Milwaukee Journal Sentinel, The: While job cuts loom

Spivak & Bice

While job cuts loom, future looks brighter for leaders of Tower

By CARY SPIVAK AND DAN BICE

of the Journal Sentinel staff

Tuesday, May 16, 2000

Inside every dark cloud there's a silver (or gold) lining.

Take, for example, Tower Automotive Inc., where annual pay for its seven part-time board members is skyrocketing to $75,000 -- roughly double or triple the old pay, depending on how you do the math.

The news wasn't so hot for some of Tower's Milwaukee employees last week, though. That's when about 400 Tower workers found out their jobs were on the bubble because work on the new Ford Ranger truck frame line will be shifted from Milwaukee to the Twin Cities in 2002.

So, while those workers will be waiting for a couple of years to see if they keep their jobs, Tower's board members will wait until Thursday to find out if they can collect their booty in stock.

The timing of the two actions "just shows the usual lack of sensitivity from the top for the bottom," said Graef Crystal, a former executive pay consultant turned critic.

Tower officials scolded us for talking about the pay hikes for the suits at the same time we discussed shaky futures of the blue-collar workers.

"To . . . tie them together, I don't think is appropriate," said spokeswoman Judy Vijums.

Company Chairman Tony Johnson agreed and noted that the new pay plan was created long before shifting work out of Milwaukee was ever considered. Still, he conceded, the two actions "might" create a PR problem for the Michigan company.

Johnson said the pay plan accomplishes two goals. It boosts board salaries while encouraging directors to own stock in the company.

Last year Tower Automotive board members were paid $18,000, plus fees of $500 to $1,000 for attending meetings. The board held four meetings last year and two of its committees had a couple of meetings. The compensation committee had six get-togethers.

Directors also received 10,000 to 15,000 stock options allowing them to buy stock at a set price, Johnson said. With the options, the old director compensation package was worth between $40,000 and $50,000, he argued.

Tower Automotive closed at $15.56 Monday, roughly half its 52- week high of $28.25.

The new plan eliminates options in favor of allowing the bosses to receive their entire payment in restricted stock -- that is, shares that must be held for a period of time.

Before Tower boosted its directors' pay, the firm hired a consultant who surely shocked the execs by concluding that "we had been very much underpaying our directors," Vijums said.

Not anymore. With the pay raise, Tower directors will be raking in more each year than their counterparts at Johnson Controls Inc., a Milwaukee company with $16 billion in 1999 sales -- or about eight times more than Tower.

Johnson pays its directors $39,000 annually, with half of that in stock. They also receive $1,500 to $2,000 for each board meeting they attend.

Johnson Controls also gives new board members 400 free shares when they join the select group. Johnson closed at $59 Monday.

Tower's Johnson wasn't fazed by the comparison. He rattled off names of companies with far more generous pay plans for directors.

"You have to look at it in relative terms," Johnson lectured. "If you have the dean of the Harvard School of Business, which we do, that's a gentleman who could command $50,000 for a single day" of work.

Besides, he said, "the issue we're talking about involves, in my view, relatively minor amounts of money."

Blackjack: The Menominee tribe is on the verge of promising to eventually pay the state a whopping $21 million a year if it could open a casino in Kenosha.

Sources close to the nearly completed secret negotiations say the deal will create a progressive payment plan linked to gaming revenue. The state's annual jackpot should hit about $21 million in several years.

To put that figure in perspective, remember the state now receives only about $24 million in gaming revenue from Wisconsin's 11 tribes.

The deal could be reached as early as this week, sources say. Officials Monday were not sure whether the tribe's gaming compact should be amended, as the Indians want, or if the state would simply issue a letter saying the payment plan is acceptable.

Menominee leaders are eager to get a state blessing because its proposal -- backed with junk bond financing being arranged by non- Indian Chicago and Kenosha investors -- is pending before federal regulators. The feds want to know how much of the estimated $240 million gambling revenue a Kenosha casino could bring in will actually find its way back to the reservation.

Current plans have a chunk of those winnings being used to pay off the bonds while the non-Indian investors have their eye on grabbing about a third of the profits. Local governments have dibs on another $168 million over 10 years -- leaving the tribe with at least $45 million annually.

Daddy's girl: Molly Christofferson, daughter of Mayor John O. Norquist's top political strategist, Bill Christofferson, has landed a new job.

The 25-year-old college student recently joined the mayor's staff as a scheduler, said Norquist spokesman Steve Filmanowicz. She'll be paid $15,528 a year for 21 hours of work each week.

Prior to joining hizzoner's staff, the younger Christofferson worked in "restaurant management" and on Norquist's re-election campaign.

Filmanowicz, of course, said her father didn't land Molly the City Hall job. "She was hired on her own merits," he insisted.

Cary Spivak and Dan Bice can be contacted by phone at (414) 223- 5468 or e-mail at sb@onwis.com.