Sunday, June 06, 2004

Million $$ Perks for CEO's

This is why they have to pay their employees so little....

By E. Scott Reckard, LA Times Staff Writer

A million bucks isn't a lot for chief executives in this day and age. But a million in perks during a single year still lands you in rarefied company.

At least seven chief executives from California's 100 largest public companies pocketed $1 million or more last year in what financial statements classify as "other compensation," according to The Times' annual executive compensation survey.

The category excludes salary, bonuses, stock options, restricted stock and other commonplace rewards. But it does include a grab bag of other perquisites such as insurance, forgiven loans, windfalls triggered by companies going private, special retirement payments and personal use of corporate jets.

Another benefit sloshed into the other-comp bucket is the "gross-up," a term applied when the company covers the taxes that executives otherwise would have to pay on all those perks. Several California CEOs logged millions of dollars in gross-ups, the bane of many shareholder and consumer advocates.

"The most highly compensated people in the country would appear to me not to need any help settling their tax bills," said Paul Hodgson, senior research associate with the Corporate Library, a Web-based corporate governance research firm.

Read the rest. The details are telling. For example:

• R. Chad Dreier, Ryland Group Inc., $7.61 million.

The Calabasas-based home builder has seen its shares boom along with the housing markets, going from $10 apiece four years ago to $94.14 on Dec. 1 before settling back to $78.72 on Friday on the NYSE.

Dreier, Ryland's CEO since 1993, has recorded booming perks as well, including $90,169 last year for personal services and medical costs, $102,942 in use of corporate aircraft and $392,074 in contributions to retirement and deferred pay.

A more unusual reward resulted from Ryland's paying off the CEO's split-dollar life insurance, a type of policy that resembled an interest-free long-term loan. Such arrangements were banned under the Sarbanes- Oxley Act, the 2002 accounting reform bill. To erase the split-dollar policy from its books, Ryland paid Dreier about $2.1 million, company spokeswoman Melissa Bailey said.

Dreier also was credited with $2.66 million in deferred earn- ings under a Ryland incentive plan. What's more, he received $2.25 million to cover his taxes on the split-dollar payout and the value of some restricted stock that became salable in 2003 — a gross-up that grossed out one consumer activist.

"I think even Caesar had to pay taxes," said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights in Santa Monica. "We've now outdone the Romans in pandering to the guys at the top."

Those Romans--pikers, that's what they were. Weenies.