Monaco's woes hit CEO in the wallet.

Byline: Tim Christie The Register-Guard

COBURG - Monaco Coach Corp. had a tough year in 2005 - both sales and profits were down - and, as a result, chairman and CEO Kay Toolson suffered the consequences.

Toolson earned no bonus last year, and his total compensation for leading the Coburg RV maker was cut nearly in half from 2004.

Toolson still did well for himself - he earned $881,285 in salary and other compensation, plus 15,000 stock options worth $91,000, according to a proxy statement prepared for Monaco shareholders in advance of the May 17 annual meeting.

But that compensation is only a little more than half of what he earned in 2004: $1.6 million, of which $223,500 was salary and $1.34 million was bonus, plus 10,000 stock options.

Executive compensation at publicly traded companies has come under greater scrutiny in recent years, and shareholders have become more vocal when they believe that executives are overpaid - or when that pay isn't tied directly to company performance.

A survey by the Corporate Library, a Portland, Maine, governance firm, found that CEO pay continued to climb in 2005, although not as rapidly as in previous years.

The median pay of CEOs rose 11.3 percent in 2005, according to the survey of more than 550 companies; CEO pay at the largest firms rose 3.7 percent to a median of $5.2 million.

"Unfortunately, CEO pay hasn't slowed down that much, but it has slowed some," said Alex Higgins, an executive compensation analyst with The Corporate Library.

"It's not necessarily about paying too much - it's about whether their pay is tied to performance," she said. "If you see these executives making millions a year yet shareholders are suffering losses, that's when people get angry."

At Monaco, compensation is tied to performance, which is why Toolson and other top executives received no bonuses in 2005, said Rick Kangail, Monaco's vice president of human resources.

"We have performance measures directly tied to business performance, and the achievement of those is an indication that the business is doing well," he said. "We did not achieve those performance measures last year."

Fortunately for Toolson, his base pay more than tripled in 2005.

Monaco's compensation committee, made up of independent board members, hired an executive compensation consulting firm in late 2004 to study the competitiveness of the company's pay program, the proxy statement says.

The study found that Monaco's executive base salaries were generally "well below' competitive levels; executive pay was "highly leveraged," meaning base pay was below market but was offset by the potential for significant annual bonuses; and long-term incentives were significantly below market levels.

As a result, the board adjusted base pay to the 50th percentile of executive pay at 19 similarly sized companies.

Toolson's base salary was adjusted from $233,500 in 2004 to $850,000 in 2005, an increase of 264 percent, and his annual bonus incentive opportunity was reduced.

When Monaco did not meet its performance goals last year, Toolson and other top executives did not earn bonuses, "even though the (compensation) committee believes that Mr. Toolson demonstrated extremely strong corporate leadership during this challenging period," the proxy statement says.

Also, in March 2005, Toolson was granted a long-term equity award - namely, options to buy 15,000 shares of common stock, an increase of 5,000 from the 2004 level.

Toolson gets other perks as well: The company buys him life insurance and contributes to his 401(k) retirement savings plan, according to the proxy statement. He gets to use the corporate jet for "limited personal travel." But he doesn't get a company car, other deferred compensation or club memberships, the statement says.

Monaco rival Country Coach doesn't have to disclose to the SEC what CEO Jay Howard earns because it is a subsidiary of National RV Holdings, a Perris, Calif., company.

But the salary of Brad Albrechtsen, National RV Holdings CEO, and his top deputies is publicly reported in SEC filings.

In 2005, when National RV Holdings lost $19.8 million, Albrechtsen earned a base salary of $265,000, plus a $40,000 bonus, $20,000 worth of long-term stock options and $5,000 in company matches to his 401(k) plan. In 2004, when his firm lost $9.5 million, Albrechtsen earned the same salary, but no bonus.

"A variety of components go into that bonus," company spokeswoman Donna Dolan said. "It's a performance-based system."

National RV Holdings is a far smaller company than Monaco. It had about 2,800 employees and revenues of $463.6 million last year, compared with Monaco's 6,040 employees and revenues of $1.24 billion.

Coburg-based Marathon Coach doesn't have to disclose what its executives earn because it is privately held. Spokeswoman Mary Barton would say only that the firm's executive compensation is "competitive" in the industry.