creek; Gilkey at No. 8; Arthur Brown, chairman, president, and CEO of Hecla, at No. 9; and tied for 10th, Coldwater Creek founders Dennis and Ann Pence, who serve as chairman and vice chairman, respectively, and each had total 2000 compensation of about $441,000.


CEOs who didnt make the top 40 include Anthony Paquin (41st), of financially troubled Medinex Systems Inc.; Victor Bradley (42nd), of Yamana Resources; Christopher Maus (47th), of Lifestream Technologies Inc.; Don Barbieri (48th), of growing WestCoast Hospitality; and John Ueberroth (50th), of Ambassadors.


For this story, the Journal tallied compensation in three general categories; salary, bonus, and other. The latter category typically includes a variety of compensation, from perks and relocation expenses to consulting fees, signing bonuses, and company contributions to various retirement plans. It also includes payouts under long-term compensation plans, including restricted stock awards. Restricted stock is stock granted outright to the executive, without cost to the employee, but with limitations on when it can be redeemed.


The Journal didnt include awards of stock options, the value of which can vary depending on the price at which a companys shares are selling when the options are exercised. Through stock options, an executive receives the right to buy a certain number of a companys common shares at a specified price.


The executive then has a certain period of time in which to exercise that right, and typically only a percentage of the awarded shares are exercisable, through a vesting schedule, each year during that period.


For example, Itrons Nosbaum was awarded options to buy 100,000 shares of the companys common stock last year at $6.75 per share, which was the market price at the date the options were issued.


Since then, though, Itrons stock has jumped in price to just under $20 a share, which means that if the stock holds that price long enough for all the shares to vest over the next few years, Nosbaum could earn a profit of roughly $1.3 million if or when he decides to exercise them.


In contrast, Key Tronic CEO Jack Oehlke was awarded 30,000 shares of that companys stock in 2000 at an exercise price of $2.81 a share. With Key Tronic shares currently trading at about $2 a share, those options are worthless for now.


Because the executive compensation levels studied for this story represent only the pay of executives of 17 publicly traded Inland Northwest companies for which disclosure information was available, they may or may not correspond to the compensation received by the execs of privately held concerns, which make up the bulk of Spokanes employers.


However, in a 1997 survey of 19 Spokane-area companies, most of which were privately held, the Associated Industries of the Inland Northwest found the median compensation of local CEOs to be about $144,800, while the median pay for top financial officers was $77,700, and top sales and marketing executives earned a median of $91,000. The median executive compensation in the Journals analysis of executives of publicly traded companies that year was $210,000.