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Edwards Theatres Executives Will Take Deeper Salary Cuts

November 21, 2000|LESLIE EARNEST | TIMES STAFF WRITER

The family that runs troubled Edwards Theatres Circuit Inc. will take another round of pay cuts and chop some relatives off the chain's payroll under an agreement approved Monday in bankruptcy court.

Chief Executive James Edwards III, who took a pay cut of almost $1 million three months before the Newport Beach cinema chain filed for bankruptcy protection in August, will see his pay drop another $85,000 to $490,000 on Feb. 23.

Edwards' sister, Chief Corporate Officer Joan Edwards Randolph, who took a 63% salary reduction in May, will be dropped from the payroll in February.

Edwards' wife, Patricia, director of marketing and community relations, who makes $125,000, also will relinquish her salary in February. Another sister, Carole Ruoff, left her position as company treasurer just before the bankruptcy filing.

Bernice Edwards, co-chair of the board and widow of late founder, James Edwards Sr., will retain a salary of $7,800, according to court documents. She drew a salary of $567,200 before a cut last May.

The latest round of cuts was approved by bankruptcy Judge Lynne Riddle, despite objections from the company's largest creditor, which claimed the chain's top executives still were being paid too much.

The creditor, Bank of America, had particularly objected to the salaries of James Edwards, the chief executive, and Stephen Coffey, who was named president just before the bankruptcy filing. The bank also had urged that part of the executives' pay be tied to the company's performance. The company owes $217 million to a consortium of lenders headed by the bank.

But Riddle ruled that Coffey can retain his $520,000 salary, Edwards attorney Eric Goldberg said. It remains unclear whether Coffey will receive a $520,000 bonus.

The company has maintained that the proposed salaries are reasonable and has said Coffey's salary should be considered apart from other executives because his position with the company is temporary.

Despite the cuts, the company's attorney declared victory after Monday's hearing.

"The court found that the company had made significant sacrifices already," Goldberg said.

While the bank's attorney declined to comment, an attorney for another large group of creditors said he was satisfied with the court's ruling. That creditors committee and Edwards had agreed to the pay proposal before Monday's hearing.

"The committee believes the arrangement accomplishes significant cost savings without disruption to Edwards' operations," attorney Jeffrey Reisner said.

The company could not be reached for comment.

Edwards, which operates the Southland's largest theater chain, is one of a number of theater chains that have struggled with mounting debt and dwindling profits from a building binge that left them with too many screens.

The popular megaplexes drew business away from the exhibitors' older, less modern, complexes. As a result, a number of chains have filed for bankruptcy, which makes it easier for them to break leases and dump older theaters.

Edwards lost $40 million last year, after earning $14 million in 1998.

The pay cuts began in May, according to an agreement between the company and the bank, Goldberg said. Joan Edwards Randolph's salary, which was $513,300, has been trimmed to $325,000, the documents show. Overall, as of Feb. 23, family members' salaries will be 26% of what they were a year earlier, the company said.

But the bank maintains in its court filings that family members also received valuable perks, including monthly auto leases totaling $1,200 for Patricia Edwards, $710 for Joan Edwards Randolph and $986 for Don Barton, Randolph's son and the company's vice president of advertising and general sales manager.

Barton's annual salary of $400,000, which survived the latest round of cuts, was reduced from $570,000 in May.

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