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Well-Paid L.A. Gear Chairman to Work for Free

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TIMES STAFF WRITER

L.A. Gear’s chairman, Robert Y. Greenberg, is planning to work for free until the sneaker firm makes money again.

But he is not getting much sympathy. L.A. Gear also disclosed Wednesday that Greenberg earned $3.47 million in cash compensation last year, while its No. 2 executive, Sandy Saemann, received $2.54 million.

That came in a fiscal year when L.A. Gear’s earnings fell 43% to $31.3 million and the company posted its first quarterly loss ever as a public company: a fourth-quarter deficit of $7.1 million. Company executives say Marina del Rey-based L.A. Gear, the nation’s No. 3 sneaker maker, lost money again in its first quarter ended Feb. 28.

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“For a company of this size, and given their performance, this (executive pay) is a lot of money, a lot of money,” said Frederick Wadler, an analyst with Gilford Securities in Chicago and an L.A. Gear critic.

The median compensation last year for chief executives of firms about the same size as L.A. Gear was $600,000, according to a leading compensation consultant who asked not to be identified.

Greenberg and Saemann’s 1990 compensation--in salary and bonuses--actually was down from 1989, when Greenberg earned $5.4 million and Saemann received $5.3 million. Their bonuses, which had been tied to pretax profits, fell due to the company’s performance.

Kevin J. Ventrudo, L.A. Gear’s chief financial officer, said Greenberg was paid $500,000 in the company’s first quarter but decided to work without pay beginning the current quarter until the company turns a quarterly profit again.

“He’s committed to returning the company to profitability as soon as possible, and this is his way of showing it personally,” Ventrudo said.

Even if profits come back dramatically, Greenberg stands to take another pay cut this year. If and when L.A. Gear makes money again, Greenberg will be paid at an annual rate of $1.5 million. Any incentive bonuses above that would require board approval.

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Likewise, Saemann’s pay has been lowered to an annual rate of $1.1 million and any bonuses beyond that also would require the board’s consent. Greenberg, with nearly 20% of the company’s stock, and Saemann, with 5%, are the company’s two largest shareholders and are members of the board.

L.A. Gear’s chief administrative officer, Gil Schwartzberg, agreed to a $125,000 cut in his base salary. He received $1.7 million last year.

Nike, the nation’s No. 1 sneaker maker, awarded $543,000 last year to its chief executive and top shareholder, Philip Knight.

Paul Fireman, the chief executive of the No. 2 sneaker firm, Reebok International, has been one of the highest-paid executives in American industry. In 1989, Fireman made $14.6 million in salary and bonuses. But under a new pay package announced in response to angry shareholders, Fireman’s cash compensation will be capped at $2 million.

If L.A. Gear loses keeps losing money, Greenberg will have more than his own pay check to worry about--the company is required under its new bank agreement to return to profitability this quarter.

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