OK, now we're officially in a recession. The latest data suggests that U.S. CEO compensation has decreased for the second year in a row, receding to 2004 levels. Nonetheless, don't expect to see these folks rummaging through the trash anytime soon. Plenty of top executives still enjoy handsome rewards, despite investors' growing awareness that many CEOs cash in at shareholders' -- and workers' -- expense.

Hooray for deflation!
Several surveys currently show substantial drops in total CEO compensation in 2009. The New York Times tapped Equilar, which said that median CEO pay dropped 13%. A USA TODAY survey based on The Corporate Library's data indicated that median CEO pay dropped 18% to $6.6 million.

Note that these surveys included small numbers of companies. Don't be too surprised if a larger sample later yields different results.

These indications that CEO compensation has taken a two-year hit are frankly a relief, in the larger context of our suffering economy. The recession has hurt many people, and chief executive officers should not be some parasitic, protected class, immune to their fair share of hardship.

Furthermore, the typical U.S. CEO's pay has crept upward over the years, until it represents hundreds of times the typical worker's salary. CEO compensation got way out of whack during way too many bubbly go-go years. In many cases, I'd say a little pay deflation's way overdue.

Recession? What recession?
Unfortunately, well-paid outliers persist. I've compiled few of the more dubious data points for 2009:

  • Kraft's (NYSE: KFT) Irene Rosenfeld pulled down $26.3 million, a 41% increase year over year. That jump outpaced salaries at consumer-goods rivals like Pepsi (NYSE: PEP). Given the stock's lackluster performance compared to the Dow, and a drop in Kraft's annual revenue, Rosenfeld's impressive raise seemed to mostly hinged on the company's hostile takeover of Cadbury, which Berkshire Hathaway's (NYSE: BRK-B) Warren Buffett notably criticized as an overpriced deal.
  • AT&T (NYSE: T) CEO Randall Stephenson's total pay rose 35% to $20.2 million, even though the company's stock actually dropped 1.6%.
  • Occidental Petroleum's (NYSE: OXY) Ray Irani received a 39% pay hike to $31.4 million. Governance experts at the Corporate Library dub Occidental "a serial over-compensator" that sets performance targets the company is all but guaranteed to wallop.
  • Wells Fargo's (NYSE: WFC) John Stumpf made out pretty well, taking home $19 million despite the restrictions on TARP recipients' pay (which declined 34% overall). Interestingly enough, the Obama administration's compensation requirements for salary caps and long-term stock actually ended up handing Stumpf a lucrative stock-based windfall.

The road to reality
Business as usual may linger in some corners, but at least there are signs that CEO pay's undergoing a growing reality check.

In addition to shrinking pay, corporate governance watchers note that perks have decreased by 28%, to a median of $125,198. Perhaps companies and their boards have finally begun to grasp that shareholders are sick of paying for executives' absurd goodies. Country club memberships, private jet trips, and other luxuries should clearly be part of these already highly paid individuals' personal budgets. (Anybody who remembers Aaron's (NYSE: AAN) foray into NASCAR racing knows how preposterous perks can get.) These encouraging signs are a good start toward dialing back excessive CEO pay.

Though I truly believe merit deserves appropriate rewards, the oft-cited "free market" defense for high levels of CEO pay across the board doesn't work for me. A true free market shouldn't reward executives just for showing up, much less for abject failure. Highly paid CEOs who do not deliver healthy businesses and robust shareholder returns are a big waste of capital and a drag on profitability.

Let's keep our eyes on CEO pay, Fools. Short attention spans on this issue and many others are the enemies of solid business, good investments, and healthy portfolios.

Check back at Fool.com every Wednesday and Friday for Alyce Lomax's columns on corporate governance. 

Berkshire Hathaway is a Motley Fool Inside Value choice and a Motley Fool Stock Advisor recommendation. PepsiCo is a Motley Fool Income Investor pick. Motley Fool Options has recommended a "roll your diagonal call" position on PepsiCo. The Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletters free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.