The Palm Beach Post from West Palm Beach, Florida on March 24, 1998 · Page 23
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March 24, 1998

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The Palm Beach Post from West Palm Beach, Florida · Page 23

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West Palm Beach, Florida
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Tuesday, March 24, 1998
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Page 23
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TUESDAY, MARCH 24, 1998 The Palm Beach Post PAGE 5B SB Codes for 24-hour financial updates Page 6B B Paxson bonuses top $12 million despite dip in shares CEO Lowell 'Bud' Paxson sat on the committee that gave the bonuses to himself and four top executives. Bloomberg News WEST PALM BEACH Lowell "Bud" Paxson, head of Paxson Communications Corp., gave $7.2 million in bonuses to himself and four top executives last year, as the broadcaster's shares lagged a rising market. The payouts are notable in part because Paxson is the only member of the compensation committee that recommends executive pay packages to the company's board. The pay packages were for a year when West Palm Beach-based Paxson Communica $1.88 million. Also, James B. Bocock, president and chief operating officer, got $1.89 million; Dean M. Goodman, president of the Pax Net network, got $1.10 million; Jon Jay Hoker, president of Paxson television group, got $1.58 million; and Arthur D. Tek, chief financial officer, got $800,000. Some questioned whether a CEO should be determining the size of bonuses. "Clearly, it makes no sense to have employees or individuals that may have financial links to the company making compensation decisions," said Ann Yerger, director of the Council of Institutional Investors' research service in Washington. The board granted the bonuses "upon rec- Please see PXKSONUB tions sold its radio and billboard businesses and began preparing for August's planned debut of its national television network. Company shares fell about 3 percent during 1997, compared with a 3 1 percent gain for the Standard & Poor's 500 Index. "They got bonuses for pushing the stock down? Management should get paid based on what they do for shareholders," said Alan B. Snyder, president of Snyder Capital Management LP. Snyder Capital held 250,000 shares at the end of June, but sold its stake when Paxson Communications unveiled its planned TV network in November. "These were one-time bonuses related to the sale of our radio group," said Paxson Communications spokesman Seth Grossman. "I don't think anyone would argue with the fact that significant value was created from that transaction." And, to be sure, Paxson's total pay still pales in comparison to other media executives, such as Barry Diller, who got an option package last year from HSN Inc. that will be worth $292 million if the company shares rise 10 percent annually for the next decade, or Walt Disney Co.'s Michael Eisner, who got $10.65 million in fiscal 1997. Paxson's 1997 salary and bonus of $2.3 million as chairman and chief executive of Paxson Communications was a six-fold raise from the $385,000 in salary he got in 1996, with no bonus. The compensation package was detailed in the company's proxy filed with the Securities and Exchange Commission. During 1997, Paxson got a cash bonus of Lowell 'Bud" .. Paxson took : home a cash" L bonus of $1.88 million in - , 1997. Ine s ervico Reno sues over merger i of Northrop, ... u s Lockheed The Defense and Justice departments say the deal could threaten soldiers' lives and taxpayers' wallets. The Associated Press to get new home office in merger The company will move to Atlanta and change its name to Lodgian ln a deal with Impac Hotel Group. The fate of its workers is not yet known'.:: By Marguerite M. Plunkett ',', - " Palm Beach Post Staff Writer " WEST PALM BEACH Hotel owner, and manager Servico Inc. is ending its 20-year run in West Palm Beach a run that saw it fall from profitability to bankruptcy and bounce back into' the black. Servico is changing its name and moving Its headquarters to Atlanta as part of a $513 million deal to combine with Impac Hotel Group Inc., the companies announced Monday. The new company will take the name Lodgian as it becomes the country's largest independent lodg-ing owner-operator with multiple hotel brands. WASHINGTON Backed by the Pentagon, the Justice Department sued to block Lockheed Martin's $8.3 billion deal for Northrop Grumman on grounds the merger could threaten soldiers' lives and taxpayers wallets. It was the largest merger ever challenged by the federal government. The two departments studied the deal for eight months and negotiated unsuc A :l Jr.. j. . ' . , ' ' ' I y cessfully through the weekend with the companies on possible divestitures and revisions. But on Monday, Defense Secretary William Cohen wrote Attorney General Janet Reno that allowing the nation's largest defense contractor to buy its third largest one is not in the best interests of the department. "This merger isn't just about dollars Combined, the company will have 140 hotels in 35 states and Canada. ; '-.i, ' The value of the deal equals $107 million in """""T1 and cents, it s about winning wars and saving lives." Reno said in a news conference after the filing in U.S. District Court. "We want to ensure that any de- . fense merger protects our soldiers lives and our taxpayers wallets. The government had been seeking $4 billion in di vestitures, including radar systems and electronic countermeasures, which en able pilots to evade incoming missiles, company officials have said. I A company offer to divest businesses with $1 billion in sales was rejected last Servico stock and Servico-Lodgian's assumption of $406 million of debt The new company's market capitalization will be about $1.2 billion. The news sent Servi-co's stock (NYSE: SER) up 88 cents Monday to $18.63 a share. Impac is .iosely held. Servico owns 85 hotels in 24 states, including the Omni Hotel on Belvedere Road and the Sheraton on Clearwater Park Road, both in West Palm Beach, and the Holiday Inn in Fort Pierce. It also owns hotels that fly the Holiday Inn, Best Western, Clar Servico Inc. Hotel owner and management company ."?. Headquarters:,' Belvedere Road, West Palm Beacrf .,'; Local T'Y'-' employees: 85 I ' Total hotels: 85 Local hotels: 3 - 1997 net Income: $12.6 . million ." . -. 1997 revenue: $276.7 million Stock exchange and ticker symbol: - NYSE: SER THE ASSOCIATED PRESS Sal Testa (left), a broker with Stern and Kennedy, studies his computer screen as another trader makes a transaction on the floor of the New York Stock Exchange Monday. Dow drops sharply as exporters make moves to increase oil prices week; Lockheed said another possible revision was rejected this weekend. Lockheed spokesman Charles Manner said, "We have said from day one that we will defend ourselves if this did end up in court." Justice Department antitrust chief Joel Klein left the door open to further negotiation to avoid trial, but wasn't optimistic. There's a significant gap" between the sides, Klein said. Lockheed Martin makes underwater robots in Riviera Beach, where it employs 75 people. Another arm of the company recently was chosen to run Palm Beach County's welfare system. Northrop Grumman builds control mechanisms for business and commercial jets in Stuart, where it employs 400 people. Workers there were told Monday to expect an announcement today regarding "exciting news" for the plant Northrop officials said the announcement isn't related to the proposed merger.. A few workers contacted Monday speculated about additional work for the plant The Associated Press NEW YORK The Dow industrials' assault on 9,000 was interrupted Monday amid concerns that efforts by the world's top petroleum exporters to boost oil prices will aggravate inflation and trim corporate profits. The Dow Jones industrial average sank sharply in the final minutes of trading to finish the day down 90.18 at 8,816.25. That erased nearly a third of ion and Howard Johnson ' - flags. The company " made a profit of $12.6 million on revenue of $276.7 million in 1997. William Meyer, head of Meyer Jabara Hotels in West Palm Beach and son of Palm Beach philanthropist Arthur Meyer, moved the company to West Palm in 1978. The Meyers sold Servico in the mid-1980s to a Dallas real estate syndicator that nearly destroyed the company. Impac owns or manages 55 hotels, primarily mid-market and upscale Marriotts, Doubletrees and Holiday Inns. The company's holdings include the Mayfair House Hotel in Coconut Grove and .the Holiday Inn in North Miami, as well as trophy properties such as the Denver Airport and downtown Portland, Ore., Marriotts. -: ; ', . Impac had revenue of $125 million in 1997 and projected revenue of $180 million in 1998, according to President Robert Cole. The company declined to release its net income. - " Servico Chief Executive Officer David Budde-meyer will become Lodgian's CEO, and Cole will 10 percent Last week, oil prices slumped to the lowest level in nearly 10 years. For stock investors, concerns emerged quickly on Monday that higher oil prices could revive inflation and hurt corporate earnings by raising manufacturers' energy costs. The Dow Jones transportation average was down more than 2 percent with the biggest declines coming airline stocks, like AMR and Delta. The rise in the price of oil certainly will hurt areas of the economy," said Larry Wachtel, market analyst at Prudential Securities. "But it doesn't mean that inflation is around the corner." close. "Yes, the news of the higher oil prices played into this market" said Ricky Harrington, technical analyst at InterstateJohnson Lane in Charlotte, N.C. "But people aren't entirely pulling out of this market The supply-demand equation is still in favor of the bull." With no new economic news released Monday, Wall Street focused on rising oil prices. In recent days, many of the world's leading exporters have said they will reduce oil production to lift sagging oil prices. That follows the collapse of prices in recent months, after OPEC agreed in November to increase its stated output ceiling by the Dow's 300-point gain during its five record-setting sessions last week. u. While blue-chip stocks strug Market closed at: 8,816.25, down 90.18 gled, broad-market indexes were Minut by minute mixed, and the American Stock MOij 1 1 1 1 1 Exchange composite index reached its fourth-straight record Please see SOMCO1 IB Government hearing could cost Pratt & Whitney $260 million M20 10! 1 r i 1 i 10 11 12 1 2 1 4 am. p.m. Dow: wk by wk 000 400 300 000 TWO TWO ruled the company used faulty accounting procedures from 1984 to 1995.. The department ordered the company to pay back $157.6 million in Overcharges, plus interest for a total of $260.3 million. The company appealed that month, and disputed the order before the Armed Services Board of Contract Appeals. Pratt & Whitney officials said it used correct accounting procedures, and refused to change its accounting practices in response to the government's claim. The government has indicated It could levy another assessment against the company for failing to change its accounting practices since the 15 order. the company would share in the ultimate profit Morrison said the bills submitted to the government did not reflect the cost of the two companies collaborating. At Pratt & Whitney's request Judge Park Conroy asked a reporter to leave the hearing room shortly after opening arguments, citing a protective order to keep the company's trade and business secrets private. The hearing is scheduled to last for two weeks. The company was ordered to reimburse the government in December when the Department of Defense The government alleges that Pratt overcharged taxpayers for military engines. By Natalie Hopkmson I'aim beak Post HasMingtim Hurrum FALLS CHURCH. Va. Big money is at stake for lYatt & Whitney in a government hearing that opened Monday to determine whether Pratt should pay the federal government $260.3 million for overcharging taxpayers for military engines. Government attorneys argued before the Armed Services lkard of Contrail Appeals that for more than a decade. Pratt wrongfully billed the government for overhead costs divided between its military engine business in northwestern Palm Beach County and its commercial engine programs in Connecticut In opening statements, the government also said the company used a subcontractor to buy foreign parts for aircraft engines. The result was that higher indirect costs were allocated to the contract and paid by the government Pratt attorney Kent Morrison denied the accounting arrangement was the equivalent of a subcontract He characterized it as a "collaborative agreement" in which both the parts manufacturer and 12 M 14 1-20 2-1 2 IT 2-2 J-1T 8vafcs mOrcMe m KoKtw OqVTJ pnc doe not h to mrh tT Cinvrt itk Imm V M or Oomnf onc can pct WWin tm fM Itm occur f tr mwM Htmmf. mei change rawM from cxne o close

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