County’s Best-Paid Executives Mirror the Hot Industries

Roger Johnson made $966,479 in salary, bonuses and stock options last year as chairman, president and chief executive of Western Digital Corp., an Irvine-based computer chip maker.

That may sound like a lot, and it is: the total remuneration made Johnson the highest-paid executive of a publicly held company based in Orange County.

But then, his company made $21.5 million in its 1986 fiscal year--a record that Western Digital expects to handily top when the current fiscal year ends next month.

Echoing the nationwide trend towards performance-based compensation, Orange County’s top-earning executives last year increasingly came from companies enjoying one of their best-ever years.

James Conte, president and chief executive of Community Psychiatric Centers in Santa Ana and a close second to Johnson, earned $963,914 for the year. The operator of psychiatric hospitals and kidney dialysis centers earned a record $51.3 million profit.

And Arthur Svendsen, chairman of Standard Pacific L.P. and third on the list, earned $786,286 in 1985 for his efforts on behalf of the Costa Mesa home builder. The company earned $19.4 million for the year.

The composition of the 10 top-paid executives mirrors what’s hot and what’s not among Orange County’s large publicly held companies. There were few high tech companies represented but plenty of service companies such as Community Psychiatric; Bergen Brunswig, a drug distributor, and National Education Corp., a trade school operator.

Some industries, such as real estate, would likely have been even more heavily represented, but most of Orange County’s big real estate companies are privately owned and do not reveal executive salaries. As a result, the list excludes such well-known developers as Irvine Co. owner Donald L. Bren; Koll Co. owner Donald Koll; William A. Lyon, of the home-building company that bears his name, and George Argyros, owner of Arnel Development Co.

Unlike a similar survey two years ago, none of the 1986 top-paid executives come from the county’s big oil service companies, which have been severely hurt by the prolonged worldwide depression in oil-drilling activity.

In fact, with the exception of Fluor Corp., which has been hurt by a drop in major construction projects throughout the world, none of the companies with executives on the top-10 list lost money in their most recent fiscal years.

“More compensation is being tied to performance at companies throughout the nation,” said Fred Whittlesey, a member of the consulting firm of William M. Mercer-Meidinger-Hansen, which compiled the top-paid list.

Done as Incentives

And, increasingly, that compensation is being made in the form of incentives such as bonuses, profit-sharing and options to buy company stock at below-market prices.

Half of the executives on Orange County’s top 10 exercised those options last year, yielding compensation considered “long term” since federal Securities and Exchange Commission rules prohibit company insiders from selling those shares for at least six months after they are purchased.

The growing emphasis on performance-tied pay is the reason for what several consultants see as a decline in the yearly increases in fixed salaries among all employees, and particularly top-level executives.

A newly released study from Towers, Perrin, Forster & Crosby, international management consultants, shows that base salaries among executives nationwide will rise about 5% in 1987, the lowest increase in more than 10 years. For all employees, the increase is expected to be 4.7%, according to the study.

“There’s a strong desire to move away from the fixed form of compensation,” said Lawrence A. Wangler of the company’s Irvine office.

For Orange County, the Towers, Perrin study estimates that base salaries will increase about 5.8% for executives and about 5.5% for other workers. The county rate is about 1% higher than that in Los Angeles, which Wangler attributes to Orange County’s more robust economy and its higher percentage of fast-growing companies.

ORANGE COUNTY TOP 10

NAME TITLE COMPANY 1. Roger W. Johnson Chairman, CEO Western Digital Corp. 2. James W. Conte President, Community Psychiatric CEO Centers 3. A.E. Svendson CEO Standard Pacific Corp. 4. R.R. Foell President Standard Pacific Corp. 5. H. David Bright President, National Education Corp. CEO 6. Robert L. Green Chairman Community Psychiatric Centers 7. David S. Tappan Jr. Chairman, CEO Fluor Corp. 8. Emil P. Martini Jr. Chairman, CEO Bergen Brunswig Corp. 9. S.J. Scarborough VP Standard Pacific Corp. 10. William J. Popejoy Chairman, CEO Financial Corp. of America

CASH LONG-TERM OTHER TOTAL 1. 440,154 526,325 0 966,479 2. 700,000 0 263,914 963,914 3. 786,286 0 0 786,286 4. 739,444 0 0 739,444 5. 408,000 183,143 113,607 704,750 6. 450,000 0 211,348 661,348 7. 450,000 140,492 45,250 635,742 8. 608,333 0 0 608,333 9. 580,790 0 0 580,790 10. 523,784 0 0 523,784