Scaling New Heights : Fidelity Among Companies That Place Stock in Reward System : Income: Not all salaries and bonuses, however, reflect the value of a business’ shares.

You wouldn’t know it by looking at the chief executive’s base salary, but Fidelity National Financial Inc. placed first among Orange County companies in stock appreciation over a five-year period.

The nation’s fifth largest title insurance companies, Newport Beach-based Fidelity saw the value of its shares increase more than tenfold. According to its proxy statement to shareholders, $100 invested in Fidelity shares in 1988 was worth $1,388.50 at the end of the company’s 1993 fiscal year.

Fidelity rewarded four of its five top officers with pay hikes and increased bonuses over the past few years. However, the salary of President and Chief Executive William P. Foley II stalled at $394,008, unchanged from the previous year and down 3% from the $405,836 he was paid in 1991. Foley’s annual bonus took a dive, too: $415,000 last year, down 40% from $697,742 in 1992.

Rather than with a raise, the company acknowledged Foley’s contribution to Fidelity’s good fortune with sizable grants of stock options--worth a conservatively estimated $3.5 million in 1993.

Frank P. Willey, Fidelity executive vice president and general counsel, said the reward system provides Foley an opportunity to make more money than he would with standard pay hikes. And, what’s good for a major shareholder is good for all shareholders.

“A 5% to 10% increase in salary does not even compare in terms of value to a big jump in stock value,” Willey said. “We have an employee stock purchase plan that many of our employees and all of our executives are involved in. As a result, we are very motivated to look at stock appreciation. The more we can do to enhance the value of our stock for our shareholders, the more financial reward we ourselves recognize.”

All in all, 1993 was a good year for Fidelity. Its profit more than doubled from 1992 to $36.3 million, and revenues rose 47% to $575.4 million. That helped Foley’s 20% stake in the company climb from a value of $38 million at the beginning of 1993 to $86 million by the end of the year.

Health-care companies, benefiting from a growing emphasis on cost-saving managed health plans, crowded the other top slots for stock value appreciation. If you invested $100 in Pacificare Health Systems in Cypress five years ago, by the end of 1993 it would be worth $1,262.50. Fountain Valley-based FHP International Corp.’s stock value grew sixfold to $607. And at Safeguard Health Enterprises in Anaheim, a $100 investment turned into $550 over five years.

Of 82 Orange County public companies that were required to report stock performance trends in their proxies, 50 showed gains over the five-year period while 32 reported losses.

The big losers were shareholders of Koll Real Estate Group, where a $100 investment in the Newport Beach development company, made when its stock was first publicly traded in 1990, would have plummeted to a mere $4.48 at the end of 1993.

Chairman Donald M. Koll and Chief Executive Raymond Wirta joined Koll Real Estate just last year, so their respective salaries of $162,500 and $110,417 cannot be compared to company performance over the three-year period.

But Raymond J. Pacini, the company’s chief financial officer and executive vice president, saw his salary and bonus increase 32.6% over the three years--to $286,500 in 1993 from $216,000 in 1991. Pacini’s actual salary dropped slightly in 1993, off 5.25% to $156,500 from $165,167 in 1992. But his annual bonus of $130,000 was more than twice the $60,000 bonuses he received in 1991 and again in 1992.

“My bonus was based on specific objectives that we accomplished during the year,” Pacini said--adding that the company raised $100 million through asset sales and financing, paid off $58 million in bank debt and retired another $53 million in public debt.

The company reported 1993 profit of $14.3 million, which included a gain of $41 million from discontinued operations, compared to a loss of $38.4 million the year before. Revenue declined 41% to $16.7 million.

Other losers over the five years included Alliance Imaging in Orange, where $100 fell to $9; UnionFed Financial Corp. in Brea, which turned $100 into $10 for shareholders; and CMS Enhancements in Irvine (since renamed AmeriQuest Technologies Inc.) where $100 invested in 1988 fell to $18 at the end of 1993.

Options Exercised

Milan Panic of ICN, with $9.5 million in stock options, leads the list of those exercising options. The top Orange County executives in stock options exercised:

1993 Stock Options Rank Exercised Executive Title Company 1. $9,542,241 Milan Panic COB,CEO,SO ICN Pharmaceuticals 2. $2,750,000 Leslie G. McCraw COB,CEO Fluor Corporation 3. $2,505,279 Robert E. Martini COB, CEO Bergen Brunswig Corp. 4. $1,952,188 Hugh K. Coble SO Fluor Corporation 5. $1,667,000 Michael W. Rayden COB,P,CEO Pacific Sunwear 6. $1,375,000 Vincent L. Kontny P, COO Fluor Corporation 7. $1,267,364 Adam Jerney P,SO ICN Pharmaceuticals 8. $902,877 Alan Hoops P, CEO Pacificare Health Systems Inc. 9. $861,187 Terry Hartshorn P, CEO Pacificare Health Systems Inc. 10. $750,000 David S. Samuels COB, CEO, P State of the Art Inc.

Source: Individual companies ; Researched by JOHN O’DELL / Los Angeles Times

Total Compensation by Firm

Rockwell heads the list of firms with the largest total executive payrolls.

Rank Company Amount 1. Rockwell International $16,719,873 2. Abbey Healthcare Group $10,460,488 3. Clothestime $9,567,612 4. Fluor Corporation $8,650,808 5. Pacificare Health Systems Inc. $6,398,055 6. FHP International Corp. $6,102,440 7. St John Knits, Inc. $5,754,448 8. Fidelity National Financial Inc. $5,315,706 9. Nichols Institute $5,006,633 10. AST Research $4,643,093

Source: Individual companies ; Researched by JOHN O’DELL / Los Angeles Times

How Stockholders Fared

LARGEST GAIN: FIDELITY NATIONAL FINANCIAL INC.

How $100 invested Dec. 31, 1988, in Fidelity National Financial Inc. Class A common stock compares to a similar investment in a group of competing title insurance companies and the Standard & Poor’s 500 Index:

Fidelity National Industry S&P; Broad Year Financial index* Market 500 1988 $100.00 $100.00 $100.00 1989 127.83 117.72 131.68 1990 133.33 101.04 127.58 1991 297.33 144.57 166.47 1992 600.53 206.37 179.20 1993 1,388.50 275.66 197.26

* Comprises Alleghany Corp., Capital Guaranty Corp., First American Financial Corp., Investors Title Insurance Co., Lawyers Title Corp. and Stewart Information Services Corp.

LARGEST LOSS: KOLL REAL ESTATE GROUP

How $100 invested in Koll Real Estate Group Class A common stock Jan. 2, 1990 (the first day its stock was traded) compares with a similar investment in the Media General Index and the Wilshire Real Estate Securities Index on Dec. 31, 1990:

Real estate Media General Year Koll index index Jan. 2, 1990 $100.00 $100.00 $100.00 Dec. 31, 1990 20.51 51.47 92.98 Dec. 31, 1991 7.05 58.29 120.02 Dec. 31, 1992 2.56 52.60 124.83 Dec. 31, 1993 4.48 62.84 143.29

Sources: Fidelity National Financial Inc., Koll Real Estate Group;

Researched by JANICE L. JONES / Los Angeles Times