The reality of layoffs and a difficult economic climate is causing some C-level executives to downgrade their compensation packages. These range from the dramatic offer made by Ford Motors' (NYSE:F) CEO to take $1 in salary in return for government bailout dollars to more subtle gestures by others who are willing to lop 20% off their 2009 pay. Investors interested in cozying up to a short list of companies whose top brass is willing to take one for the team should consider the following. (Learn how some of the biggest bailouts in U.S. history have affected the economy in Top 6 U.S. Government Financial Bailouts.)

The Price Of Special Delivery
No more than a week rolls by before I see a white FedEx (NYSE:FDX) van or truck on its way to make a delivery. Despite its outward appearance of "business as usual", the economic slowdown has prompted belt tightening from the top. FedEx CEO Frederick W. Smith will be taking a 20% pay reduction along with other executive pay cuts in the neighborhood of 10%. In an additional display of cost cutting, FedEx has decided to end its 12-year run as an advertiser during the upcoming Super Bowl. From a value standpoint, investors should note that FedEx has a relatively low Price/Earnings to Growth (PEG) ratio of 1.21. A PEG of "1" or below suggests expectations of earnings growth over the next five years.

Earth Mover Cuts Deep
Mention infrastructure to investors, and Caterpillar (NYSE:CAT) is likely the first company that comes to mind. A global slowdown in construction and development is working against the heavy equipment supplier, but as another example of leadership, management is stepping up to the challenge. Caterpillar executives are slated to reduce their compensation by up to 50% while others in the corporate hierarchy, from senior managers down to support staff, will incur less severe pay cuts. The savings and a resurgence of future infrastructure development projects could help Caterpillar limit the layoffs beyond those slated for production workers in Mossville, Ill. Value investors will happily note Caterpillar's PEG ratio of 0.88.

Searching For A Signal
Motorola
(NYSE:MOT) executives, including CEO Greg Brown, will take 25% pay cuts along with additional cost-saving measures including a freeze on the pension plan and a suspension of the company's 401k matching contribution. Motorola's PEG is a high 6.25, although the stock is trading below its book value given its 0.70 price-to-book ratio. A mixture of stiff competition, layoffs and a scaled-down lineup of devices being offered in 2009 suggests that Motorola may only reward investors with a long-term horizon.

Final Thoughts
Upper management salary cuts do not guarantee future performance, but they do indicate how the right team can add value during turbulent times.

The economy has a large impact on the market. Learn how to interpret the most important reports in our Economic Indicators Overview.

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