* CEO's 2011 performance-based compensation cut 45 pct
* Value of 2012 incentive lowered by 20 percent
* Stock up slightly
March 1 (Reuters) - Alcoa Inc cut Chairman and Chief Executive Officer Klaus Kleinfeld's perfomance-based compensation for 2011 by 45 percent as the aluminum company's shares slumped by more than half.
In the first half of last year, Alcoa raised executive salaries that had been frozen since 2008, since its stock was rising along with the price of aluminum, the company said in a filing with the Securities and Exchange Commission.
But in the second half of 2011 the business environment changed completely, as aluminum prices fell and economic expansion slowed.
As a result, the board's compensation and benefits committee made a discretionary reduction of 45 percent on Kleinfeld's earned annual cash incentive compensation, lowering it to $1.51 million.
Also, his 2012 equity award, valued at $7,600,045, was set 20 percent lower than his 2011 award, the filing said.
However, German-born Kleinfeld still earned more last year than in 2010 as his base salary increased by 2.9 percent to $1,433,333 and his pension rose as discount rates changed.
Kleinfeld's total 2011 compensation, including salary, incentives, stock options and pension, rose to $14.04 million from $13.29 million in 2010.
Explaining the reasoning behind the cut in performance incentive, Alcoa said that its stock price, which is impacted by the forward view of aluminum pricing, declined to a low for the year.
Alcoa stock hit a 52-week high of $18.47 last April 8, but slumped to $8.45 on October 4. On Thursday, the shares were 5 cents higher at $10.22 in morning trading on the New York Stock Exchange.
Reporting By Steve James, editing by Dave Zimmerman