For many Orange County executives, 1991 was a year when their pay packages came under greater shareholder scrutiny and corporate boards were cautious in handing out cash bonuses and perks.
It mirrored a trend statewide of keeping executive compensation in line with a company's financial performance. Of the top 100 county executives on the list of publicly traded companies, one-third of the officers saw their cash compensation remain unchanged or had it reduced.
Even so, what many at the very top got in their pay envelopes was hardly disappointing. In fact, the roster of $500,000-plus pay packages grew again, pushing the county's corporate brass closer to the statewide median.
The median compensation package of the top 100 executives was $468,252, up 3% from $454,330 a year earlier. The median for the statewide top 100 dropped to $1.88 million in 1991, from $2 million in 1990. Of all Orange County executives surveyed, the median pay in 1991 was $203,609, up 9.2% from $186,500 a year earlier.
Leading the list of 346 Orange County public company chiefs was the county's first $6-million man, ICN Pharmaceuticals Chairman Milan Panic. His $6.1-million package, which included $5.4 million in stock awards, placed him seventh in the statewide list of best-compensated executives.
Because only public companies report their pay arrangements, well-known county executives such as South Coast Plaza developer Henry T. Segerstrom, Irvine Co. owner Donald L. Bren and home builder William Lyon are not listed. Their pay packages, like their companies, are private.
Eighteen public company executives passed the $1-million mark in total pay; there were seven a year earlier. The group is a hodgepodge of pharmaceutical and high-tech executives, as well as the chieftains at Fluor Corp. Forty-five executives had packages of $500,000 or more; there were 41 a year earlier.
More than half of the corporate millionaires got there through stock options, awards and other non-cash compensation.
It was the stock market that made the difference. While the going was good, heads of public companies cashed in options and boards of directors doled out stock awards to make up for a limit on cash compensation.
"We've had a recession and the stock market is going up," said Fiona MacDonald, a compensation consultant at William M. Mercer Inc., a management consulting firm in Los Angeles. "It's a little weird. . . . But (executives) will be nervous. They can't see the price going up any higher. So they want to cash in some options."
The stock market also became an attractive place to raise more capital, particularly for home-building companies pinched by restrictions on bank financing. The Presley Cos. began trading shares last fall. Presley President Wade H. Cable, who had total compensation of $1.7 million, placed 10th on the county list.
At industrial giant Fluor Corp., four executives exercised a total of $5 million worth of options and were granted a combined $2.4 million in stock, to be ranked in the top 10. All told, Fluor Chairman Leslie G. McCraw; President and Chief Operating Officer Vincent L. Kontny, and subsidiary presidents Gerald M. Glenn and Hugh K. Coble made a total of $4.1 million in cash compensation.
Presumably, the engineering and construction company rewarded its top officers because Fluor had its most profitable year ever. Profits in 1991 grew 9%, to $149.1 million.
Fluor has for years been the largest public company in the county. (Rockwell International, which is larger than Fluor in total sales, moved to Seal Beach in December, too late to be included in this year's county rankings.)
Fluor executives have been stalwarts on the list, so their inclusion this year is no surprise. But longevity is an exception to the rule in Orange County, where there are many small- and middle-size firms that tie executive pay to a company's fortunes. Because financial performance can be fluid, top executives move up and down in the rankings year to year.
"There's much more correlation in pay and performance" in Orange County than elsewhere, said Lawrence Wangler, managing partner of the Newport Beach office of TPF & C, the compensation consulting arm of Towers Perrin, an international benefits consulting firm. "That's much stronger. There's a lot of emphasis on stock.
"In general, the firms tend to stay away from the exotic. They offer long-term incentives versus something like convertible debentures or indexed options."
Indeed, ICN's Panic topped the list after ranking only 28th a year earlier. Panic's package grew 834% to $6.1 million, including $5.4 million in stock awards. Company officials say he was awarded a bonus for helping to arrange a joint venture in Yugoslavia.
It was a comeback year for the company. ICN also rebounded from a $26.7-million loss in 1990 to a $5.9-million profit last year. For the 12 months ended Friday, ICN shareholders saw the stock climb 243%--from $5.125 to a close of $12.50.