Filing Details 1984-85 Salary, Severance Payments and Fees : Ex-FCA Officers Paid $5.2 Million

The small team of top executives who ran Financial Corp. of America under ousted Chairman Charles W. Knapp were paid more than $5.2 million in salary, severance payments and consulting fees during 1984 and so far in 1985, the troubled savings and loan company has revealed in a proxy statement.

The statement also disclosed that the company continues to be under contract to a firm owned by Knapp’s wife to provide airplane transportation for FCA executives.

The proxy materials also detail a number of outstanding loans made on highly favorable terms under previous management to Knapp and other former executives for stock, real estate and business transactions.

Knapp and his four chief deputies left FCA last year in the midst of a $6.8-billion run on the deposits of American Savings & Loan, FCA’s main subsidiary. Federal regulators concerned about the S&L;’s rapid growth and the flamboyant chairman’s high-risk real estate lending policies worked to replace him last August with William J. Popejoy.

The nation’s largest S&L; lost $590 million last year, the biggest deficit in the thrift industry’s history.

Knapp and two of his top aides, J. Foster Fluetsch and Edward D. Marks, now are associated with Trafalgar Holdings, an investment and real estate firm that Knapp established after leaving FCA last August.

Knapp was paid $2,190,211 in 1984, including a previously reported $2-million severance payment voted by the board to speed his departure last summer.

FCA’s current management has sued him seeking to recover the severance payment, which reportedly infuriated federal regulatory officials who had pressured him to leave. Many of the directors who authorized the payment have since left the board.

Knapp was paid $1.2 million in salary and bonus in 1983.

Fluetsch, who resigned as FCA vice chairman last September, received $339,604 in salary plus a severance payment of $647,500 and a car worth $27,797.

An FCA shareholder, Irving Fishman, filed suit in federal court in Los Angeles seeking to force Knapp and Fluetsch to return the severance payments.

Marks, former executive vice president of FCA and president of FCA Credit Corp., was paid $274,190 in salary for the first eight months of 1984. Marks, a former FCA director, also is to receive $9,443 monthly for the next 10 years in consulting fees. The payment is indexed to inflation. Marks left FCA with a $22,500 company car as well.

Arthur L. Shingler, who resigned in December as an FCA director and president of American Savings, received $710,710 in salary for 1984. In addition, FCA gave him $500,000 in severance pay in March of this year and has paid him $62,500 so far in 1985 in consulting fees.

Philip R. Brinkerhoff, now chairman of Financial Corp. of Santa Barbara, an S&L; holding company, received $407,710 in pay in 1984. He resigned last December as director and executive vice president of FCA. He also served as a top executive of two FCA subsidiaries.

Loans for Stock Purchases

Under Knapp, top officers were allowed to buy company shares with FCA loans at 4% interest or at the Bank of America prime rate then in force. Knapp has repaid all such loans, the proxy said, but Marks still owes $175,910 under the program and Fluetsch owes $67,500. Another former director, John J. Borer Jr., owes $117,742, the proxy stated.

The outstanding loans have been refinanced at 12% and were due March 31.

Knapp owes the bank $350,000 for a loan due in 1989 and secured by a second trust deed on his house.

The proxy also reveals that FCA is under contract to a firm named Jet Airways to provide private air transportation to FCA executives who fly frequently between company facilities in Los Angeles-area airports and Stockton, where American Savings has its headquarters.

Leases on airplanes operated by Jet Airways were acquired by American Savings last July from Fluetsch, Borer and N. Brooke Knapp, Knapp’s wife.

The remainder of flight operations were taken over by a new company, also named Jet Airways, wholly owned by Brooke Knapp. Last year, Brooke Knapp’s company was paid $9.1 million. FCA’s contract with Jet Airways was renewed last November.

American Savings took over lease payments on three planes previously leased to Jet Airways by three limited partnerships controlled by Fluetsch, Shingler and a brother of Fluetsch.

The complicated financing of the airplane venture also includes unsecured loans of $45,000 to Brooke Knapp, Fluetsch and Borer to pay interest on an aircraft loan.

Leased Office Space

FCA has told Brooke Knapp that it intends to cut back on its private flying and will not renew her contract when it expires.

The proxy materials also revealed that American Savings leased office space in one of its buildings to a limited partnership including Knapp and Fluetsch that was set up to operate a restaurant in a company building. The S&L; spent $243,249 on improvements to the offices. The restaurant recently folded and is now in bankruptcy proceedings.

The statement also disclosed that Fluetsch’s brother and son were highly-paid FCA executives. Michael Fluetsch, his brother, was paid $182,108 as an official of FCA Asset Management; Timothy Fluetsch, his son, received $102,876 as an employee of American Savings and FCA American Mortgage.

In addition, FCA granted former director Borer a five-year consulting contract paying him $14,583 per month and providing $300,000 in life insurance.

Popejoy’s annual salary is $520,000.