He’s Fired for Earning Too Much--Wins $20 Million

A Beverly Hills insurance executive who was fired six years ago by Sperry and Hutchinson Co. for making too much money won $20 million Thursday from the Green Stamp company and its former subsidiary, which he ran.

Los Angeles Superior Court jurors awarded the money to Frank V. McCullough Sr., 64, after a 12-week trial before Assistant Presiding Judge Jack E. Goertzen.

Sperry was assessed $6 million in compensatory damages and $2 million in punitive damages, and its former insurance subsidiary, S & H Insurance Co., was ordered to pay $4 million in compensatory damages and $8 million in punitive damages.

“I am a little numb but happy as I can be,” a laughing McCullough said in a telephone interview from his office at Carlisle Insurance Co., the mid-Wilshire firm he founded after his ouster by Sperry. “This sort of gives me bragging rights to be more right than the other guys.”

McCullough said he was particularly pleased by the jury’s 12-0 vote in his favor. Only nine votes are required to reach a civil court verdict, but the McCullough jury’s verdict was unanimous against the two companies.

McCullough, according to his attorneys, Charles B. O’Reilly and Frank Bonin, was hired by Sperry in 1974 to take over its failing S & H Insurance Co. in Los Angeles. He turned the company around, the lawyers said, and earned major bonuses under his contract, which guaranteed him 20% of the subsidiary’s annual profits.

In 1977, they said, McCullough was entitled to a bonus of $636,000 but the company asked him to limit his bonus to $225,000. He refused and collected the full 20%, sharing a third of the $636,000 with his employees.

On April 14, 1978, McCullough was fired.

“They fired him,” Bonin said, “for making too much money.”

Under his contract, McCullough was to receive 10% of profits each year for three years if he were fired without cause.

Bonin said Sperry sent McCullough checks but “cooked the books” in computing the amount, assessing 10% of the profit after subtracting bonuses to others instead of 10% of the gross profit.

The companies were accused of wrongful termination, breach of contract and fraud.

McCullough also sued the accounting firm of Peat, Marwick, Mitchell & Co., and its account executive, Jerry M. Miller, but the jurors failed to reach a verdict against them.

Goertzen first declared a mistrial against the accountants, but later granted a verdict in their favor at the request of their attorney, Cheryl Hoffman. The judge said jurors had rejected charges of negligence against the firm and Miller, and that evidence of fraud by those defendants was insufficient to warrant a second trial.

McCullough, who was out of work for 18 months, was asked if he considers himself better off today. “How can I say that I am better off because they pushed me off the mountain?” he replied. “The worst part was the frustration of feeling kind of helpless. What do you do when somebody says, all of a sudden, you are finished?

“It is the helplessness of having a wrong pushed on you when you can’t do anything about it.”

Well aware that appeals will delay receipt of any of the $20 million, McCullough isn’t planning how to spend his millions yet.

“It won’t change me 10%,” said McCullough, a father of four grown sons and grandfather of nine. “It was always the principle with me. I really thought I was right and they were wrong.

“The primary problem was they didn’t keep their word to me,” he said. “I think in business you should always keep your word.”