CEO Pay Watch: Joel Ronning, Digital River

Total compensation: $6,654,049 for the year ended Dec. 31

Salary: $436,342

Non-equity incentive pay: $157,871

Other compensation: $961,600

Value realized on vesting shares: $5,098,236

Total 2012 return to shareholders: –4.2 percent

Note: Digital River was one of the few U.S. companies in 2012 where shareholders rejected management's "say-on-pay'' proposal. As a result the company met with shareholders over the course of the year to gather feedback on the reasons behind the nonbinding vote, including meeting with 10 of its largest institutional shareholders.

In response to those meetings, the company made a number of changes to its executive compensation programs, some of which won't be reflected until 2013 compensation is disclosed in next year's proxy.

The company has adopted a "clawback policy," will disclose more information about performance targets and performance against those targets, made changes to short-term and long-term incentive awards and changes to how it selects its peer group. The company also made changes to its corporate governance practices.

Ronning, who founded the company, resigned from Digital River on Dec. 31. Ronning's other compensation includes $867,576 paid in connection with the nonrenewal of his employment agreement as CEO. Ronning earned an annual bonus of $157,871, which was 17.5 percent of the total targeted bonus he could have earned for the year which was $900,000.

On Feb. 28 Digital River hired David Dobson as its new CEO. Dobson, a former executive with CA Technologies and Pitney Bowes, will get a bigger annual salary — $600,000 vs. $450,000 for Ronning — but his annual bonus will be limited to 100 percent of his salary, where Ronning could have earned 200 percent of his salary.

Dobson's fiscal 2013 bonus will be prorated, but in his first year as CEO he'll get his annual bonus regardless of performance against financial goals. As part of Dobson's employment agreement he got one-time grants of restricted stock and performance stock awards with grant-day value of $5.55 million. Dobson will also get a housing allowance of up to $3,500 per month pending his relocation to Minnesota.

Patrick Kennedy