Friday, May 23, 2008

Radio One CEO’s pay hike not the norm for state executives

Other salary increases more in line with company’s performance

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The 70 percent base salary raise awarded to Radio One CEO Alfred Liggins III this year is well above raises being given to some other Maryland company executives — most of whom lead businesses that, unlike Radio One, are profitable.

Liggins’ annual salary is increasing from $575,370 in 2007 to $980,000 for three years starting this year, according to a recent filing with the U.S. Securities and Exchange Commission. He will also receive a $1 million signing bonus and a $4.8 million bonus to compensate him for ‘‘losses associated with his past employment contract,” the filing reads.

The cash infusion for Liggins comes after Radio One lost $387.1 million last year, while the Lanham company’s stock price and revenues also dwindled. Liggins, who could not be reached for comment, said in a statement that the national market was challenging but the company saw good local revenue gains.

Meanwhile, CEOs at some other Maryland companies are getting more modest or no raises. Andrew Florance, CEO of CoStar Group, a Bethesda commercial real estate information company, got a 4 percent raise this year to $455,886 after CoStar’s net income increased by 29 percent to $16 million in 2007. Dale Wolf, CEO of Bethesda insurer Coventry Health Care, also received a 4 percent increase in base salary to $965,000 after the business showed gains in both profits and stock price last year.

Noah Samara, CEO of Silver Spring radio company WorldSpace Satellite Radio, did not receive a raise this year from $650,000 after the company posted a $169.5 million loss last year. WorldSpace executives said in the company’s recent proxy statement that base salary increases were not made to any executives ‘‘in light of the 2007 company performance.”

The compensation packages recently awarded to Liggins and his mother, board chairwoman Catherine Hughes, who is getting a 75 percent raise, seem ‘‘outrageous given the massive destruction in value their mismanagement of the company has caused,” said Frederick W. Moran, a media and communications analyst with the Stanford Group Co. Over the last few years, shareholders of Radio One have lost more than $2 billion, with the stock falling from a high of more than $20 in April 2004 to $1.15 on Thursday, Moran said.

‘‘Radio One can’t afford to waste money at such a desperate time,” Moran said. ‘‘This is the result of a share structure where management controls the vote and the investing public gets no representation. I can’t recall witnessing a penny-stock company with a micro-capitalization affording such egregious compensation after such ill stock performance.”

HealthExtras CEOgets 16.5 percent raise

The only other CEO found in a small sampling of Maryland company proxy statements to obtain a salary increase of 10 percent or more was David Blair, CEO of Rockville pharmacy benefits management business HealthExtras. Blair’s base pay is increasing by 16.5 percent to $495,000, after the company showed gains in profits and stock price last year.

The raise was merited based on Blair’s ‘‘performance relative to his goals and objectives,” HealthExtras executives said in the proxy statement. Net income grew by 24 percent, revenues increased by 46 percent and the company had a client retention rate of more than 98 percent.

‘‘We believe that Mr. Blair’s compensation is consistent with our objective to reward, align, motivate and challenge our CEO to continue leading the company successfully,” executives said.

One of the largest increases in total compensation last year went to Robert Stevens, CEO of Bethesda defense and aerospace giant Lockheed Martin Corp. Stevens took in a total of $30.9 million last year, some 66 percent more than in 2006, according to Lockheed’s filing. Much of the increase was due to stock options and non-equity incentive compensation, with $5.3 million attributable to ‘‘accelerated expense resulting from becoming retirement eligible,” executives said.

More ‘say on pay’proposals floated

Some Maryland employers continue to face proposals at their annual meetings that would give shareholders a non-binding vote on what their chief executives are paid.

Stockholders at Lockheed Martin, the largest company headquartered in Maryland in terms of annual revenues, recently rejected the proposal for the second consecutive year at their annual meeting. But the proposal received more support in April than a year ago, with holders of 142.8 million shares supporting the measure, compared with 137.2 million last year, according to company filings.

Lockheed’s board opposed the proposal, as executives said in a filing that stockholders already have the opportunity to express their views and vote on equity incentive and other performance-based plans.

‘‘We believe that adopting an annual vote on executive pay is unnecessary and could put Lockheed Martin at a competitive disadvantage or negatively affect stockholder value,” executives said. ‘‘This proposal could lead to a perception that compensation opportunities at Lockheed Martin may be negatively affected by this practice, when compared to opportunities at other companies that have not adopted this practice.”

Towson toolmaker Black & Decker Corp. also held a similar vote last month, which was approved by holders of 19.2 million shares and rejected by holders of 23.8 million shares.

Last year, 40 ‘‘say on pay” proposals averaged about 42 percent support, up from 40 percent in 2006, according to RiskMetrics Group, a Rockville company that advises investors on corporate governance issues. Some companies, including insurer Aflac and Verizon Communications, have seen the issue pass.

There is not a similar vote scheduled for Radio One, which holds its annual stockholders meeting Wednesday in Washington.