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CEOs are taking a hit from the recession - less total compensation, smaller bonuses, nearly worthless stock options - but their companies are already making adjustments that could mean fatter paychecks in the future.

An Associated Press analysis shows the median pay package for CEOs of companies in the Standard & Poor's 500 index fell 7 percent to $7.6 million in 2008.

And the potential hit to their pocketbooks could be even larger if stock prices don't rebound. One clue: 90 percent of the $1.2 billion in CEO stock options granted last year are "under water," meaning the current stock price is too low to yield a profit, the AP analysis shows.

Boards already are trying to cushion the blow. The AP found that some have changed the rules to make it easier for executives to qualify for bonuses. Others are doling out more stock options, which give executives the right to buy shares in the future at prices locked in today.

Other findings in the AP's analysis:

_ Four of every five CEOs took home a cash bonus, despite the fact that the stock prices of the companies in the survey fell by an average 36 percent and profits fell 31 percent.

_ The median payout in cash for salary and bonuses fell 20 percent from a year earlier to $2.4 million. But that's still 48 times what the average U.S. worker makes, based on the most recent government figures.

_ Of the 10 CEOs who took the biggest pay cuts last year, four were heads of financial services companies. Overall, the heads of companies that develop and process raw materials - including supplies for construction, steel and glass, and paper products - took the biggest hit. That group's median compensation shriveled 26 percent to about $6.3 million.

Since the economic meltdown, pressure has grown from shareholders, Congress and President Barack Obama for boards of directors to rein in executive pay. But even with all that scrutiny, experts on CEO compensation say it's too soon to call the 2008 decline in pay the start of a trend.

"I wouldn't yet say this is a watershed moment for executive compensation. This is a watershed opportunity," said Jesse Brill of the Web site CompensationStandards.com and one of the nation's foremost experts on CEO pay. "I am fearful too many boards won't take a hard stance to enforce significant change."

There are already examples of corporate boards setting CEOs up for a potential windfall. Many made large stock grants in the first few months of 2009, when stock indexes dipped to levels not seen in more than a decade. The S&P 500 has rebounded more than 30 percent from its early March low, though it's off 44 percent from its October 2007 peak. Given the timing of the early 2009 stock awards, a sustained stock market recovery would supercharge the profits when these options are exercised.

SunTrust Banks illustrates how the rules of the game are changing. Its board voted in February to grant CEO James Wells options on 1.1 million shares, more than four times the number he received in 2008. That unusually big award became a target of shareholder groups, and in April the company said Wells had declined the full amount and would accept only half, 550,000 options. He will have to meet performance goals to earn slightly more than half of those options.

The exercise price on the 2009 grants is about $9 a share, reflecting the bank's stock price in February when it was close to an 18-year low. A year earlier his options had an exercise price close to $65, where the shares were then trading. SunTrust shares now are at $15, meaning that while Wells' 2008 options are deep under water, his 2009 options already are in the money to the tune of about $3 million.

The AP analysis is based on the compensation disclosures of 309 companies in the S&P 500 that filed proxy statements with federal regulators through April 20 and had the same CEO for the last two years. The overall AP database also includes 78 chief executives who headed their companies only in the second year. Company stock market and earnings performance figures were provided by Capital IQ, a unit of Standard & Poor's.

The AP formula shows how corporate boards value pay packages for their executives. It adds up salary, perks, bonuses, preferential interest on deferred pay, and the value a company puts on stock options and stock awards on the day they were granted last year.

When boards grant stock options to executives, they assign an exercise price that typically mirrors the share price on the day of the option grant. Most companies give CEOs several years to decide whether to exercise the options. If the stock does well, the payoffs can be enormous.

To put a value on a CEO's stock compensation, the company relies on formulas that make assumptions about how its stock will appreciate over the life of the options and what the resulting profit value will be for the CEO when the options are exercised.

If a company's stock has fallen sharply since options were granted early in 2008, the stock will have to rise sharply for a CEO to realize the original value the company put on the stock compensation.

The median compensation of $7.6 million means half of the CEOs in the AP sample made more than that and half less. That was down about $585,000 from 2007.

Chesapeake Energy CEO Aubrey McClendon topped the AP list with a total package of $112.5 million, even though his company's stock price fell nearly 60 percent last year. Motorola co-CEO Sanjay Jha was second with $104.4 million. It was the first time since AP started analyzing CEO pay three years ago that anyone topped $100 million.

McClendon's total was inflated by a $75 million bonus he received on Dec. 31 as part of a new employment contract. He owns a stake in some of the company's wells, and the company said his bonus payment will go toward his portion of the cost of developing and maintaining them.

The bonus came two months after McClendon was forced to sell more than 31 million shares of Chesapeake stock - valued at $550 million and down from a peak of $2.2 billion only three months earlier - to cover bank demands for repayment of loans. The huge sale helped further drive down the stock price last fall.

Chesapeake said in regulatory filings that McClendon's overall pay reflects his role "in shaping the vision for the company and growing it into the largest independent producer of U.S. natural gas."

There were similar examples of a mismatch between pay and stock performance throughout corporate America. At 104 companies in the AP sample, the chief executive's bonus got fatter even though the stock price declined.

Carol Bowie, head of the Governance Institute at RiskMetrics Group, a financial risk management firm, said that is part of a troubling trend. "Executives have been richly rewarded over the last decade because of market trends, not necessarily because of superior performance. Now, when the market trend goes the other way, they want to be bailed out," she said.

Motorola's Jha was an example of how many executives' total pay is heavily weighted in stock options and stock grants. Overall, such compensation accounted for 58 percent of total pay in the AP's larger sample of 387 companies.

Jha was a rising star at Qualcomm when Motorola wooed him last year with a package made up almost entirely of stock grants and options; the company valued them at $103.5 million on the day they were awarded in August, when the company's stock was around $10 a share.

Even though Motorola shares have since fallen to about $6, the 3.6 million stock grants he will receive over the next three years - effectively a signing bonus - still are worth more than $21 million.

But for Jha to wind up realizing the $104.4 million that Motorola valued his 2008 compensation at, he must engineer a turnaround of its struggling cell phone business and propel Motorola shares well above $10 a share. His 16.5 million options don't turn profitable until the stock reaches that level.

The 10 highest-paid CEOs on the AP list received packages totaling $538 million, $50 million less than the top 10 in 2007.

Four of the top earners in 2008 came from financial services companies - Goldman Sachs, American Express, Citigroup and JPMorgan Chase. All received money from the government's Troubled Asset Relief Program. But most of their pay was inflated by stock options and awards granted early in the year for their performance the year before. And most of the options are under water. None got bonuses for their work in 2008.

Even more stark was Morgan Stanley's John Mack, who received no raise, bonus or stock options. His salary and perks came to $1.2 million - 97 percent below the $41 million he made the year before. But it could have been worse. Morgan Stanley and Goldman Sachs were the only two of the big five Wall Street investment houses that survived the year.

In some cases, boards offered bonuses but CEOs turned them down.

Directors at General Electric wanted to give Jeffrey Immelt a bonus even though he missed every one of the six performance goals set for him, a list that includes revenue and earnings targets. The company explained in its proxy statement that Immelt "performed well in an extraordinarily tough business environment."

Immelt declined.

"Earnings came in well below where we expected. The broad equity markets, and GE's stock price, declined significantly in 2008," Immelt explained on the company's blog.

Robert Iger, head of Walt Disney Co., gave up a $2.4 million bonus. He was eligible for it partly because Disney stock, which fell 3 percent during its last fiscal year, was less than the S&P 500's 20 percent decline over the same period. (Iger still came in at No. 3 on the AP list for his total package - $51.1 million.)

Iger and others acted in the midst of populist anger over corporate riches at a time of growing economic pain for most of the country.

Already, the government is taking steps to limit bonuses and severance packages at companies that get bailout money. At the same time, those who set executive pay - board members, working with attorneys, corporate human resource officials and outside compensation consultants - are under increased pressure to clamp down, said Brill, the executive pay expert.

"Fear and self-preservation are great motivators," he said. "No one wants to be named in a lawsuit or in any way get negative publicity."

One of the nation's top pay advisers, Frederic Cook, is calling on companies to tie pay to long-term corporate performance, not short-term fluctuations in the stock price.

"The American public and their elected representatives will no longer support companies who put their executives' self-interests and net worth ahead of the company and its stakeholders," Cook said in a March 18 letter to his clients, including McDonald's, Gap and Eastman Kodak.

Some companies are scaling back, with boards or CEOs driving such decisions. Dow Chemical, which shuttered 20 plants and laid off 11 percent of its work force in recent months, gave CEO Andrew Liveris stock awards worth $5 million in 2009, down from $11 million in 2008. Southwest Airlines CEO Gary Kelly voluntarily reduced his base salary by 10 percent, which would bring it down to about $400,000 for 2009, and he won't get a raise until the company's earnings improve.

But some companies are making it easier for executives to come out winners. Some are raising salaries. Others are tossing out old performance factors that tied pay to stock returns and profits and replacing them with measures some pay experts say are easier to achieve, such as revenue and cash flow targets.

Chip maker Altera said it will let the board weigh "significant individual contributions" to justify executive bonuses even when the company "fails to meet a challenging financial performance metric."

Altera also boosted the number of shares of restricted stock given to top executives because their current value is considered too low to retain them. CEO John Daane will be eligible for up to 250,000 shares this year, versus 100,000 in 2008. He stands to make about $2.4 million more from the larger grant, based on the current stock price of about $16.

Given these crosscurrents, it's too soon to say what happens next to executive pay.

Earlier this decade, public outrage followed corporate scandals at Enron and WorldCom, but attention shifted away as the stock market and economy rebounded.

"Every time we are in a crisis, you hear this is it for CEO pay," said RiskMetrics' Bowie. "The reality is, when the crisis passes, things tend to go back to business as usual."

Associated Press Writers Erin McClam, Nicoletta Ratti, Vinnee Tong, Erin Conroy, Tali Arbel and Chris Kahn contributed to this report.

Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed

Analytics firm says developers should promote other apps, solicit reviews and send viral invites to make money.

WASHINGTON, D.C.--The White House's $3.6 trillion budget, outlined Thursday, provides a broad plan for government spending during the next decade and a road map for slashing the deficit from $1.75 trillion to $533 billion by 2013. But its true value may be in what it says about how Americans will be taxed during that same period.

Specifics of the Obama administration's budget plan won't be unveiled until April--standard procedure for a first-year president. But many of the broad strokes are campaign promises finally put to paper, causing worry from some quarters of the business community. "There's a significant business tax increase suggested in this budget," says Clint Stretch, a tax expert at Deloitte Tax LLP in Washington.

Among them is the closure of tax "loopholes" for the oil and natural gas industries, raising revenue by $32 billion over the next decade. In part, the money would come from reinstating an excise tax on oil and gas from the Gulf of Mexico. It would take away a tax deduction that treats oil and gas as manufactured goods. And it would repeal provisions that allow some drilling costs to be counted as expenses instead of an investment.

The industry, obviously, is not happy. "New taxes could mean fewer American jobs and less revenue at a time when we desperately need both," says Jack Gerard, president of the American Petroleum Institute. Less revenue? Higher taxes would discourage oil and natural gas investment domestically, sending it overseas, he argues.

Another major concern is a very vague line item that calls for better implementation of international tax enforcement, reform of tax deferral for income earned and kept overseas, and "other tax reform policies." It's expected to raise revenues by $210 billion during the next 10 years.

Business groups don't like what they see. "We've all been invited to the dinner, but some of us turn out to be the main course," says Martin Regalia, chief economist for the U.S. Chamber of Commerce.

Of course, not all proposals affecting business are tax hikes. As he proposed on the campaign trail, Obama's budget calls for an elimination of capital gains taxes on small businesses, which would begin to take effect in 2014. A permanent expansion of the "research and experimentation" tax credit would take effect in 2010, costing $74.5 million over a 10-year period.

Also assumed is an expansion of a tax provision that allows businesses to carry back current losses to prior years when they were profitable. That means they can get big refunds from the Treasury now from the taxes they paid in their profitable years. The details aren't spelled out, but PriceWaterhouseCoopers tax expert Lindy Paull says the figures indicate that the "carryback" period will be five years for all businesses.

President Barack Obama's economic team tried to keep Democratic allies negotiating the stimulus bill from limiting paychecks for executives at banks in need of a bailout. Treasury Secretary Timothy Geithner and economic aide Lawrence Summers failed.

Sen. Christopher Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee, inserted strict rules into the $787 billion economic stimulus package over the White House's objections. Dodd's limits on bankers' bonuses are significantly more aggressive than those sought by Obama or Geithner in recent days, with much fanfare.

Dodd, D-Conn., said the restrictions - an executive making $1 million a year in salary could receive only $500,000 in bonus money, for example - are necessary if Obama plans to ask Congress for more money to save the financial sector.

"It will never happen as long as the public perceives that there are people getting rich," Dodd said in an interview. "Save their pay or save capitalism."

That tone among Democrats flavored much of the discussion about how to write the stimulus bill, which the president could sign as early as Monday. Despite direct appeals from Geithner, Summers and White House officials, Democrats didn't budge, according to administration officials.

The Obama administration's proposed restrictions applied only to banks that receive "exceptional assistance" from the government. It set a $500,000 cap on pay for top executives and limited bonuses or additional compensation to restricted stock that could only be claimed after the firm had paid the government back.

The stimulus bill, however, sets executive bonus limits on all banks that receive infusions from the government's $700 billion financial rescue fund. The number of executives affected depends on the amount of government assistance they receive. But as a rule, top executives will be prohibited from getting bonuses or incentives except as restricted stock that vests only after bailout funds are repaid and that is no greater than one-third of the executive's annual compensation.

President-elect  Barack Obama calls it "the largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s." New York Mayor Michael R. Bloomberg compares it to the New Deal -- when workers built hundreds of bridges, dams and parkways -- while saying it could help close the gap with China, where he recently traveled on a Shanghai train at 267 mph.

Most of the infrastructure spending being proposed for the massive stimulus package that Obama and congressional Democrats are readying, however, is not exactly the stuff of history, but destined for routine projects that have been on the to-do lists of state highway departments for years. Oklahoma wants to repave stretches of Interstates 35 and 40 and build "cable barriers" to keep wayward cars from crossing medians. New Jersey wants to repaint 88 bridges and restore Route 35 from Toms River to Mantoloking. Scottsdale, Ariz., wants to widen 1.5 miles of Scottsdale Road.

On the campaign trail, Obama said he would "rebuild America" with an "infrastructure bank" run by a new board that would award $60 billion over a decade to projects such as high-speed rail to take the country in a more energy-efficient direction. But the crumbling economy, while giving impetus to big spending plans, has also put a new emphasis on projects that can be started immediately -- "use it or lose it," Obama said last week -- and created a clear tension between the need to create jobs fast and the desire for a lasting legacy.

"It doesn't have the power to stir men's souls," said David Goldberg of Smart Growth America. "Repair and maintenance are good. We need to make sure we're building bridges that stand, not bridges to nowhere. But to gild the lily . . . where we're resurfacing pieces of road that aren't that critical, just to be able to say we spent the money, is not what we're after."

Minneapolis Mayor R.T. Rybak is proud that his city was able to quickly rebuild the Interstate 35 bridge that collapsed into the Mississippi River in 2007 while making sure to include capacity for a future transit line on it. But he worries that many of the road and bridge upgrades around the country will not be done in a similarly farsighted way, given the time pressures.

"The quickest things we can do may not be the ones that have the most significant long-term impact on the green economy," he said. "Unless we push a transit investment, this will end up being a stimulus package that rebalances our transportation strategy toward roads and away from [what] we need to get off our addiction to oil."

Mayors say there would be a better chance for a long-term impact if the money were focused on metropolitan areas where investments could make the most difference in reducing congestion and lessening dependence on cars. They doubt that will happen if infrastructure funding goes directly to state capitals.

In Seattle, Mayor Greg Nickels said that the list of projects submitted by Washington state included only one in Seattle, for a ferry dock, while the city has ambitious hopes for removing a hulking highway ramp in a revitalized neighborhood and accelerating a light-rail expansion.

"Metro areas really are the engines of the economy, and to the extent that this can go directly to the metro areas rather than a cumbersome state process, it will have more effect," Nickels said. "States can do a nice job in rural counties, but in metro areas it's not always a good relationship or very nimble."

As it stands, Congress, wanting to keep things simple, plans to disburse the money under existing formulas -- funding for roads and bridges will go to state governments, while money for public transit will go to the local agencies that receive transit funding.

State officials are playing down concerns about their proposed projects' value. New Jersey Gov. Jon S. Corzine said repairing a swath of roads and bridges is ambitious in its own right. "We could spend money on further provision of rail to Port Elizabeth and Port Newark, but if the highways weren't paved, we actually wouldn't have the ability to have the trains get to the spot to take the goods to the local distribution outlet," he said. "Those deferred maintenance investments are fundamental to maintaining a capital infrastructure."

Oklahoma transportation director Gary Ridley justifies his state's wish list in similar terms. Its highway pavements "are probably 40 years old, and some of them have been replaced, but a lot of them haven't," he said. "It's not like we're grabbing these out of the air."

Timely tips for calculating the right pay package for big decision-makers.

Physical crime may not pay, but cybercrime certainly does--and it pays big for those with the know how to take advantage of it. Moreover, in some countries where technology is still in its infancy and laws don't exist or are only vaguely defined, it's even semi-legal.

On one level, this should come as no surprise. Laws often take years to catch up to technology. In places where technology is still developing, it will take even longer. But even in established economies it takes time to comprehend all of the ramifications of new technology and to figure out how that technology is actually used and misused.

Yet there's another level. Because the Internet is an open highway for data moving in all directions, it means criminals can work in one or more geographies, individually or in gangs. It also means they can reach across international boundaries and grab whatever they can through a variety of means--phishing, pharming or spear-phishing--without ever stepping foot in the country where the crime is committed.

Bad people with bad intentions do exist and, when they can get away with it, they often do bad things. For corporations, that poses both philosophical and legal problems--both of which fall squarely on the chief information officer's shoulders.

On the philosophical side, the biggest question is just how open should a company be? The free exchange of ideas is vital to an innovative company. In fact, the more the better, even if most of them aren't useful, and that generally requires interaction with the outside world. Locking down a corporate enterprise to keep out the bad guys is roughly the equivalent of air travel after 9/11. Prior to that, it was an acceptable mode of transportation. Now it's time-consuming, inconvenient and often just plain miserable.

Most people don't want to work in an ultra-secure environment, so it's up to the CIO to find a happy medium between the open, free flow of ideas and the legal problems that can ensue if company data gets out. That includes everything from intellectual property, which can be used by a competitor, as well as customer data that can create havoc if it falls into the wrong hands.

Corporations are entrusted with keeping personal information private. Adhering to minimum industry standards is no guarantee data won't get stolen or the company won't get sued. Even if a company ultimately wins in court, lawsuits are expensive to defend and can chip away at a company's well-earned image.

Former executives who oversaw massive losses at Swiss banking giant UBS AG will repay a further 22 million Swiss francs ($18.45 million), Chairman Peter Kurer said Thursday.

The repayments by the unidentified individuals bring to nearly 70 million francs ($59 million) the amount of money handed back to the bank by former executives over the past year.

"I am continuing to hold talks concerning further repayments and waivers, and would greatly welcome it if it comes to that," Kurer told a special shareholders meeting.

Kurer said he was treating the latest repayments as confidential.

He said UBS (nyse: UBS - news - people ) was way ahead of other major banks in retrieving performance pay from executives whose decisions turned out to have contributed to the bank's losses in the global financial meltdown. It also is taking a pioneering role in tying conditions to any future bonuses, he said.

Pressure has been growing on the former executives to give back bonuses and other payments since UBS received a nearly $60 billion state bailout package last month.

Shareholders at the meeting voted overwhelmingly to accept conditions contained in the bailout, including a capital increase and issuance of mandatory convertible notes worth 6 billion francs.

A former executive of a New York company that ran dozens of Days Inn hotels has pleaded guilty to tax fraud and agreed to pay $105 million.

Federal prosecutors in Manhattan announced Friday that Stanley Tollman entered the plea via video link from London. The 78-year-old was immediately sentenced to one day of probation.

He agreed to pay $60.3 million in restitution to the Internal Revenue Service and $44.7 million to settle a civil forfeiture action arising from the multimillion-dollar tax evasion scheme.

Prosecutors say English courts ruled against extraditing Tollman earlier this year because of his wife's poor health.

Tollman was a principal in Tollman-Hundley Hotels, which owned and managed more than 50 Days Inn hotels nationwide.