Paul Lapides

Compensation for top executives at Chattanooga-based Unum Group increased in 2008 despite an economic recession and negative stockholder returns, a Securities and Exchange Commission document shows.

According to Unum’s 2009 Proxy Statement, Thomas R. Watjen, president and chief executive, received $13.94 million in compensation in 2008, an almost 90 percent jump from 2007.

But according to company documents included in the SEC filing, the compensation figures are inflated by accounting and actuarial procedures.

Unum spokesman Jim Sabourin said that because Mr. Watjen turns 55 this year, Unum is required by law to include “accelerated value of future year grants.” He said these involve accounting practices that do not accurately reflect Mr. Watjen’s true compensation.

Mr. Sabourin said that absent the accounting practices, Mr. Watjen’s actual compensation is about $7.8 million. Down from $10.3 million in 2007, according to the company.

“The $13 million is accurate from an accounting standpoint, but it does not accurately reflect Tom’s compensation. In reality, his compensation was lower this year than last,” he said. “The Summary Compensation Table (in which the $13.9 million figure is stated) includes the value of future year stock options as well as the value of unvested grants from prior years.”

Mr. Watjen’s earnings consist of a base salary of $1.09 million, a $55,000 increase from the prior year, and about $6.5 million in stock awards plus other awards and compensation.

Robert C. Greving, executive vice president and chief financial officer, was awarded $1.8 million in compensation, a 37.5 percent increase from the $1.3 million in compensation he received the prior year, according to the Proxy Statement.

Kevin P. McCarthy, executive vice president and president and chief executive of Unum U.S., saw his compensation jump more than 70 percent from 2007 to 2008 from $1.9 million to $3.2 million, the filing says.

Paul Lapides, director of the Corporate Governance Center at Kennesaw State University in Kennesaw, Ga., said many companies continue to increase executives’ salaries and compensation despite the company’s performance.

“It is sad that when you look at many of the companies reporting over the last year that compensation is increasing while shareholders are losing a fortune,” he said. “I think it is sad that more CEOs don’t waive all or a portion of their bonus to point out that they are willing to share in the pain.”

At a meeting in February, a Unum committee decided not to grant base salary increases for 2009 to some executives and other key senior officers, including Mr. Watjen, according to the filing.

This decision reflected input from the CEO regarding his views about compensation in this challenging environment, the company said. As a result, the base salaries of these executives will be maintained at current levels in 2009.

A Unum compensation committee based Mr. Watjen’s 2008 earnings on his and the company’s performance. The document called the performance “excellent” despite negative shareholder return for the year in the tough economy.

“Although company performance generally met or exceeded plan and the committee considered Mr. Watjen’s individual performance to be excellent, both the committee and Mr. Watjen recognize that the overall environment was difficult,” the document said.