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New 10-Year Pact for Warner's Ross Reignites Dispute With Chris-Craft

March 03, 1987|KATHRYN HARRIS | Times Staff Writer

A flare-up of an old feud in the Warner Communications' board room became public Monday, with Warner's announcement that it has bestowed a handsome 10-year contract on its chief executive over the objections of Chris-Craft Industries, the largest shareholder.

Warner did not elaborate on the new contract awarded Steven J. Ross, other than to say that it provides "substantial new bonus awards . . . based upon the price of (the company's) stock."

The New York-based entertainment company said Ross' new contract was opposed by all six directors nominated by Chris-Craft. Warner has a 16-member board.

Ross' last contract expired in 1983, when the company was mired in losses generated by its former Atari video game business. The company has fully recovered, however, and the board increased Ross' base salary to $800,000 as of Jan. 1, 1985.

With bonuses, Ross collected $2.8 million in 1985. His 1986 compensation has not yet been disclosed.

Ross enlisted Chris-Craft as a friendly investor in 1984 to ward off the unwelcome overtures of media magnate Rupert Murdoch, but the friendship was quickly strained. By most accounts, Ross is annoyed by the watchdog-like presence of Chris-Craft Chairman Herbert J. Siegel at the company Ross co-founded in 1961.

Although Ross owns less than 1% of Warner's outstanding shares, he managed to reduce Chris-Craft's power as Warner rebounded from its Atari woes. Last year, for example, Warner diluted Chris-Craft's voting stake to about 17.4% from 29.1% by issuing new shares.

Past skirmishes became public when Chris-Craft threatened to increase its stake or align with other shareholders to force certain changes. When the two sides failed to agree on a slate of board nominees in 1985, for example, Warner held no shareholder meeting that year.

And in August, 1986, Chris-Craft threatened to sell a portion of its holdings after it lost a fight to block Warner's sale of $500 million in new convertible preferred stock, which diluted the Chris-Craft stake.

The two companies' affairs are further complicated by Warner's 42.5% stake in Chris-Craft's broadcasting subsidiary, acquired at the time of Chris-Craft's investment.

Neither Ross nor Siegel could be reached for comment late Monday.

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