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They’re back, baby.

After many chief executives at public companies in Maryland saw their pay decline for two years, a good number are now collecting bigger compensation packages, in line with a recent national study.

Eight CEOs of the 12 largest public businesses in the state in terms of revenues saw their pay rise last year, according to company proxy statements filed with the Securities and Exchange Commission. That was up from five of 12 in both 2009 and 2008.

The average compensation for those dozen Maryland CEOs increased by 49 percent last year from 2009, to $12.1 million.

National surveys showed a similar trend. The average CEO compensation at 747 public companies rose by 18 percent last year to $12 million, according to GovernanceMetrics International, a New York corporate governance information company.

Another survey of 200 businesses by Equilar, a compensation consulting firm in Redwood City, Calif., found compensation rising by 12 percent to $9.6 million last year. That followed two years of declines for CEOs, according to both GovernanceMetrics and Equilar.

The recovering economy is fueling more robust corporate earnings, which are driving the top pay increases, said Aaron Boyd, head of research at Equilar.

“A lot of the jump in pay had to do with two previous years of declines and the improving economy,” Boyd said.

The list of the highest-compensated CEOs at Maryland public companies in 2010 had a new name at the top: David M. Zaslav, head of Silver Spring broadcasting giant Discovery Communications. He jumped ahead of the 2009 leader, Lockheed Martin chief Robert J. Stevens.

Zaslav was paid a total of $42.6 million last year, with more than 80 percent of that in stock and option awards. His compensation was 265 percent more than the $11.7 million he received in 2009.

Discovery did not have any comment beyond what was in the company’s recent proxy filing, spokeswoman Michelle Russo said. In determining Zaslav’s compensation, a Discovery committee considers factors that include the company’s revenues, profits, advertising sales growth, market capitalization, shareholder return, data from publicly traded peer companies such as Time Warner Cable and how he met performance goals, executives said in the filing.

Discovery’s revenues rose by 9 percent in 2010 from 2009 to $3.8 billion, while its profit jumped by 19 percent to $653 million. Discovery’s stock price soared to $41.70 on Dec. 31 from $30.67 a year earlier.

Performance-based pay for Zaslav is weighted toward equity compensation “to closely align management’s interests with the interests of our stockholders,” executives said.

Meanwhile, Stevens last year saw his total compensation decline for the third consecutive year to $21.9 million since rising to $30.9 million in 2007. The main difference from 2009 was $2.5 million less in stock options. Lockheed’s stock price slid slightly last year to $68.59 on Dec. 31 from $71.33 a year earlier.

“The decline in stock price led to a decrease in the value of the executives’ equity compensation,” executives with the Bethesda military, aerospace and information technology giant said in the proxy filing. But sound financial results, including a rise in revenues of almost $2 billion, resulted in a larger annual bonus, though “heightened concerns about product and service affordability” led officials to not award a merit increase in salary.

Nolan Archibald, former CEO of Black & Decker, would have been second on this year’s list if the toolmaking company was still based in Towson. Black & Decker last year was purchased by the Stanley Works of New Britain, Conn., and Archibald became executive chairman of the combined business. He saw his compensation more than double last year to $28.2 million after a slight decline in 2009, with more than 80 percent of that in stock and option awards.

Rothblatt highest-paid woman CEO

Martine Rothblatt, CEO of Silver Spring biotech United Therapeutics, was again the highest paid woman executive in Maryland, with a total of $17.6 million, about the same as in 2009.

But more than 80 percent of that is in stock options, noted Andrew Fisher, the company’s chief strategic officer and deputy general counsel.

“If our market capitalization doesn’t increase in a given year, she does not receive equity-based incentive options in that year,” he said. “We think this is perfectly aligned with our shareholders’ interests. If the stock price goes up, shareholders are happy and Martine receives an option grant.”

Moreover, that figure is misleading if considering the present day market value of those options, Fisher said. United Therapeutics’ stock has declined from $63.22 on Dec. 31 to $53.86 on Thursday.

“Those options are presently under water,” Fisher said. “They’re only worth something if the stock price is higher than the strike price, which is currently not the case.”

But in many cases, a company’s board of directors resets the strike price the defined price at which the holder of options can buy or sell the securities to allow executives to make money from the options, according to studies in financial journals. Executives often must wait several years to cash in those options.

A key reason for the waiting time is to encourage top executives to create long-term sustainable growth, not just short-term results, Boyd said. The practice of resetting strike prices has declined as the economy has improved, he said.

While tying a substantial part of a CEO’s compensation to equity has benefits to shareholders, there are concerns that focusing too much on stock prices can hurt other parts of the business, Boyd said.

Stock options also helped H. Thomas Watkins, CEO at Rockville biotech Human Genome Sciences, climb into the top 10 highest compensated executives in Maryland. Watkins pulled in $9.9 million last year, including $8.4 million in stock option awards.

Historically, Human Genome has relied solely on stock options to provide equity incentives for top managers, executives said in the proxy statement. The company has awarded restricted stock to executives more in recent years.

In determining the size of a stock incentive award, Human Genome’s compensation committee considers company performance, competitive data and the executives’ responsibility and performance. “Most importantly, since the stock incentive award is meant to be a retention tool, the compensation committee considers the importance to stockholders of that person’s continued service,” executives said.

Company spokesman Jerry Parrott said HGS had no further comment on Watkins’ compensation.

At Constellation Energy Group of Baltimore, the direct compensation of CEO Mayo Shattuck III last year was roughly the same as in 2009 at about $12 million, said Lawrence McDonnell, a company spokesman.

“His cash compensation actually declined, and a larger share of his pay was linked to equity,” McDonnell said. “Our compensation program is very clearly linked to performance and aligned with shareholder interest.“

Constellation also doesn’t think changes to a CEO’s retirement plan should be an element of annual compensation, because it is earned over a career and the value tends to change each year, he said. The value of Shattuck’s retirement plan increased by about $5 million last year, about the same as the jump in his overall compensation noted in the proxy.

More say on pay

With a relatively slow economic growth so far this year, CEO compensation probably will settle down, Boyd said.

Another factor could put a damper on CEO pay. Most public companies are conducting nonbinding shareholder votes on executive compensation as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which became law last year.

Through mid-June, shareholders at public companies have supported management pay plans 91.2 percent of the time, according to Rockville proxy advisory firm Institutional Shareholder Services. That was higher than the 89.2 percent approval rate in 2010, when “say on pay” votes were mandated only at federally supported financial firms.

Among the companies where negative votes were recorded was Constellation Energy, where investors holding 61 percent of the shares voted against the compensation plan. The concerns appeared to center around “pay-for-performance concerns,” according to an ISS report. Constellation posted a net loss of $932 million last year, following earnings of $4.5 billion in 2009.

Shareholders at Stanley Black & Decker also cast a negative vote, with concerns over an employment agreement with Archibald that provides for three years of guaranteed equity awards.

The increased number of “say on pay” votes has helped make shareholder meetings more consequential, said Marc Goldstein, head of governance research engagement for ISS.

“The days of the ‘Wall Street walk’ are largely over,” Goldstein said in a statement. “Investors often are unwilling or unable to simply sell shares when concerns arise about how a company is managed…. The financial crisis continues to be a stern reminder of the consequences of poor governance and lax oversight.”

kshay@gazette.net