European Stars And Stripes (Newspaper) - September 2, 1980, Darmstadt, Hesse                                Executive bonuses an example  up a " ",-f-.t  fun lil r p a   com pens Niton a Griem age 53. Company fashion Industry related with $050 million in sales. Contract 3 years 8 months. Annual salary $300,000 front end Bonus $175,000, with Cash or deferred payment option. Cash was taken annual incentive Bonus 0 to so percent of salary determined by Success in meeting mutually determined goals. Stock Grant 30,000 shares Given at Market Valuo of . Closing Price on first Day of work. Pension guaranteed annual pension of 65 percent of final year s pay beginning at age 65. No vesting Tor first three years of employment 40percent vesting it Start of fourth year additional 10 percent vesting added annually thereafter. Miscellaneous personal Choice of leased Cadillac value automobile All expenses included. Membership in luncheon or athletic club of Choice. Insurance fully paid medical insurance plus allot her medical expenses Lor family not covered with maximum of $10 000 a year. Group tile insurance of $750,000. Long term disability insurance of 55,000 a month exclusive of social Security benefits. Travel insurance $600.000. Personal accounting and Legal services up to55.000 a year. Termination agreement if contract not renewed by company executive receives $50,000 a year Tor 10 years plus additional vesting in pension plan to equal six years or 60 percent of benefits at age 65. Relocation All expenses. Mortgage provision to keep mortgage payments constant the company agreed to lend up to s100.000 As Dow payment. With interest rate of 5 percent. No principal payment was required Lor three years it which Point the loan could be rolled Over the executive chose Louse $70.000 Olive is 00 000 available Syufy Cal dullness a Koo s no him York Titi to by Thomas c. Hayes new York times Hose whopping bonuses paid to such base Ball stars As Nolan Ryan Pete Rose and Reggie Jackson have spread to the business world. When lbs hired Thomas Wyman away from the Pillsbury co. Last month he collected is Mil lion before even showing up for work. Similarly in another notable instance. Lee a. Iacocca got a $1 million sweetener last year when the Chrysler corp. Hired him after Henry Ford 2d had dismissed him from the Ford motor co. Mote Aad Bah companies a using the so called front cod boo no strings payment in addition to salary and performance incentives m bait to reel in gust Poi Verea executive. Some five year pacts for corporate officials can run to $8 million or More including pension benefits according to the tax lawyers who negotiate such deals. While the million Dollar payments get the attention smaller bonuses Are More typical and they Are being offered to Middle level executives As Well As to corporate chiefs. The Era of spectacular bonuses Date Back at least As far at 1974, when Revlon inc. Paid  million to Michel c. Bergerac then a senior executive at the International Telephone and Telegraph corp. And Archie r. Mccardell was Given $1.5 million to jump irom the Xerox corp. To the International Harvester co. In 1977. Actually the Label front end Bonus u Only partly accurate. Typically the payment if tailored to match and in Many Case to exceed the value of the mock opt oru. Accumulated bonuses and other fringe Benefit that a manager must abandon when be leaves Hli old Job. "it1 the key to unlock the Golden Handcuffs said Donald site Linn a vice president of towers Perm footer & Crosby a consulting firm. The Bonus element Only Comet into play when the payments include Benefit exceeding she buyout level sit highly thought executives hold secure pm a and often bargain Fon dded iwo Etener perhaps$500,000 or More to entice them to move to Suofy mtg menu reportedly lured Bergerac from itt. At agt4l w take the Teton presidency under the late Chirle Revion. Recon. The mercurial founder of Rev ton ohm town for Lew thaa compatible relation with daily Magazine previous executives who worked for him. Wyman was offered similar inducements by William s. Paley. The lbs chairman to accept a Post that for a decade has virtually been a revolving door. The one shot payment seem to have stirred Little controversy among stockholders onions or corporate Gad lies. A spokesman for the american federation of labor and Congress of Industrial organizations in Washington said we Don t give much of a Hoot about executive pay Levels As Long As workers get their fair  William Cunningham an Al Cio researcher said the Union had not undertaken a study of front end bonuses As it has other compensation issues. Jordan h. Eskin of democracy for stockholders an advocacy group said the bonuses Are a competitive Factor in the  he added. There Are a lot More serious problems than that  however Lewis d. Gilbert a perennial corporate gadfly frowns on the trend. It becomes a vicious Cycle he said. The officials Are not retained because somebody comes along later with an even bigger offer. It s a delusion half the  hammering out a Complete compensation contract of ten takes three months and negotiating on details of the Bonus is one of the reasons Why said Richard m. Cun mins a $200-an-hour tax partner with Coopers by Brand the accounting firm. Another Tough item a added b agreeing of a supplemental pension to cover what the candidate often in his late 40s or Early 50s, would forfeit in leaving his old company. Supplemental pension deals can put the estimated value of a whole package Over $8 million in a five year employment contract said Cummins a former Wall Street lawyer. I had one Case where a Guy got the right to collect -$290,000 a year for the rest of his life begin Ning seven Yean after the five year contract ended and that we regardless of whether the contract was re  Sou exp Artrai before accept fag contract demand that the company pro Rue nary can Cou tuesday september 2, 1980 try Dob  free air travel for family members and Wecy haircuts. If such things Are already part of company policy there u to problem. But some companies have added an extra $100,000 to one shot Bonus to mollify the candidate said Herbert mines chairman of business careers a recruiting concern. The front end Bonus although increasingly popular is Only one Way to Calm the fears of an executive wary of a Short stay at the new company. Supplemental pension coverage such As a 60 percent annual pension based on a final five year salary average guaranteed annual bonuses and separation agreements often arc used. No matter where a company draws the line on the Price it is willing to pay most executives say there is Little doubt that the average starting Point is getting higher and higher. Our philosophy is that if we decide we want a Guy we re going to do whatever it takes to get him said Laurence e. Mullen vice president of personnel and organization development at Allegheny Ludlum Indus tries. Even with our officer level Guys we be made some pretty Good  Arthur h. Kroll a tax lawyer with Patterson Belknap Webb & Tyler a new York Law firm said if a company really wants a fellow they usually won t get Hung up on direct Money  Cummins of Coopers & Lybrand has negotiated 45 of these deals for companies and their top recruits in the last five years. It s shuttle diplomacy Thal i All it is be said. The got five going right Dow and my travel sched ule is  Cummins said the discussions often Are held in clan Destine settings. A candidate travelling As or. A May sign into a Plush hotel in Europe or South America far from Home. The candidate is terrified that his company might hear he s considering another Job Cummins said. If the news leak out he said it is not unusual for an executive to be banished from his office that very Day. "1 flew into a Small Southern town one night to meet with the head of the biggest company there he recalled. He was slumped Down in his car seat afraid somebody would recognize him. We negotiated Alt night in a holi Day inn then quit at Sunrise so be could get out before the lobby got  some often courted candidates displaying what cum mins re Garvai extravagant egos want 10 bargain for lesser Perks too such a free air travel for their Ami lies or an extra car for their wives. Executives May take the front cod Boms in a single Cash payment or have it deferred in equal payments Over a period of several years. A single Cash payment carries a higher tax bite but the executive Baa what b left to invest immediately. As Mullen of Allegheny Ludlum suggested the front end payment u being offered further Down within the ranks of managers. We re seeing More and More of it said William r. James vice president of Hewitt associates a consulting firm on executive compensation and employee benefits. It s related to what is really a Short Supply situation for Good  most companies he said would rather pay a one time Bonus than a higher salary. The higher salary could throw a carefully built pay Structure out of Kilter and could cause resentment among company veterans once word got out. Although front end bonuses partly practical and partly psychological Are useful most executives de cide whether to accept a Job mainly on the basis of its Challenge and potential rewards said Cummins of Coop in & Lurana. One Man in a comfortable executive Post at a major corporation was offered a $250,000 Bonus plus a si0,000 Eazary increase to $175,000 a year to take Over the most profitable division of a holding company. What ready led him to accept according to Abs Der. Stera president of none lying firm went two Otter or gaining Points he Mudd be Ghoca 5 percent of the Lusa suy s co Maxim Tzoc and on re Wal a Iefata u do a Wear Wen nor pot for Sale which a thatt gtd was bikely. This gave him a position of prominence Stem explained with Good up front Money plus the very real possibility of one Day having his own  the stars and stripes Poga 13