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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
http://www.latimes.com/business/20000705/t000063233.html
By Kathy M. Kristof: Times Staff Writer
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