Columbia Savings & Loan in Beverly Hills has been making so much money of late--and paying its top executives so well as a result--that it has gotten the thrift into hot water with S&L regulators.
Columbia reported Monday that its six-month earnings rose 85% to a record $130 million. But that's not the issue. Rather, it is the $9-million compensation package that Chief Executive Thomas Spiegel received last year when Columbia Savings earned $122 million, nearly triple what it earned in 1984.
Columbia Savings, with assets of $8.28 billion, has been among the country's most aggressive and fastest-growing large savings and loan firms.
Spiegel's compensation, which was tied to Columbia's financial performance, made the 40-year-old executive the third-highest-paid official in corporate America, behind Chrysler's Lee A. Iacocca and Texas oilman T. Boone Pickens Jr.
The compensation included a salary of $960,000, a bonus of $3 million and a retirement contribution of $5 million. Spiegel said payments on all but $2 million of that amount have been deferred for at least four years.
But the Federal Home Loan Bank Board was not happy about the generous salary package. As Spiegel himself put it: "No one has ever made this kind of money in the savings and loan industry before."
As a result, regulators have directed Columbia's board of directors to "take immediate steps to recover all amounts other than Mr. Spiegel's salary," according to a supplement to Columbia's latest proxy statement.
Columbia also disclosed that regulators questioned the salaries of other top executives who made more than $150,000 in 1985. That would include the S&L's top five executives, all of whom received compensations of more than $300,000 last year.
Chairman Abraham Spiegel, Thomas' father, received a salary and bonus of $360,500 as well as a retirement contribution of $200,000. The elder Spiegel is the company's 79-year-old patriarch; his family owns a majority interest in the S&L.
The younger Spiegel, in recent interviews, said his compensation agreement was based on earnings, which were unexpectedly high in 1985. The matter, he said, remains "in limbo," though he did not sound in any mood to give up his gains.
"It's not a matter of fighting it," Spiegel said. The regulators "have requested from us how we determined the compensation, and we gave them that information. We haven't heard from them since."
A regulatory spokesman at the Federal Home Loan Bank of San Francisco refused to comment.
Meanwhile, Columbia said its 1986 second-quarter profit rose to $53 million--41% above year-ago levels--because of record loan volume, asset sales and widening profit margins. The company also voted to pay a common stock dividend of 6 cents a share--the first such cash payout since 1974.
"Our earnings alone make the first six months of 1986 extraordinary," Spiegel said in a statement, "but we are also quite proud of our other accomplishments."
Among those accomplishments was a record loan volume of $175 million in June, he said, and $160 million in income from the sale of loans, mortgage-backed securities and investment securities in the first six months of 1986.