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Posted 24 Feb 2001   For week ended July 09, 2000
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Sent on Mormon-News: 11Jul00

Summarized by Kent Larsen

Willes Makes $64.5 Million on Leaving Times-Mirror
Los Angeles Times 5Jul00 B2
By Kathy M. Kristof: Times Staff Writer

LOS ANGELES, CALIFORNIA -- LDS Church member Mark H. Willes, nephew of LDS Church President Gordon B. Hinckley, topped the Los Angeles Times' list of highest-paid Southern California executives. Willes earned $64.5 million from Times-Mirror for this year, in spite of being forced to resign amid the Tribune Company's purchase of Times-Mirror.

The total compensation figures listed in the Times's article included salary, severance and stock payments, as well as the value of company provided benefits, from the common life and health insurance and retirement benefits to executive-level benefits like care and housing allowances.

In Willes' case, the bulk of the pay came from stock options granted in previous years during his five-year term as Times-Mirror's CEO which "vested" (i.e., became his without restriction) when the Tribune Company agreed to purchase Times-Mirror. Stock options granted to employees commonly "vest" when a "liquidity event" occurs -- when the company is sold or goes public.

Willes also received a severance payment of $9.2 million and had 15 years added to his tenure for calculating retirement benefits.

The compensation makes Willes and example for the critics of high executive pay. His compensation amounts to 25 percent of Times-Mirror's 1999 earnings and, if invested at 6% interest, is enough to pay more than 50 people at the average American wage, just from the interest after paying LDS tithing. However, during Willes' term at Times-Mirror, the company's stock price quadrupled, including an increase of 20% last year.

But critics say that salaries in the range of Willes' are out of control, and don't represent reality. Executives compare their salaries to those at other companies, especially those at lucrative Internet start-ups, and complain that they are making less, persuading their Boards of Directors to raise their salaries. Since no compensation committee wants to pay their company's chief executive in the bottom half of all executives, the average pay keeps increasing as companies try to put their executives in the top half.

And critics maintain that not only do shareholders suffer lower earnings because of huge severance packages like Willes', morale among lower-level employees suffers as well, "There is a quiet outrage . . . with the people who remain," says Don Sagolla, director of the compensation practice at William M. Mercer, Inc. "They are an often-ignored constituency. But they are the ones who have to stay and fix things that got messed up."

See also:

Executive Compensation Climbs Into Stratosphere Los Angeles Times 5Jul00 B2 By Kathy M. Kristof: Times Staff Writer


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