Big Perks Put Seven CEOs in a Whole ‘Other’ Club

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.

Glynn also received $600,000 when the U.S. Bankruptcy Court approved the utility’s reorganization plan in December -- a payment designed three years earlier as an incentive to keep him on the job until that milestone was reached.

* David H. Murdock, Dole Food Co., $3.28 million.

The octogenarian entrepreneur took his Westlake Village company private last year, triggering more than $3 million in early payments from long-term incentive plans.

The transaction generated similar perk windfalls for Dole’s president, Lawrence A. Kern ($4.7 million); its senior vice president and general counsel, C. Michael Carter ($2.08 million); and its vice president for administration, George R. Horne ($1.1 million).

* Ray R. Irani, Occidental Petroleum Corp., $1.68 million.

The Los Angeles oil concern paid Irani $304,500 last year for tax preparation and financial planning and $80,125 in club dues. Other perks: $563,750 for a supplemental retirement plan and $579,583 in interest on deferred compensation.

* Jeffrey C. Barbakow, Tenet Healthcare Corp., $1.48 million.

The Santa Barbara-based hospital chain awarded its departing CEO perks that included nearly $1.3 million in severance pay and $48,032 of automobile use. Barbakow, who had led Tenet for a decade, resigned amid a series of government investigations of its hospitals in May 2003, partway through the survey period for this pay study.

* Trevor Fetter, Tenet Healthcare Corp., $1.28 million.

Fetter, who succeeded Barbakow last year, received more than $1.2 million in relocation expenses, mainly reimbursement for a loss on the sale of his San Francisco home.

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CEO pay at California’s biggest companies

The chart shows compensation for chief executives of California’s 100 largest public companies. The CEOs are ranked by total compensation, which includes salary, bonus, long-term awards, stock grants, the present value of stock options granted during the year and “other compensation,” which can include company-paid life insurance and the cost of letting executives take personal trips in the corporate jet. For most executives, salary, bonus, stock grants and options make up the bulk of pay, so the chart breaks out these components. However, these four categories do not always equal total compensation, since many executives earn substantial income in “other compensation,” long-term awards and other categories not listed here. The chart data were compiled for The Times by Aon Consulting’s EComp Data Services (www.ecomponline.com) from regulatory filings. Stock option values were calculated using the Black-Scholes valuation method, which takes stock price, performance, volatility and the duration of the option into account to figure the value on the date of grant.

Key components of pay Total Stock comp. % Salary Bonus grants Options Company/CEO (mill.) change (mill.) (mill.) (mill.) (mill.)

1. Apple Computer /Steven P.Jobs $ 74.75 -24% $0 $0 $74.75 $0 2. EBay /Margaret C. Whitman 42.73 +163 0.84 1.23 0 40.54 3. Cisco Systems /John T. Chambers 38.64 -40 0 0 0 38.64 4. Countrywide Financial /Angelo R. Mozilo 35.22 +100 2.27 19.89 0.04 12.58 5. Occidental Petroleum /Ray R. Irani 30.78 +18 1.30 3.12 11.36 5.69 6. Intuit /Stephen M. Bennett 28.20 +159 0.99 2.95 17.96 5.90 7. KB Home /Bruce Karatz 28.19 -1 0.99 5.00 10.00 9.67 8. Computer Sciences /Van B. Honeycutt 22.97 +120 1.19 0 0 21.75 9. PG&E; /Robert D. Glynn Jr. 20.65 +131 1.05 0 2.17 3.73 10. Wells Fargo /Richard M. Kovacevich 20.00 -8 1.00 7.50 0 11.02 11. Solectron /Michael R. Cannon 19.81 0 0.60 2.00 4.14 13.06 12. Maxim Integrated Prod./John F. Gifford 19.36 -45 0.08 0 0 19.28 13. Genentech /Arthur D. Levinson 18.86 +96 0.86 1.20 0 16.72 14. Ryland Group /R. Chad Dreier 18.17 -31 1.00 9.57 0 0 15. Chiron/ Howard H. Pien 18.12 0 0.55 1.50 1.13 14.68 16. McKesson/ John H. Hammergren 18.00 -19 0.99 2.50 1.25 8.66 17. Amgen/ Kevin W. Sharer 17.43 +51 1.10 2.48 0 13.10 18. Applied Materials/ Michael R. Splinter 17.37 0 0.44 0 4.13 12.80 19. Electronic Arts/ Lawrence F. Probst 16.84 +47 0.70 1.10 0 15.04 20. Mattel/ Robert A. Eckert 16.65 +5 1.25 0.63 0 3.80 21. Intel/ Craig R. Barrett 16.07 +29 0.61 1.51 0 13.81 22. PacifiCare Health/ Howard G. Phanstiel 11.59 +28 0.98 2.00 3.00 5.21 23. Northrop Grumman/ Ronald D. Sugar 11.34 +44 1.04 2.65 0 5.47 24. Charles Schwab/ David S. Pottruck 11.08 -7 0.98 0 2.50 7.46 25. Verisign/ Stratton D. Sclavos 10.85 -37 0.63 0.23 0 9.99 26. Providian Fin./ Joseph W. Saunders 10.57 +27 0.75 2.00 0.23 7.52 27. ChevronTexaco/ David J. O’Reilly 10.48 +37 1.31 3.15 0 2.65 28. Allergan/ David E.I. Pyott 10.03 -9 1.07 1.08 0 7.84 29. Qualcomm/ Irwin Mark Jacobs 9.39 -21 0.98 1.50 0 6.60 30. Health Net/ Jay M.Gellert 9.30 +42 0.89 0 3.13 5.21 31. Tenet Healthcare/ Trevor Fetter 9.21 +21 0.85 0.26 3.73 3.09 32. Standard Pacific/ Stephen J. Scarborough 9.09 +46 0.80 7.54 0 0.74 33. Agilent Tech./ Edward W. Barnholt 8.88 -47 1.00 0.33 0 7.54 34. Edison International/ John E. Bryson 8.77 +32 1.07 1.70 0 2.16 35. Hewlett-Packard/ Carleton S. Fiorina 8.66 -37 1.24 2.10 0 5.14 36. Nvidia/ Jen-Hsun Huang 8.56 -48 0.40 0 0 8.16 37. National Semiconductor/ Brian L. Halla 8.22 -62 0.89 0.40 0 6.91 38. Ingram Micro/ Kent B. Foster 8.20 -4 1.18 1.19 0 5.81 39. Maxtor/ Paul J. Tufano 7.80 +88 0.68 2.98 0.57 3.57 40. Network Associates /George Samenuk 7.80 -30 0.72 0.87 0 6.18 41. Knight Ridder/ Anthony P. Ridder 7.71 +51 0.97 0.46 0 4.04 42. Dole Food/ David H. Murdock 7.67 +93 0.97 1.37 0 0 43. Fluor/ Alan L. Boeckmann 7.33 +45 0.93 1.52 2.05 2.24 44. Walt Disney/ Michael D. Eisner 7.32 +20 1.00 6.25 0 0 45. Calpine/ Peter Cartwright 6.62 +68 1.00 2.25 0 3.28 46. Apria Health Care/ Lawrence M. Higby 6.25 +10 0.69 0.70 0 4.61 47. Xilinx/ William P. Roelandts 6.21 -33 0.72 0.41 0 5.08 48. Davita/Kent J.Thiry 6.04 -46 0.64 0.84 0.75 3.73 49. Cadence Design/ H. Raymond Bingham 5.77 -36 0.85 0 0 4.90 50. Del Monte Foods/ Richard G.Wolford 5.71 +106 0.63 0.90 0 4.15 51. Robert Half Intl./ Harold M. Messmer 5.71 -15 0.53 1.51 0.26 3.34 52. Broadcom/ Alan E. Ross 5.71 NM 0.52 0.25 0 4.76 53. LSI Logic/ Wilfred J. Corrigan 5.30 +560 0.86 0.50 0 3.93 54. PMI Group/ Roger W. Haughton 5.13 +30 0.75 0.42 1.61 2.21 55. Sempra Energy/ Stephen L. Baum 5.05 -34 1.05 2.16 0 1.09 56. Gap/ Paul S. Pressler 5.03 -85 1.50 3.10 0 0 57. Avery Dennison/ Philip M. Neal 4.66 -9 0.99 0.50 0 2.41 58. Jacobs Engineering/ Noel G. Watson 4.59 +2 0.95 0.88 0 2.75 59. McClatchy/ Gary B. Pruitt 4.55 +16 0.90 0.83 0 2.72 60. Adv. Micro Devices/ Hector De J. Ruiz 4.00 -78 0.95 0.01 0 2.93 61. Clorox/ Gerald E. Johnston 3.98 +14 0.69 0.79 0 1.15 62. Metro-Goldwyn-Mayer/ Alex Yemenidjian 3.98 -79 2.50 1.45 0 0 63. Watson Pharmaceuticals/ Allen Chao 3.67 -28 0.89 0.97 0 1.79 64. First American/ Parker S. Kennedy 3.44 +45 0.61 2.00 0 0.82 65. Guitar Center/ Marty Albertson 3.32 +19 0.59 1.05 0 1.59 Guitar Center /Larry Thomas 3.32 +16 0.59 1.05 0 1.59 66. Golden West Financial/ Herbert M. Sandler 3.27 +146 0.90 0.47 0 1.88 Golden West Financial/ Marion O. Sandler 3.27 +146 0.90 0.47 0 1.88 67. KLA Tencor/ Kenneth L. Schroeder 3.24 -58 0.58 0.20 0 2.45 68. URS/ Martin M. Koffel 3.17 -24 0.86 0 2.21 0 69. Hilton Hotels/ Stephen F. Bollenbach 3.11 +40 1.00 2.00 0 0 70. Western Digital/ Matthew E. Massengill 2.98 -31 0.70 1.05 0 1.22 71. Symantec/ John W. Thompson 2.89 -88 0.75 2.02 0 0 72. CKE Restaurants/ Andrew F. Puzder 2.68 +44 0.57 1.25 0 0.80 73. Franklin Resources/ Charles B. Johnson 2.68 +287 0.59 2.00 0 0 74. Sun Microsystems/ Scott G. McNealy 2.64 -91 0.10 0 0 2.54 75. Jack in the Box/ Robert J. Nugent 2.60 -1 0.76 0 0 1.80 76. Unocal/ Charles R. Williamson 2.46 +68 0.86 1.50 0 0 77. Smart & Final/ Ross E. Roeder 2.45 +82 0.71 0.84 0.26 0.60 78. Bell Microproducts/ Donald W. Bell 2.17 +182 0.55 0.56 0.54 0.50 79. Gencorp/ Terry L. Hall 2.08 +86 0.53 0.62 0 0.56 80. Fleetwood Enterprises/ Edward B. Caudill 2.03 0 0.50 0.46 0.37 0.60 81. Longs Drug Stores/ Warren F. Bryant 1.98 -19 0.75 0.14 0 0.89 82. Building Materials/ Robert E. Mellor 1.95 +11 0.61 0.37 0 0.52 83. Williams-Sonoma/ Edward A. Mueller 1.91 -90 0.98 0.73 0 0 84. Ross Stores/ Michael Balmuth 1.87 -90 0.94 0.89 0 0 85. Adobe Systems/ Bruce R. Chizen 1.85 -88 0.90 0.94 0 0 86. CNF /Gregory L. Quesnel 1.84 -64 0.75 0 0.99 0 87. Reliance Steel & Alum./David H. Hannah 1.72 +55 0.50 0.58 0 0.26 88. Mercury General/ George Joseph 1.43 +89 0.61 0.80 0 0 89. Granite Construction/ David H. Watts 1.27 -5 0.36 0.86 0 0 90. Siebel Systems/ Thomas M. Siebel 1.25 NM 0 1.25 0 0 91. SanminaÐSCI/ Jure Sola 1.21 -83 0.55 0.45 0 0.15 92. Westcorp/ Thomas Wolfe 1.16 +16 0.49 0.30 0 0.27 93. Safeway/ Steven A. Burd 1.00 -21 1.00 0 0 0 94. ABM Industries/ Henrik C. Slipsager 0.87 -30 0.68 0.19 0 0 95. Central Garden & Pet/Glenn W. Novotny 0.68 -63 0.50 0 0 0.19 96. UnionBanCal/ Norimichi Kanari 0.54 -2 0.52 0 0 0 97. Pacer International /Donald C. Orris 0.48 -20 0.30 0.18 0 0 98. Atmel/ George Perlegos 0.35 0 0.35 0 0 0 99. Oracle/ Lawrence J. Ellison 0.06 +53 0 0 0 0 100. Univision Comm./ Jerrold A. Perenchio* 0 0 0 0 0 0

NM = Not meaningful *Univision Chairman Perenchio receives no compensation. He’s a significant shareholder and holds majority voting power in the company, making him “highly motivated to increase Univision’s value” even without pay, according to the Univision proxy. Source: Aon Consulting EComp Data Services