Salomon Settles Pay Fight With 2 Former Execs : Trading: About $20 million will go to president and vice chairman, who left after Treasury bond scandal.

Salomon Inc. said Monday that it paid an estimated $20 million to settle a dispute over back pay with its former president and vice chairman, who left the firm in the wake of its Treasury bond scandal.

Salomon said it has been unable to reach agreement with former Chairman and Chief Executive John Gutfreund and former general counsel Donald Feuerstein.

But Salomon said in a statement it has agreements with former Vice Chairman Thomas W. Strauss and former President John Meriwether. Salomon didn’t specify the total amount in its statement, but company documents indicate Strauss received $10.97 million and Meriwether at least $9.7 million.

The four executives resigned in August, 1991, after revealing they had known about improper Treasury bond trading practices months before they informed government officials. Last month, Strauss and Meriwether settled charges with the Securities and Exchange Commission by agreeing to pay fines and temporarily not work in the securities industry.

Salomon agreed last year to pay $290 million in fines and penalties to settle federal securities fraud charges related to the scandal. It was one of the largest penalties ever assessed in the securities industry.

The SEC has charged that Salomon traders made $13.5 billion in false bids at Treasury auctions between August, 1989, and May, 1991.

Salomon said the settlement with Meriwether and Strauss essentially is for compensation in various stock and executive pay plans before the scandal broke in 1991.

Under the settlement, Strauss is allowed to exercise options to buy 145,000 shares of Salomon stock at a steep discount of $18.37 1/2 a share. At current market prices, that deal alone would give Strauss a paper profit of $2.9 million.

On Monday, Salomon’s stock closed at $38 a share, down 12.5 cents, on the New York Stock Exchange. The settlement was announced after the close of trading.

Strauss surrendered the right to purchase options for 218,000 shares, but the discount for those options wasn’t nearly as lucrative: It ranged from $19.94 a share to $30.37 1/2 a share, according to Salomon’s 1991 proxy statement.

Philip Howard, an attorney representing Strauss, declined comment on the settlement.

Salomon allowed Strauss to keep stock awarded to him in executive compensation plans prior to 1991. It also agreed to purchase his shares in Salomon’s Equity Partnership Plan, in which the firm’s executives receive a portion of their salary in stock that they can’t touch for five years.

The statement didn’t specify the value of the shares, but Salomon’s 1991 proxy said Strauss claimed to have 131,725 shares, worth $5 million at current prices. Strauss also claimed that he was owed $3.06 million last year in Salomon’s managing directors compensation plan.

Meriwether, on the other hand, was awarded nearly $10 million: an $8 million bonus for 1991, plus $1.7 million because Salomon prevented him from exercising an option to buy 182,000 shares.