There may be one common sense result from the current economic downturn and resulting unemployment and fiscal belt tightening.  After rising unchecked for years, CEO pay may be headed for a fall.

Compensation experts say the severe economic downturn, a shift in the political winds and shareholder outrage could finally combine to pressure companies to limit raises or, in some cases, even cut executive salaries.

That has occurred a few times already. Last month, Motorola Inc., facing drastic cost cuts, announced that its co-CEOs, Gregory Brown and Sanjay Jha, had agreed to take 25% reductions in 2009 salary. Caterpillar Inc. recently said its executives, including CEO Jim Owens, could see their total compensation decline by as much as 50% next year because of cuts in incentive pay. Both companies cut rank-and-file compensation as well.

Reducing executive pay has a minor impact on profits, but it helps companies avoid the perception that CEOs don’t suffer along with employees and shareholders.

It’s anybody’s guess who might join executives at Motorola and Caterpillar in having their wallets lightened. Candidates could include UAL Corp. CEO Glenn Tilton and Boeing Co. chief James McNerney.

Both companies face job cuts, and both men rank among the highest-paid CEOs in Chicago. United Airlines pilots, who are facing the loss of 950 jobs, have called for the ouster of Tilton and say he should at least take a pay cut.

A UAL spokeswoman said the company’s executive pay “is market-based and on par with other comparably sized companies.”

This year, compensation experts expect changes in federal law to impose so-called “say on pay” measures universally. The legislation likely will be introduced in the House early this year, two years after Congress last voted it down. The sponsor of the failed 2007 bill: then-Sen. Barack Obama.

Source:  John Pletz of Crain’s Chicago Business, a sister publication of Workforce Management.