Texaco Urged to Hold Off on Bonuses

State Treasurer Matt Fong urged Monday that top Texaco executives be denied 1996 bonuses or receive only reduced year-end financial rewards because they failed to prevent racial discrimination at the oil company.

Texaco agreed to pay $176 million to settle 2-year-old discrimination claims after a recording of executives belittling black employees was made public earlier this month.

The Republican state official said the company’s five most senior executives should be penalized for the misconduct of current and former employees.

“They’ve done a bad job. They shouldn’t be rewarded,” he said at a Capitol news conference.

A Texaco spokesman in New York rejected Fong’s proposal as “misdirected.”

Spokesman Jim Swords said it would be wrong to slash 1996 bonuses when Texaco managers have promised to “move forward” with reforms to fight racial discrimination.

Last year, the five top managers, including Texaco Chairman and Chief Executive Officer Peter Bijur, received $2.1 million in bonuses on top of base salaries totaling almost $3 million, Fong said.

Fong is the state’s top financial officer and a trustee of its mammoth government employee and teacher retirement systems. He said the two agencies own about $200 million worth of Texaco stock.

Fong urged Texaco to detail what actions it has taken to ensure a “zero tolerance for racial discrimination.”

But Fong said a boycott of Texaco, as sought by the Rev. Jesse Jackson, or divestiture of Texaco stock, as other states are contemplating, is “all the wrong medicine.” He said such steps would devalue the company, punish stockholders and penalize innocent employees.

“I believe in . . . situations where a company has either admitted to discrimination or has been fined as a result of such actions, that the top corporate officers be punished, not the employees,” Fong said.

He said that next month he will seek the support of the governing boards of the two state retirement systems in pressuring Texaco directors to deny or reduce bonuses to the top managers.

Fong, who is of Chinese ancestry and is a potential contender for the U.S. Senate in 1998, said he has in the past suffered discrimination.

He recalled that as a young officer freshly graduated from the Air Force Academy, he was refused service by motels in the Midwest that advertised vacancies. “I kept repeatedly being told there were no rooms available,” Fong said.