Citicorp's John Reed Underpaid?
Shed a tear for Citicorp's John S. Reed, who was paid $1.2 million in 1990. A new study on executive compensation says the chairman of the problem-plagued banking company is grossly underpaid.
Mr. Reed deserved closer to $2.3 million, according to the report released last week by the United Shareholders Association. With the company having eliminated its dividend, however, it's unlikely Mr. Reed will get a raise anytime soon.
But the banking industry's "best buy" was Hugh L. McColl Jr. of NCNB Corp., whose $750,000 salary plus bonus made him undervalued by $1.3 million, or 63%, the group said.
The shareholder rights group, founded by corporate raider T. Boone Pickens, said its survey of the nation's 1,000 largest corporations showed that underpaid CEOs outnumbered overpaid ones by about 2 to 1. The study, which compared data from November 1989 to similar figures from November 1990, based its findings on a formula linking executive compensation to company size and profitability.
Bankers were well represented on the list of cheap help, with 55 underpaid executives, including some whose banks have since been seized by the government.
Chief executives said to be underpaid included:
* John F. McGillicuddy of Manufacturers Hanover Corp., whose 1990 compensation package of about $970,000 was 42% less than indicated for top officers of like-sized companies with similar earnings.
* Edward E. Crutchfield Jr. of First Union Corp., $870,000 a year, or 46% less than the study's norm.
* Wallace D. Malone Jr. of SouthTrust Corp., $500,000 a year, or 47% less than what the study would call appropriate.
* Terrence Murray of Fleet/Norstar Financial Group Inc., $960,000, or 38% less than appropriate.
* John Medlin of Wachovia Corp., $990,000 - 39% underpaid.
Most Overpaid Banker
The study's most overpaid banker was Bram Goldsmith of City National Corp. in Beverly Hills, Calif. His whose $3.4 million compensation package, including stock options, was 452% more than the estimated value of his services.
Joining him on the list of the nation's overpaid chief executive officers were about 19 other bankers, including:
* William S. Edgerly, who got about $4.6 million last year at State Street Boston Corp., or 203% more than what the study considered the competitive rate for running a company that size.
* J.L. Albritton of Riggs National Corp., whose $1.4 million salary represented 172% overpayment. A Riggs spokesman said Mr. Albritton had accepted a 28% pay cut for 1991.
Ms. Hockstader writes for the Medill News Service.