10 Executives in Region Break $1-Million Mark in 1990 Compensation

Three top officials of Walt Disney Co. headed the list of 1990’s highest-paid executives at public companies in the San Fernando Valley and Ventura County areas.

Meanwhile, 10 officials of local companies received total compensation of more than $1 million in 1990--or more than 18 times the average household income in the San Fernando Valley. A total of 32 executives in the region received $500,000 or more.

Executives of entertainment and financial companies dominated the list. Indeed, of the 10 highest paid executives in the area, eight worked in the movie and television industries or at insurance companies.

But the size of the top-paying companies on the list varied widely, from aerospace giant Lockheed Corp., which had nearly $10 billion in sales last year, to Dick Clark Productions Inc., with about $30 million in sales in fiscal 1990.

The survey is based on a Times analysis of proxy statements and annual reports of public companies in the region stretching from Glendale to Ventura. Some of the salaries listed are for fiscal years that ended during 1990, rather than for the calendar year that ended Dec. 31.

During much of the 1980s, huge salaries for top executives were defended as “pay-for-performance,” an incentive meant to reflect an executive’s contribution to profits and stock appreciation. But, as corporate earnings have deteriorated recently, some observers have begun to question whether top executive salaries are just reflections of performance. For instance, shareholders of ITT Corp., a huge New York-based conglomerate with diverse interests, have complained about Chief Executive Rand Araskog’s $11.4 million pay for 1990.

But locally, shareholders voiced no complaints at Walt Disney Co.’s annual shareholders meeting in March about the equally lofty $11.2 million the Burbank-based company paid its chief executive, Michael D. Eisner, making him by far the best-paid executive in the region. Eisner collected a $1.6-million raise compared to 1989.

Their lack of complaints may be because, in addition to rewarding its top executives amply, Disney has a record of significantly improving its corporate performance since Eisner took the helm in 1984. During Eisner’s tenure, Disney’s earnings have jumped from $98 million to $824 million in 1990 (although the entertainment conglomerate recently suffered its worst quarter in six years).

Other Disney executives are well rewarded for their work too. Last year, Disney paid Frank G. Wells, president and chief operating officer, $5.65 million in salary, bonus, and other compensation. And the company paid Gary L. Wilson, former executive vice president and chief financial officer, $2.14 million, virtually all of it in cash. Two other Disney executives were among the region’s 25 best paid.

Not every company paying top dollar to its top executives last year could point to its 1990 earnings for an explanation, however.

Zenith National Insurance’s chief executive, Stanley Zax, scored fourth on the salary list despite the fact that the Woodland Hills-based property-casualty insurer has been battered by junk bond losses recently.

Zax was paid $1.75 million in total compensation last year--the same pay he received a year before--making him the 69th best-paid executive in the state. Meanwhile, Zenith lost $9.16 million in 1990, compared to a profit of $41.1 million in 1989. Zenith’s revenue rose 6% for 1990, to $520.9 million.

Most of Zenith’s problems last year were due to $50.5 million in charges related to its holdings of junk bonds. Since then, Zenith posted a 78% increase in net income in the first quarter ended March 31. Zax was out of the country and could not be reached for comment.

Fifth on the compensation list was Erwin Cheldin, chief executive of Unico American Corp., a Woodland Hills insurance company with revenues of $31.6 million, only a fraction of Zenith’s. Cheldin was paid a total of $1.71 million--but the figure was inflated because Cheldin recorded a onetime $968,013 gain from exercising stock options, according to Roger Platten, a company vice president.

20th Century Industries paid its top executive, Louis W. Foster, $1.43 million in 1990, but according to Ric Hill, the company’s assistant vice president for corporate affairs, the figure is reasonable, given that “he’s the founder” of the company and “he’s also wearing the hats of chief executive officer, chairman of the board and a director.”

Hill pointed out that Foster’s total salary for 1990 was inflated by the fact that the company paid Foster two annual bonuses during the year instead of the usual one because it decided to shift the payment date of the bonus.

Wayne Patterson, chairman of Live Entertainment Inc. for about a year, earned the region’s seventh-largest compensation package: $1.31 million, entirely in cash.

Patterson, a former chairman of Pace Membership Warehouse Inc., was brought on board to help the company recover from the murder of its former chairman, Jose Menendez. Although Live Entertainment’s earnings deteriorated slightly in the quarter ended March 31, most observers expect its home video business to help the company keep growing.

Two officials of Lockheed Corp., the huge Calabasas defense and space conglomerate, made more than $1 million in 1990: Daniel M. Tellep, the company’s chief executive, and Vincent N. Marafino, its chief financial and administrative officer. In the wake of a large round of layoffs, Lockheed’s earnings for 1990 jumped to $335 million from only $2 million in 1989.

The information for the San Fernando Valley and Ventura County survey was culled from a broader look at proxy statements and annual reports for California companies.

In cases where benefits or stock gains were reported over periods exceeding one year, the compensation figure was based on an annual average. In cases where the 1990-91 proxy statements were unavailable, the information is from the previous year’s proxy.

The Region’s Highest-Paid Executives

NAME COMPANY TITLE 1 Michael D. Eisner Walt Disney COB, CEO 2 Frank G. Wells Walt Disney P,COO 3 Gary L. Wilson Walt Disney EVP, CFO 4 Stanley R. Zax Zenith National Insurance COB, P, SO 5 Erwin Cheldin Unico American P, CEO, COB 6 Louis W. Foster 20th Century Industries COB 7 Wayne H. Patterson Live Entertainment COB, CEO, P 8 Daniel M. Tellep Lockheed Corp. COB, CEO 9 Stanley Braun Pac Rim Holding P, CEO 10 Vincent N. Marafino Lockheed Corp. VCOB,CFO 11 Martin S. Blinder Martin Lawrence Ltd. Edit COB, CEO 12 Richard W. Clark Dick Clark Prod. COB, P 13 Louis L. Borick Superior Industries Intl P 14 Richard A. Nunis Walt Disney SO 15 Gilbert L. Wachsman Live Entertainment SO 16 Raymond C. Brown Superior Industries Intl SVP 17 Norman M. Coulson Glenfed CEO,P,VCOB 18 Lee H. Kasper Image Entertainment SVP 19 Joe Shapiro Walt Disney SVP, LC 20 Thomas W. Wathen Pinkerton’s CEO, COB 21 Joseph G. Havlick CII Financial COB, CEO, P 22 Gene McGrevin Syncor International P, CEO 23 Allen A. Baron Martin Lawrence Ltd. Edit CFO,TRE,SEC 24 David A. Mount Live Entertainment SO 25 R. Lee Armbruster American Ecology VP

1990 Total Salary Stock Stock Other Comp. & Bonus Options Awards Comp. 1 Michael D. Eisner 11,239,039 11,233,229 None None 5,810 2 Frank G. Wells 5,647,425 5,641,615 None None 5,810 3 Gary L. Wilson 2,138,478 2,134,280 None None 4,198 4 Stanley R. Zax 1,750,000 1,750,000 None None None 5 Erwin Cheldin 1,710,864 742,851 968,013 None None 6 Louis W. Foster 1,434,208 1,404,000 None None 30,208 7 Wayne H. Patterson 1,308,782 1,308,782 None None None 8 Daniel M. Tellep 1,118,269 1,011,250 26,319 None 80,700 9 Stanley Braun 1,044,753 934,173 None None 110,580 10 Vincent N. Marafino 1,006,844 899,635 8,930 None 98,279 11 Martin S. Blinder 968,571 896,543 72,028 None None 12 Richard W. Clark 929,000 850,000 None None 79,000 13 Louis L. Borick 925,000 925,000 None None None 14 Richard A. Nunis 924,968 918,750 None None 6,218 15 Gilbert L. Wachsman 870,303 300,297 170,006 None 400,000 16 Raymond C. Brown 794,119 360,000 434,119 None None 17 Norman M. Coulson 685,351 681,361 None None 3,990 18 Lee H. Kasper 684,933 250,801 434,132 None None 19 Joe Shapiro 680,810 675,000 None None 5,810 20 Thomas W. Wathen 647,246 600,601 None None 46,645 21 Joseph G. Havlick 623,587 503,167 None None 120,420 22 Gene McGrevin 582,603 582,170 None None 433 23 Allen A. Baron 577,835 525,000 52,835 None None 24 David A. Mount 569,975 564,808 None None 5,167 25 R. Lee Armbruster 566,860 566,860 None None None

Guide to Title Abbreviations CAO Chief administrative officer CEO Chief executive order CFO Chief financial officer COB Chairman of the board COO Chief operating officer EVP Executive vice president LC Legal counsel P President SEC Secretary SO Subsidiary officer SVP Senior vice president TRE Treasurer VCOB Vice chairman VP Vice president