NEW YORK (

TheStreet

) -- Retail CEOs watched their companies burn in 2008. Yet amid the start of the most devastating financial crisis since the Great Depression, they were still compensated as though it was the Pax Romana.

While 30 of the 68 retailers tracked by

TheStreet.com

through

Securities and Exchange

filings did dock their top leaders' pay, 34 others actually hiked compensation packages, with the average total compensation coming in at over $5.5 million.

And these were not just inflationary increases. About 20 of the CEOs reaped double-digit jumps in their 2008 pay from the year prior, even as the 68 companies saw annual profit tumble 12% on average.

A majority of the gains came from hefty stock and option awards, which averaged $3 million for the CEOs tracked. These awards are typically ignored by media outlets on the notion that there is no guarantee CEOs actually receive the full value of the awards due to fluctuating stock prices.

But excluding stock and options doesn't exactly paint an accurate picture, either. (The market rally this spring and summer -- the S&P Retail Index is up 26% in the year-to-date period -- certainly helped the net worth of corporate bosses across the sector, for instance.)

But even if we turn a blind eye to these values, five of the top 10 CEOs still received a substantial raise in 2008.

Take

Guess

(GES) - Get Report

CEO Paul Marciano, who ranked fourth in the tally. Though his total 2008 compensation was flat compared with the prior year at $15.2 million, if stock and option awards are removed, Marciano actually took home $8.8 million, a whopping 88% increase from 2007. That huge pay raise came even as Guess's share price tanked by nearly 60% over the course of those same 12 months.

Similarly,

Radio Shack's

(RSH)

head honcho Julian C. Day earned a total of $9.8 million (he did not receive any stock or option awards in either 2007 or 2008), an 11% boost, even as the retailer reported an almost 20% decrease in annual profit.

The electronic retailer has been steadily losing market share to rivals such as

Best Buy

(BBY) - Get Report

and discounters like

Wal-Mart Stores

(WMT) - Get Report

and

Costco Wholesale

(COST) - Get Report

.

Then there's

Gap

(GPS) - Get Report

boss Glenn Murphy, who just missed the top 10. Nonetheless, he saw a 64% surge in his pay package, excluding stock and option awards, even while Gap's share price dropped 37% during the year.

At least on the surface, it would seem that retailers are trying to

appear

sensitive to the troubling economic times by eliminating bonuses. Only seven of the CEOs on our list -- including

Buckle's

(BKS) - Get Report

Dennis H. Nelson, whose bonus came to a huge $5.6 million, the most of any retail CEO -- received this discretionary compensation.

But don't be fooled. Retail top dogs are still being rewarded in the form of "non-equity incentive compensation," a jargonistic euphemism that really means "cash bonus."

While there are some differences in the way non-equity compensation and bonuses are determined and allocated -- non-equity comp is decided by meeting pre-arranged goals set for the period, while a bonus does not have a pre-established performance target and is purely discretionary -- they both result in heavier wallets for CEOs.

By setting clear goals, non-equity compensation alleviates at least some of the public scrutiny bonuses have been garnering over the past year. Executive pay has become such a hot-button topic, fueled of course by those teetering financial and insurance firms who nonetheless dolled out huge sums to their top managers, that the Treasury Department is currently deciding how much those finance chiefs should be paid.

The average non-equity compensation for the 68 CEOs on our list was $837,245 in 2008.

At $6.5 million,

Abercrombie & Fitch's

(ANF) - Get Report

Michael Jeffries received the fattest non-equity incentive payout out of all the retail execs tracked. This number included a $6 million "stay bonus" for meeting the performance criteria of "cumulative growth in earnings from Feb. 1, 2005 through Jan. 31, 2009 of 13.5%," according to the company's SEC filing and remaining on board at the company.

But in 2008 Abercrombie saw a massive 68% plunge in profit from the year prior, resulting in a 71% hit to its stock. In this case, was Jeffries's "stay bonus" warranted?

It doesn't matter. As long as Jeffries met the already agreed-upon performance criteria and remained at the company for the period in question, he was guaranteed the sum. That's the beauty of non-equity incentive compensation; it's hard to argue against it since the goals are predetermined. The more discretionary nature of bonuses makes them an easier target.

Jeffries' hefty raise also came with some serious perks (use of the company plane, for instance), which amounted to $2 million in "other" compensation.

J.C. Penney

(JCP) - Get Report

also makes liberal use of non-equity comp.

The company's CEO, Myron E. Ullman III, ranked seventh in our tally, with a 26% raise to $10 million in 2008. Excluding stock and options, Ullman's total compensation was $3.8 million, which turns out to be an even higher 40% increase from 2007.

The gain was mostly due to $1.4 million in non-equity comp. (Ullman did not receive any such pay in the year prior.)

And yet J.C. Penney, along with most department stores, was one of the first retailers to enter the recession. By the end of 2008, its profit was nearly halved and its stock price had tanked 55%.

But there were some CEOs that actually deserved their pay hikes.

Aeropostale's

(ARO)

leader Julian Geiger saw his total pay package more than double in 2008 to $14.2 million. The teen retailer has managed to pick up market share as consumers trade down from Abercrombie and

American Eagle Outfitters

(AEO) - Get Report

with wallet-friendly prices and compelling fashion. This resulted in a 15.6% gain in profit in 2008, impressive when 47 out of the 68 retailers reported profit declines.

Others, while few and far between, even took a pay cut.

Wal-Mart Stores'

(WMT) - Get Report

former CEO H. Lee Scott Jr., who resigned in January, once again topped the chart as the highest paid retail executive, with a total compensation of $30.2 million, with $22 million of that in stock and option awards.

But this was still a 5% pay cut for Scott at a time when the discounter was one of the few companies that managed to report an annual profit increase of 5.5%.

The big-box retailer has been able to survive and actually thrive during the recession due to its low prices on necessities like food and basic household supplies.

Apparently, Wal-Mart's performance wasn't good enough for Scott to receive a raise. Yet the question of just what warrants a pay boost isn't always clear. Many observers believe the Treasury Department's decision on what bank executives ought to make will provide a first step toward broader guidelines regulating pay, no matter the sector.

But, of course, any decision to curtail executive pay is risky: Top managerial talent can simply flee to greener pastures, after all.

The problem, however, is deciding what a CEO is worth during periods of anemic performance. For the retail industry, answering that question has so far proved a difficult task.

-Reported by Jeanine Poggi in New York.

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