business

A three-year look at total return, however, reveals double-digit gains by all 10. And among the 88 companies with comparable data, three-year total returns were positive at 74 companies and negative at 14. (All company returns are calculated based on the year or years for which the CEO is compensated.)

Still, mega-salaries accompanied by last year's meager returns raise the perennial question about CEO compensation: Are they worth the money?

"I represent executives and even I find it hard to explain a few of the numbers in the survey," said V. John Ella, a Minneapolis employment attorney.

"People who want to make the pay-for-performance argument are finding it harder and harder," said Robert Kennedy, professor of ethics and business law at the University of St. Thomas College of Business.

In recent months, media scrutiny of CEO pay has intensified. The outsize pay and compensation practices of McGuire and the board at UnitedHealth Group have attracted national attention and an informal inquiry from the Securities and Exchange Commission.

Other forces are coming to bear, too. Stricter accountability for chief executives is a cornerstone of the Sarbanes-Oxley Act passed in 2002 after the Enron scandal. Key provisions of the act are only now taking effect.

And after a decade-long debate, accounting rules are taking effect this year that require public companies to account for expenses associated with issuing stock options to employees. Stock options, in particular, have fueled the huge windfalls in executive pay since the early 1990s.

Separately, the SEC has said it will require far more extensive disclosure of executive perquisites beginning in 2007.

Either compensation gains will begin to moderate, Ella said, "or it will never change, because executives will always be able to game the system to their advantage. I happen to think we are on the cusp of change."

Others aren't so sure.

"If you are one of the players, then you can begin to demand certain benefits," Kennedy said. But "there is a certain lack of self-consciousness about this. Some people should be just be embarrassed that they are taking home this amount of money."

Brian Shapiro, a professor of accounting at St. Thomas whose research includes executive accountability, said that outsize executive compensation "violates people's basic sense of fairness. ... It bothers us to know people make this much money only because they have so much economic power."

Option mania

As usual, stock-option gains accounted for the largest piece (46 percent) of total compensation. Forty-three Minnesota CEOs exercised $202.5 million in options last year.

In 2004, 50 CEOs had option gains totaling $261 million. But UnitedHealth's McGuire alone accounted for $114 million of the 2004 total. Excluding him from the year-to-year comparison reveals that option gains by the other 99 soared by 37.5 percent in 2005.