St. Petersburg Times Online: Business
Place an Ad Calendars Classified Forums Sports Weather

printer version


The economy may be wobbly, but one sector shows astounding growth: the bonuses, loans, golden parachutes and little luxuries that top executives demand.

By HELEN HUNTLEY, Times Staff Writer

© St. Petersburg Times
published June 23, 2002

Sometimes salaries, bonuses and stock options just aren't enough.

America's insatiable chief executives are convincing companies to pad their pay with generous perks. Some of the packages are so outlandish that even fellow CEOs are embarrassed.

Tyco International's ex-CEO Dennis Kozlowski is the latest poster boy for CEO excess. New York prosecutors are investigating whether company funds were improperly used to buy him an $18-million Fifth Avenue apartment. Kozlowski was forced to resign just before being indicted for failure to pay $1-million in sales tax on his art purchases. He still is expected to receive a multimillion dollar severance package -- all on top of more than $300-million in compensation he's received since 1999.

And Kozlowski is not alone. Another master of the art of CEO excess was Enron Corp.'s former chief executive Ken Lay. Last year, he received $67-million in salary, bonus and restricted stock plus $70-million in loans as the company plunged toward bankruptcy.

Whether they're retiring or being pushed out the door, many former CEO's manage to cut some pretty great deals.

In the Tampa Bay area, former Florida Power Corp. CEO Richard Korpan engineered a deal that infuriated the rank and file. When Carolina Power & Light acquired the company, Korpan walked away with a $17.4-million salary, bonus and severance package plus an annual pension of $828,845 for life.

This year the excesses have been in the spotlight like never before, and they are generating renewed outrage.

"It turns my stomach to see some of the compensation levels," said Thomas James, chairman and chief executive of Raymond James Financial Inc. in St. Petersburg, whose compensation package last year was $1.9-million. He said the securities industry has not done nearly enough to pressure companies to keep CEO pay and benefits at reasonable levels.

"People who perform well for shareholders ought to be paid well, but these levels have gotten totally ridiculous," he said.

Some investors are fighting back by proposing curbs on generous severance packages for senior executives, commonly known as "golden parachutes." Those proposals are attracting more votes than ever this year at corporate annual meetings.

Other reform measures being proposed would require companies to have more independent directors, who presumably would be less likely to cave in to pressure from chief executives for more compensation.

"The reason it's a hot item at the moment is that the economy didn't do particularly well last year, but the CEOs still seemed to have done fairly well for themselves," said Paul Hodgson, senior research associate for the Corporate Library, a research and advocacy group. "That dichotomy of experience is something that shareholders and the general public don't appreciate."

Hodgson studied CEO compensation at all 500 companies in the Standard & Poor's 500 Index. The absolute worst, he said, was Conseco Inc., which paid new CEO Gary Wendt $70-million in 2000, including a $45-million hiring bonus. At the other end, Hodgson rated Nucor Corp. the best. CEO Daniel DiMicco received $1-million compensation in 2000. Last year, Conseco, an insurance company, spent more on life insurance policies for Wendt than Nucor, a steel company, did on DiMicco's entire compensation package, Hodgson said.

Perks are supposed to be disclosed if they are worth more than $50,000 or 10 percent of total salary and bonus, whichever is less. Some companies are meticulous about disclosing everything, while others are notably lax. Hugh Hefner and Playboy Enterprises got in trouble with the Securities and Exchange Commission more than 20 years ago for failing to disclose that the company was providing Hefner and his guests with accommodations, food and personal services at the Playboy Mansion.

Here's a sampling of some perks CEOs with ties to the Tampa Bay area are collecting.

Jet setters

Wal-Mart Stores Inc. flies chief executive Lee Scott around on corporate jets -- even providing him with $94,000 worth of personal travel last year.

In the Tampa Bay area, however, it's more common for the CEOs to own their own jets and rent them to the company.

John Sykes, chief executive of Tampa's Sykes Enterprises Inc., has one of the more lucrative deals. The customer support company paid him $756,000 last year to use his plane.

The payments go both ways at Jabil Circuit Inc. Last year, the electronics manufacturer paid a company owned by CEO Bill Morean $217,445 to use its plane. But Morean also paid Jabil $66,429 to compensate the company for borrowing its flight crew for non-Jabil trips.

Hospital chain HCA used to rent chairman Tom Frist's plane; he collected $78,000 last year. Now that he's retired, he's got a special perk: a parking space for the family-owned aircraft in the HCA hanger.

Side deals

Apparently one of the better perks of being a chief executive is the ability to steer business to outside companies that you or your family members control.

Take Tampa's Coast Dental Services Inc., where business is a Diasti family affair. The Diastis own 51 percent of the company's stock; Terek Diasti is chief executive and chairman; brother Adam is president. A third brother, Tim Diasti, is an executive with, where Coast Dental purchased about $1.38-million in supplies last year.

Most recently, the Diastis have moved into patient financing, with 90 percent ownership of a new private-label credit card company,, being marketed in Coast Dental offices. The Diastis also own about half of Adenta, a company with exclusive rights to market and sell the credit card program. Bottom line: Every time a patient charges a service using Coast Dental's credit card, the Diastis get a cut.

Rental agreements also steer corporate cash to CEOs and their families. One small local example: Reptron Electronics Inc. of Tampa paid chief executive Michael Musto $72,000 last year to lease 10,000 square feet of warehouse space.

Sykes Enterprises paid $470,000 last year to a company that CEO John Sykes controls to compensate it for help deciding where to locate U.S. call centers. However, chief financial officer Mike Kipphut says Sykes Enterprises severed its contract with the consulting firm in July.

Fun fringes

USA Interactive CEO Barry Diller, whose empire includes cable TV networks and film production studios, billed the company $1.8-million last year to build and operate a screening room at his residence. Diller, who has no employment contract and controls a majority of the company's shares, agreed to pay back the depreciated value of the screening room -- if he is ever fired.

Raymond James Financial Inc. provides CEO Thomas James with a place to display his extensive art collection. James and his wife, Mary, own about 1,350 of the more than 1,400 paintings, sculptures and other artworks that decorate the financial services company's St. Petersburg headquarters.

The company spends about $90,000 a year to insure the artwork and pay the salaries and benefits of two employees who serve as curators for the collection. In addition, more than 40 Raymond James employees volunteer to lead tours of the art collection, which is open to the public by reservation.

James began the collection in the late 1950s, primarily by buying the work of Florida artists. In the mid-1980s, he started collecting Western and Southwestern art, which now makes up about half the collection. Company pundits joke that Raymond James' building binge at Carillon office park is rooted in the need for more wall space to display the James collection.

Big-time borrowers

Being a top executive may mean you don't need to ask a bank for a loan. The company will give it to you.

Saks Inc., for instance, offers loans to top management to pay their federal income tax bill. The logic is that much of their incentive pay comes in the form of stock grants. The company doesn't want them to be forced to sell stock just to pay taxes on the extra income. Saks chairman and CEO Brad Martin got an $865,000 loan from the company to pay his income taxes in 2000. Then in 2001, the company extended Martin's repayment date by five years and forgave similar but far smaller loans granted to four other executives.

Claire's Stores Inc., a costume jewelry chain in Pembrook Pines, routinely makes personal loans to its top managers. The executive who formerly ran the chain's European operations still owes the company $440,000. The company has sued a former chief operating officer to get back $551,000 he borrowed. The former COO disputes the amount.

Chairman, president and CEO Rowland Schaefer repaid $750,000 from the company treasury in 2001. One loan was taken for "personal expenses" by his wife, Sylvia, who retired in 1999.

Sometimes the loans are related to company investments.

Diller, the Hollywood mogul who is CEO of USA Interactive, has parlayed a net worth of more than $950-million largely from what started out as a $5-million stake in Home Shopping Network.

In 1995, the owners of HSN wooed Diller with perks, options and stock grants and a $5-million loan to buy his initial shares in the company. He repaid half of the loan in 1997 by not collecting a $2.5-million bonus one year and extending the promissory note's due date to 2007.

At Raymond James, CEO James and other key employees get the chance to invest in Raymond James-sponsored limited partnerships at one-third the real cost. The company grants loans for two-thirds of the price of the partnership units. Partnership earnings pay back the loans with interest (at 1 percent below prime), but the employees are not personally liable for the debt.

James still owes $13,816 on an investment in one partnership, the company said. He also invested $2-million in another Raymond James partnership on the same terms and conditions as other investors.

While shareholders were left out in the cold by Kmart Corp.'s bankruptcy, plenty of top executives were not. Three months before a cash crisis triggered the discount chain's Chapter 11 filing, Kmart loaned $30-million to retain 63 top managers. Most of them left anyway after the bankruptcy filing. The biggest loan -- $5-million loan to ousted chairman and CEO Chuck Conaway -- was forgiven, but the company has yet to say what happened to the rest of the loans.

All in the family

It doesn't hurt to have your son on your company's board. It's even better when he's on the compensation committee.

Daniel D. Richard is co-founder, chairman of the board and chief executive of Cryo-Cell International Inc., a Clearwater stem-cell storage company. He also owns nearly 16 percent of the stock. That may be one reason his son Ronald B. Richard, who is also president of a division of Panasonic U.S., sits on Cryo-Cell's board.

As one of two members of Cryo-Cell's compensation committee, it's fair to assume Ronald Richard approved his father's 24 percent raise in 2001 to $234,571. And since dad did so well, son threw in a $50,000 bonus for total compensation of $284,571.

It's not unusual for CEOs to have their adult children on the payroll. At Global Imaging Systems in Tampa, CEO Tom Johnson's son Todd, vice president of acquisitions, received salary and bonus totalling $165,000 in fiscal 2001.

At Sykes Enterprises, John Sykes' son, Chuck, general manager and senior vice president for the firm's Americas division, received salary and bonus totaling $195,000.

At Raymond James Financial, Thomas James' son, Hunt, is a vice president and director. His compensation was not disclosed.

-- Times staff writers Mark Albright, Scott Barancik, Jeff Harrington and Kris Hundley contributed to this story. Helen Huntley can be reached at or (727) 893-8230.

Back to Business
Back to Top

© 2006 • All Rights Reserved • Tampa Bay Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111
Special Links

From the Times
Business report
  • Perks
  • Loose change
  • Shake hands with 21st century manners
  • Ten Tips

  • From the AP
    Business wire

    From the state business wire

  • Judge denies dismissal of Citigroup shareholder suits
  • Carnival to buy 4 cruise ships from Italian builder