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Big Perks Put Seven CEOs in a Whole 'Other' Club

Insurance, forgiven loans, corporate jet travel and 'gross-ups' are key features of their million-dollar packages.

June 06, 2004|E. Scott Reckard | Times Staff Writer

A million bucks isn't a lot for chief executives in this day and age. But a million in perks during a single year still lands you in rarefied company.

At least seven chief executives from California's 100 largest public companies pocketed $1 million or more last year in what financial statements classify as "other compensation," according to The Times' annual executive compensation survey.

The category excludes salary, bonuses, stock options, restricted stock and other commonplace rewards. But it does include a grab bag of other perquisites such as insurance, forgiven loans, windfalls triggered by companies going private, special retirement payments and personal use of corporate jets.

Another benefit sloshed into the other-comp bucket is the "gross-up," a term applied when the company covers the taxes that executives otherwise would have to pay on all those perks. Several California CEOs logged millions of dollars in gross-ups, the bane of many shareholder and consumer advocates.

"The most highly compensated people in the country would appear to me not to need any help settling their tax bills," said Paul Hodgson, senior research associate with the Corporate Library, a Web-based corporate governance research firm.

A look at the seven CEOs in the million-dollar perk club and their other compensation, as disclosed in their companies' filings with the Securities and Exchange Commission:

* Robert A. Eckert, Mattel Inc., $10.96 million.

Eckert took over as chairman and CEO after Mattel drummed out Jill Barad with $50 million in "golden handshake" severance payments in 2000.

In a "golden hello" to the new boss, the El Segundo toy maker lent Eckert $5.5 million with an agreement to erase the debt if he lasted three years on the job. Counting interest, the amount due had risen to more than $6.74 million when the deadline passed on May 18, 2003.

Mattel canceled the debt as agreed, then forked over a $4-million-plus gross-up to ensure that the CEO wouldn't be taxed on the benefit, bringing the total cost of the forgiven loan to $10.84 million. Lesser payments for insurance, deferred compensation and other benefits brought Eckert's total perks to $10.96 million for the year.

Mattel's share price, which had declined 56% during Barad's three-year tenure, rose by 72% in Eckert's first three years. That run has not continued in the year since the debt forgiveness and gross-up kicked in. In fact, Mattel shares have slipped about 23% since then, from $22.50 to $17.38 on Friday on the New York Stock Exchange.

* R. Chad Dreier, Ryland Group Inc., $7.61 million.

The Calabasas-based home builder has seen its shares boom along with the housing markets, going from $10 apiece four years ago to $94.14 on Dec. 1 before settling back to $78.72 on Friday on the NYSE.

Dreier, Ryland's CEO since 1993, has recorded booming perks as well, including $90,169 last year for personal services and medical costs, $102,942 in use of corporate aircraft and $392,074 in contributions to retirement and deferred pay.

A more unusual reward resulted from Ryland's paying off the CEO's split-dollar life insurance, a type of policy that resembled an interest-free long-term loan. Such arrangements were banned under the Sarbanes- Oxley Act, the 2002 accounting reform bill. To erase the split-dollar policy from its books, Ryland paid Dreier about $2.1 million, company spokeswoman Melissa Bailey said.

Dreier also was credited with $2.66 million in deferred earn- ings under a Ryland incentive plan. What's more, he received $2.25 million to cover his taxes on the split-dollar payout and the value of some restricted stock that became salable in 2003 -- a gross-up that grossed out one consumer activist.

"I think even Caesar had to pay taxes," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. "We've now outdone the Romans in pandering to the guys at the top."

* Robert D. Glynn Jr., PG&E Corp., $3.82 million.

PG&E's Pacific Gas & Electric Co. unit emerged from three years of bankruptcy proceedings in April; the stock, which fell below $10 in 2002, closed Friday at $27.99 on the NYSE.

But controversies spawned by California's energy crisis continue, with state regulators investigating whether the San Francisco parent siphoned billions of dollars from the utility before the unit filed for Chapter 11 protection in April 2001.

For steering PG&E through turbulent times, Glynn made more than $17 million last year, about $3.8 million of it in other compensation.

More than $3 million of Glynn's perks were for retirement annuities and gross-up payments to cover taxes on them. Such annuities, designed to replace a phased-out PG&E pension plan, also helped catapult two senior vice presidents into the million-dollar-perk club: Gordon R. Smith, with more than $2.8 million in other compensation, and Bruce R. Worthington, with more than $1.1 million.

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