Bringing Home More Than Bacon : Top-Paid San Diego Executive Delivered for Intermark, Triton

Well known as a corporate wheeler-dealer, Charles (Red) Scott enhanced his reputation last year at the helm of Intermark, a La Jolla-based mini-conglomerate he has led as chief executive since 1970. He made deals both for Intermark and Triton Group, the La Jolla-based holding company controlled by Intermark.

Scott, who is also chairman of Triton Group, was compensated abundantly for his labors: His $1,888,045 total compensation in 1988 made him the highest-paid executive at a San Diego-based public company. The figure, which included $1,027,439 in gains from the sale of stock options and performance-related pay, includes Scott’s compensation for his work at Triton.

Scott guided Triton’s 1988 sale of its Simplicity Patterns unit, a deal that resulted in a gain of $40 million just three years after Triton bought the sewing patterns publisher.

Deal-Making Continued

Also in fiscal 1988, Triton sold 11% of the stock in its wholly owned Continental Graphics printing unit to the public. The stock offering was then followed by Triton’s sale of its remaining 89% interest to a management group at the Los Angeles-based printing concern, enabling Triton to book an $80-million gain in fiscal 1989.

Scott’s deal-making continued into fiscal 1989, which ended March 31. He engineered a plan for Triton to acquire voting control of Fuqua Industries, an Atlanta-based conglomerate. Pending approval by the Federal Home Loan Bank Board, Triton plans a friendly acquisition of 51% interest in Fuqua. The bank board’s approval is required because Fuqua owns a Georgia savings and loan.

In November, Triton acquired a 64% interest in Western Sizzlin’, which, with 580 outlets, is the second-largest franchise steakhouse chain in the United States.

An Unconventional Guy

Triton’s pending acquisition of a controlling interest in Fuqua, which had about $970 million in sales last year, contrasted with Triton’s $151 million in revenue, is an indication of how unconventional a deal-maker Scott can be. (Intermark, whose sales for fiscal 1988 were $600 million, owns 41% of Triton stock and has an option to acquire an 20%. more.)

But investors who have stuck by Scott, 60, over the long haul have done spectacularly well. A $10,000 investment in Intermark stock in 1975 was worth $917,000 at the end of fiscal 1988, a 41% compounded annual return, corporate counsel Mitchell Woodbury said Monday.

Scott’s 1988 compensation package was more than $670,000 above that of Neal Harris, the second-highest-paid San Diego County executive. Harris, executive vice president of Price Co., the operator of 42 Price Club discount warehouses, made $1,216,295 in 1988, of which $1,075,441 was in stock options.

In third place was Michael Dingman, chairman of Henley Group, a multi-industry holding company that now has bicoastal headquarters offices in La Jolla and Hampton, N. H. Dingman made $1,160,000, all in base salary, and is one of five Henley executives to make the top 25 on San Diego’s best-paid list.

Other Henley executives on the list are President Paul Montrone ($775,000) in fifth place; managing directors Harold Eastman ($600,000) in eighth place, David L. Summers ($600,000) in ninth place and Harold Buirkle ($465,000) in 16th place. Each of the Henley executives also has a “golden parachute,” meaning they get special compensation if Henley is acquired.

In fourth place was Jerry Caulder, president of Mycogen Corp., a company that produces biopesticides. Of Caulder’s $926,485 in total compensation, $713,400 came in long-term compensation, typically proceeds from the sale of stock options.

Sifted Through Proxy Data

The compensation list was compiled by the Los Angeles-based human resource consulting firm William M. Mercer Meidinger Hansen.

The firm sifted through proxy material filed by 260 California-based, publicly held companies to produce a survey of the state’s 100 highest-paid executives published by The Times on Sunday.

Scott and Harris were the only two San Diego executives to make the statewide best-paid list, placing 23rd and 56th, respectively.

Michael O. McCullough, a principal with Mercer Meidinger Hansen, said he expects to see many more executives in San Diego and elsewhere in California take profits from stock options this year than last.

Stock options, which enable executives to buy stock at historically low prices and then sell shares at current higher prices, were generally unattractive last year in the aftermath of the October, 1987, stock market crash, he said.

Compensation packages paid to San Diego County executives tracked fairly closely with pay given to the top 25 Orange County executives, McCullough added.

The performance-driven compensation packages paid to Walt Disney executives Michael Eisner and Frank Wells were perhaps the most remarkable aspect of this year’s statewide survey. Eisner, with $40.1 million, and Wells, with $32.1 million, led the statewide list, and both had pay plans heavily freighted with incentives based on Disney meeting certain profit and growth targets.

McCullough said the astronomically high compensation paid to Eisner and Wells was justified by Disney’s improved financial condition and stock price since the two men took over the company’s management in 1984.

And, because of Disney’s highly visible success, McCullough expects more companies to take a closer look this year at adopting pay plans that closely tie compensation salary to performance.

San Diego’s Highest-Paid Executives

Name Title(s) Company 1 CHARLES R. SCOTT P, CEO Intermark 2 NEAL HARRIS EVP Price Co. 3 MICHAEL D. DINGMAN COB, CEO, MDIR Henley Group 4 JERRY D. CAULDER P, CEO Mycogen 5 PAUL M. MONTRONE P, MDIR Henley Group 6 KIM FLETCHER COB,CEO HomeFed Corp. 7 GORDON C. LUCE COB,CEO Great American First Savings Bank 8 HAROLD S. EASTMAN MDIR Henley Group 9 DAVID L. SUMMERS MDIR Henley Group 10 PAUL C. BARKLEY P, CEO, DIR PS Group 11 ROBERT F. ADELIZZI DIR, P, COO HomeFed Corp. 12 HARRY W. TODD COB, CEO, P Rohr Industries 13 JAMES C. SCHMIDT VCH Great American First Savings Bank 14 WALTER J. ZABLE COB, P, CEO Cubic Corp. 15 MARK A. KLINE SVP, PS Imperial Corp. of America 16 HAROLD W. BUIRKLE MDIR Henley Group 17 JOHN S. BARRY P WD-40 18 RICHARD A. CRAMER MDIR, COB, CEO Fisher Scientific Group 19 KENNETH J. THYGERSON P, CEO Imperial Corp. of America 20 THOMAS A. PAGE COB, P, CEO San Diego Gas & Electric 21 ROGER K. LINDLAND P, COO Great American First Savings Bank 22 GEORGE M. SHORTLEY EVP, DIR PS Group 23 ALAN C. KOLB COB, CEO Maxwell Laboratories 24 JAMES R. GLYNN VP, CEO Mycogen 25 DAVID A. BOCCHINI MDIR, CEO Fisher Scientific Group

Gold. parachute/ 1988 1988 1988 Name emp. agreement Cash Long-term TOTAL 1 CHARLES R. SCOTT No/No $860,606 $1,027,439 $1,888,045 2 NEAL HARRIS No/No $140,854 $1,075,441 $1,216,295 3 MICHAEL D. DINGMAN Yes/No $1,160,000 $0 $1,160,000 4 JERRY D. CAULDER Yes/No $213,085 $713,400 $926,485 5 PAUL M. MONTRONE Yes/No $775,000 $0 $775,000 6 KIM FLETCHER No/Yes $664,427 $0 $664,427 7 GORDON C. LUCE Yes/Yes $625,945 $0 $625,945 8 HAROLD S. EASTMAN Yes/No $600,000 $0 $600,000 9 DAVID L. SUMMERS Yes/No $600,000 $0 $600,000 10 PAUL C. BARKLEY No/Yes $357,267 $195,000 $552,267 11 ROBERT F. ADELIZZI No/Yes $540,030 $0 $540,030 12 HARRY W. TODD Yes/Yes $533,463 *$878,325 $533,463 13 JAMES C. SCHMIDT No/Yes $484,858 $0 $484,858 14 WALTER J. ZABLE No/No $484639 $0 $484,639 15 MARK A. KLINE No/No $483,876 $0 $483,876 16 HAROLD W. BUIRKLE Yes/No $465,000 $0 $465,000 17 JOHN S. BARRY No/No $350,000 $108,450 $458,450 18 RICHARD A. CRAMER No/No $450,000 $0 $450,000 19 KENNETH J. THYGERSON Yes/Yes $400,000 $0 $400,000 20 THOMAS A. PAGE Yes/Yes $383,000 $0 $383,000 21 ROGER K. LINDLAND Yes/Yes $357,016 $1,775 $358,791 22 GEORGE M. SHORTLEY No/Yes $216,711 $129,433 $346,144 23 ALAN C. KOLB No/No $338,311 $0 $338,311 24 JAMES R. GLYNN Yes/Yes $225,181 $106,250 $331,431 25 DAVID A. BOCCHINI No/No $328,333 $0 $328,333

Source: William M. Mercer Meidinger Hansen

* Executive’s long-term compensation, principally stock options, is reported only over a three-year period. That amount is not added to the 1988 total.

Cash compensation generally includes base salary and annual bonuses earned for services renderedin the latest fiscal year, regardless of whether receipt was deferred to future years. Long-term compensation includes any income from cash- or stock-based compensation plans or othersources that are paid that year but based on several prior years’ performance. The following items were not included in either cash or long-term compensation unless companies included them without indicating their exact amounts separately: Company contributions to 401(k) plans and cash profit-sharing plans; income from pensions; supplemental executive benefits or supplemental executive retirement plans; cash value of executive perquisites such as company cars, or retirement-oriented plans offered to all employees.

CEO, chief executive; COB, chairman of the board; COO, chief operating officer; DIR, director; EVP, executive vice president; MDIR, managing director; P, president; PS, President of a subsidiary; SVP, senior vice president; VCH, vice chairman; VP, vice president.