The Pittsburgh Press from Pittsburgh, Pennsylvania • Page 29

D3 Tuesday, November 5, 1991 The Pittsburgh Press Heinz too generous with O'Reilly, author believes cap, the board should have given O'Reilly unlimited upside potential but the upside wouldn't kick in until after the price hit $61,125. Given that O'Reilly is a risk taker when it comes to compensation, Crystal believes O'Reilly would have jumped at the chance. "That makes no sense at all," Smyth said of Crystal's scenario. Even if Heinz stock would hit $61,125 well before the end of 1994, O'Reilly would "have every incentive to continue to grow the company, because he would be such a major shareholder. That is the point of the stock option scheme." "I honestly think, at this point, if they gave him one more dime, the 60th floor of (the USX Tower, where O'Reilly's office is located) would collapse," Crystal said.

"I say that somewhat with tongue in cheek. But this is an oil well that he has milked just about as much as he can out of." ize a $250 million gain. But the board put a cap on O'Reilly's compensation by including a clause that allows them to force O'Reilly to purchase the 4 million shares whenever the price reaches $61,125. That would "limit" O'Reilly's gains to $125 million. "In order for Dr.

O'Reilly to receive $125 million," said Heinz corporate spokesman Ted Smyth, "Heinz's market capitalization would have to grow from $7.8 billion to $15.8 billion, a growth of $8 billion, which seems a reasonable deal for our shareholders." But Crystal called the cap "the stupidest decision anyone ever made." If the stock hits $61,125 well; before the close of 1994 and O'Reilly is forced to cash in his options, he has no incentive to continue to improve the company's performance, Crystal said. He said instead of installing a O'Reilly's 1991 base salary of $514,000, excluding bonus and stock options, is "a pittance" compared to the salaries of CEOs of comparably sized companies, Crystal noted. The bulk of O'Reilly's compensation comes in the form of incentives and stock options. Last year, according to Heinz's proxy, O'Reilly collected $75.1 million in compensation: $3.6 million in salary and incentives and $71.5 million in paper gains from exercising stock options granted between 1982 and 1986. And even that compensation package pales compared to the stock options Heinz's board offered O'Reilly in 1989: options to purchase 4 million shares at $29,875 per share when the five-year pact expires at the end of 1994.

If the company's stock grows during the life of the pact as it did during the past five years, O'Reilly could real Crystal is clearly of two minds when it comes to O'Reilly. On the one hand, he is a former consultant to Heinz and acknowledged his admiration for O'Reilly. He described O'Reilly in his book as "one of America's highest-performing CEOs" for consistently delivering shareholder returns that rank near the top of the nation's largest companies. Earnings and revenue have grown for 27 consecutive years. He included O'Reilly in a chapter called "The Good Guys," which features CEOs who, although lavishly paid, are compensated primarily based on how well their companies perform.

"There are worse things than high pay for high performance, such as high pay for poor performance," Crystal said in a telephone interview from Napa, where he edits a newsletter on compensation and writes a column for Financial World magazine. By David Ranii The Pittsburgh Press ANTHONY J.F. O'REILLY, H.J. Heinz flamboyant chief executive, is to be commended for being a "risk taker" whose compensation is tied to the performance of Heinz stock. But the board of directors made a mistake when it signed O'Reilly to a five-year contract that pays him $4 million for every dollar the stock advances, according to compensation Graef S.

Crystal. "There comes a limit. You can't just say you're willing to pay more and more and more for performance. I think that point has been reached, if not passed, with him," said Crystal, author of the just-published "In Search of Excess: The Overcompensation of American Executives." PEC fights By Bernie Kohn The Pittsburgh Press LAWRENCEVILLE-BASED Pennsylvania Engineering Corp. has asked a federal court to overturn an arbitrator's order that it make up two years' worth of missed contributions to an employee pension plan.

tua long-ailing capital equipment concern, one of the key holdings iof Miami Beach financier Vicjof Posner, contends it may go bankrupt if forced to honor the approximately $250,000 award made this summer to United Auto Anthony J.F O'Reilly Is he worth $75 million? order to make pension ouse sales off; payments PEC once was a leading designer of steelmaking equipment and resource recovery plants but has largely abandoned the engineering and construction business because of financial problems. Its principal remaining activity is repairing and maintaining steelmaking equipment. PEC has been hurt by the steel industry's problems, losses on waste-to-energy projects and its use by Posner as a takeover vehicle. The company, whose employment had been reduced to about 160 as of midyear, has for years sold assets and delayed payment of bills to stay afloat. warning, through notices posted inside the plant, Goldman said.

Only 35 other cases involving the Slant closing law are known to have een filed nationally, according to Julie Hurwitz, a Detroit attorney who monitors such lawsuits for the National Lawyer Guild. Despite the widespread publicity the law received when adopted three years ago, it is, rarely challenged because no agency is empowered to enforce it, employees must sue to get relief and employers have exploited numerous loopholes, Hurwitz said. but prices rise WASHINGTON (AP) Prices of existing homes rose at -the fastest pace in four years during the summer despite the first quarterly decline in sales since late last year, a real estate trade group said. Gains in the lower-cost, "second-tier" markets of much of the Midwest, South and West pushed by the lowest mortgage rates in 14 years helped boost the median price of a home by 5.5 percent in the third quarter compared to a year ago, according to',) a survey by the National Association of Realtors. The increase, the biggest since an 8.3 percent gain in the first -quarter of 1987, included all regions but the Northeast.

But the gains were driven by first-time buyers, spurred by loan rates, the Realtors said. Trade-up buyers shunned the -market, fearful of the greater risks involved purchasing higher-priced homes in an uncertain economy. "Mortgage rates have fallen to levels unseen in 14 years, yet the only sales activity we're seeing is at the low end of the market," said Harley E. Rouda, president of the trade group. As a result, the Realtors said, sales fell 1.1 percent to seasonally adjusted annual rate of 3.55 million units.

It was the first decline since an 11.6 percent drop in the fourth quarter of 1990 as the economy headed toward the depths of the recession. Nationally, the median price of a used home was $101,900, up 5.5 percent over last year and 0.8 percent over the second quarter. Prices in the second quarter had been up 4.7 percent over the -same period of 1990. Regionally, the Northeast recorded the only decline in the median price of an existing home, down 0.7 percent to $140,900. One exception was Pittsburgh, where the median resale price increased 6.3 percent to $77,700 from 1990 to 1991.

Realtors economist John A. Tuccillo said demand in the Northeast is not strong enough to drive up prices because of the relatively small number of first-time buyers who can afford to enter the market. Robertson-Ceco broke layoff law, union contends By Bernie Kohn The Pittsburgh Press THE UNION representing workers at a Robertson-Ceco Corp. plant in Indiana County has filed a lawsuit charging violations of a federal law mandat-ingadvance notice of plant closings and major layoffs. the United Steelworkers union ha? charged that the Fortune 500 building products manufacturer layoff 85 employees at its Homer City metal buildings plant in December without giving 60 days' Ford should replace leaky oil pan in Crown Victoria But federal arbitrator Marvin Feldman sided with the union's contention that the contributions are required under federal law, regardless of language in a 1989 contract that is murky on pension issues.

Feldman said in his order that PEC has not asked the Internal Revenue Service for a waiver on its pension contributions, as is often done by ailing companies, and that there is no evidence its industry is in decline. Neither company nor union officials could be reached for comment. filed in U.S. District Court in Pittsburgh. Thomas Lawton, Robertson-Ce-co's general counsel, said the company plans to file a defense in the next few days saying it gave adequate notice.

He declined to elaborate. The plant closing law requires that companies employing at least 100 people give 60 days' advance notice of a plant closing or layoffs involving more than 50 people within a 30-day period. USW officials believe the Robertson-Ceco employees had only one to five days' CLICK CLACK TALK CARS course, money. The result is that they don't last as long. But four years is ridiculous! In fact, I would check this oil pan very carefully and see if there aren't compartments for mashed potatoes, peas and a cherry cobbler.

It could have been the tin from one of the assembly worker's Hungry Man dinners. RAY: The first thing you should do is get a new one installed, Vinny. Because if another hole develops McGinnis said. The key to that breakthrough was a deal with two Hong Kong businessmen who agreed to build a plant and produce the masks overseas in exchange for a half-interest in the company. The cheaper overseas labor ensured that the company could sell the masks" at a competitive price.

The company employs about 290 in Murrysville and 700 in Hong Kong and China. McGinnis was introduced to the Hong Kong businessmen by John Marous, a Westinghouse senior executive who later became Westing-house chairman. McGinnis "has a great ability to sense a customer's need. That is not easy in this world today," said Marous, a longtime investor in Respironics. "He happily has the technical background behind him to develop a product to satisfy that need." Finding niche markets overlooked by medical industry giants; has been a key to Respironics' THE MCCNOLESS TOWNSHIP SANITARY AUTHORITY AUEOHENYCOUNTY.PENNSYLVANIA Building Revenue Bonds, Series at U74 (7.25 Due December 15, ItM) CUSIP S79418 AO 7 NOTICE IS HEREBY GIVEN that pursuant totht provisions of the Trust Indenture dited as of December 15, 1974, between The McCandlns Township Sanitary Authority, Al-leghenyCounty, Permeyl vanil end Pittsburgh National Bank, ai Trustee, $35,000 principal amount of the above-described Bonds outstanding under said Trust Indenture, bearing the selected bytheTrustee rlotfredemfJtkmonDeceinberlS.19l,bytheapplicatioii of moneys on deposit in the Sinking Fund and will be redeemed and paid on or after Mid date at a redemption price equal to 100 thereon, to the date fixed for redemption: Denraunation Bond with frel is 11 63 73 74 82 95 105 156 Interest on the above-enumerated Bonds win ohm to accrue on December 15, 1991, the date fixed for redemption, and said with all unmatured coupons appertaining thereto, should be presented for payment on or after the redemption date, via U.S.

mail to: Bond Services Department, Pittsburgh National Bank. P.O. Box 608, Pittsburgh, Pennsylvania iSlXUXt, or by delivery at Penn-libertyPlaja 11,1500 Perm Avenue, Pittsburgh, Pennsylvania 15222. NorepresentationlsmadeastotheaccuracyoftheCUSIP number printed herein or on the Bonds. When presenting the Bonds for payment, bondholders should providetheirtax identification number(via Form W-9) to avoid withholding of 20 of the principal required by FederatTaxUw.

By: The McCwkInm Township Ssntttn; Authority Dated: October 29, 1991 and Novembers. 1991 A Workers Local 1259. The union, which represents an unspecified number of production and maintenance employees at PEC's New Castle plant, is suing to enforce the award. PEC, which last made an annual profit in 1983 and has lost $132 million in the past five years, has acknowledged it hasn't contributed to any of its hourly pension plans since 1988 but maintains it cannot afford to. In papers filed during the arbitration process, company human resources director John G.

Dougherty contended an award "very well may cause the financial collapse" of PEC. advance notice. The plant had about 110 employees at the time of the layoffs, according to David Goldman, a USW staff attorney. The union said in court papers that none of the workers was called back at the end of six months, the length of time jobs must be lost to make the plant closing law applicable. The union is asking that each affected employee get 60 days' back wages, the maximum penalty permitted by the law.

The lawsuit was pan with fiberglass as a temporary repair and advised me to have a new pan installed as soon as possible. Is this normal, or do you think Ford should be responsible for the replacement cost of the oil pan? Vinny TOM: This is certainly not normal, Vinny, and we think Ford ought to fix it for you. Oil pans should never wear out. My '63 Dodge Dart still has its original oil pan (and probably its original oil, RAY: What's happened is that carmakers have been using lighter, thinner metals for things like oil pans in order to save weight and, of Page Dl University of Illinois in 1958 he later earned a master's degree from the University of Pittsburgh McGinnis came to Pittsburgh to join Westinghouse's research and development staff. After catching the medical bug he went to work in 1969 at Allegheny General Hospital, where he headed the surgical research department.

He got a first-hand look at the day-to-day problems faced by patients at the hospital and found that respiratory care was still relatively primitive. To McGinnis, that meant opportunities to develop products. So in 1971, backed with less than $50,000 in capital from physicians at Allegheny General, he formed Lanz Medical Products which manufactured a or seal, for endotracheal tubes. In those days, the seal around the tubes could easily be too tight, damaging the tissue around the trachea. McGinnis designed a cuff with a built-in regulator to prevent such damage.

Lanz's sales grew to $2.5 million by 1976, when McGinnis sold the business and established Respiron-ics. The fledgling company was in the midst of developing a heart rate monitor that patients could use while exercising, when fire destroyed the company's plant in Wilmerding. "It was really something to stand there at three in the morning and watch it go up in smoke," McGinnis said of the December 1987 blaze. After some soul-searching, he decided to rebuild the company. "We had a couple of tough years there 1978 and 1979 were brutal.

We really had minimal income." Respironics' success was assured, however, when McGinnis and his engineers developed an inexpensive, disposable anesthesia mask that, unlike the competition at the time, didn't leak. "It took off so fast, our challenge was, how do you make enough of these things," SG and use up the SF that way? Would it hurt to add a quart of SF to the SG when I'm down a quart between changes? Hugh RAY: Hugh, we can tell you're a card-carrying cheapskate. Don't you know the famous Click and Clack axiom? "It's the stingy person who spends the most." You can probably get by with SF, but why take a chance on damaging your brand-new engine just to save a few bucks on oil? TOM: SF and SG are ratings for engine oils. The second letter mea tor grabbed a significant share of the sleep apnea market with a device that was easier to adjust for technicians in sleep clinics, where sleep disorders are diagnosed and treated. "If we don't learn from that lesson, shame on us," McGinnis said.

"We learned tyou cannot wait for a competitor to leapfrog you." As Respironics has grown, McGinnis has become less involved in product development and day-to-day operations. Instead, much of his time is spent dealing with Wall Street and traveling in search of business opportunities. "Jerry was worried where the next dollar was going to be coming from in the early 1980s. He had to be personally worried about the FDA (U.S. Food and Drug Administra- To the Holders of WASHINGTON COUNTY AUTHORITY Washington County, Pennsylvania Guaranteed Revenue Bonds), Series of 1878 (6.25 Due December 15, 1M4) CUSIP 938585 AM8 VOTICE IS HEREBY GIVEN that pursuant to the provisions of the Trust Indenture dated as of December 15, 1 978, between Washington Cou nty Authority, Washington County, Pennsylvania, and Pittsburgh National Bank, as Trustee, $90,000 principal amount of the above-described Bonds outstanding under said Trust Indenture, bearing the following distinctive numbers, have been selected by the Trustee by lot for redemption on December 1 5, 1991, by the application of monies on deposit in the Sinking Fund and will be redeemed and paid on or after said date at a redemption price equal to 100 of the principal amou nt thereof, plus accrued Interest thereon to the date fixed for redemption: Coupon Bonds (with Prefix II) 145 151 159 164 173 177 180 191 203 149 158 161 170 175 179 187 198 208 Interest on the above-enumerated Bonds will cease to fixed for redemption, and said Bonds, together with all unmatured coupons appertaining thereto, should be presented for pay-rrent on or after the redemption date, via U.S.

mail to: Bond Services Department, Pittsburgh National Bank, P.O. Box 608, Pittsburgh, PA 15230-0608, or by delivery at Penn-Liberty Plaza II, 1 500 Penn Avenue, Pittsburgh, PA 15222. When presenting the Bonds for payment, bondholders should provide their tax identification number (via Form W-9) to avoid withholding of 20 of the principal required by Federal Tax law. No representation is made as to the accuracy of the CUSIP number printed herein or on the Bonds. By: Washington County Authority Dated: Novembers, 1991 sures, among other things, the oil's ability to lubricate the engine, neutralize acids and hold contaminants in suspension.

The later the second letter is in the alphabet, the better the oil. SG is currently the highest-rated oil you can buy. RAY: They're hesitant to improve the oil any more, because then they'll have to go to the SH rating, and they're fully aware of the implication of that. TOM: Don't chance it. Put a bow around that case of SF and give it to a neighbor with a lawn mower.

(Distributed by King Features Syndicate Inc.) tion) and the banks. Now he has people to do these things for him," said Dennis Meteny, the company's vice president-general manager and chief financial officer. That role change is all for; the better, according to McGinnis' No. 1 critic himself. "I don't follow up," he said.

"I like to do new things I generally drop the on older things that catch fire." (7 flsfsaJajhaW sAssffssrSVPsQaWlV 138 Newly Remodeled Rooms And Best of All OUR LOCATION! Parkway West 1-279 Parkway Center Drive, Exit 5 Greentree Exit 4 Heated Indoor Pool, Hot Tub, SteamSauna, Free Airport Limo Parking. Free Breakfast Mon. thru Fri. Reasonable Rate Offers! IB BARKWAY IWBENTER 875 Greentree Road Pittsburgh, PA 15220 for reservations, call: (412) 922-7070 1-300-528-1234 MEETING ROOMS FROM 10 TO 200 PEOPLE aS SsmS asssstf and you lose all your oil, you'll ruin the engine. And you'll never get Ford to pay for that.

But we do think you have a strong case for asking Ford to pay for the oil pan. Call the Ford zone manager in your region and whine a lot. Dear Tom and Ray: I change my own oil and filter on my car. A few years back, I ran into a real deal on a few cases of 5W-30 oil rated at SF. Recently, I traded in my car and the new car requires 5W-30 rated SG.

I have 15 quarts of SF left. What is the difference between SF and SG? Could I mix two quarts of SF with two quarts of growth. In 1985 the company introduced Sleepeasy, the first medical device to treat obstructive sleep apnea, a breathing disorder that afflicts between 1 and 4 percent of Americans. Sleep apnea therapy products account for more than half of sales. Sleep apnea is a disorder that causes a person to stop breathing briefly, sometimes several hundred times a night.

But Respironics also has fought hard to maintain its technological edge as its success attracts larger competitors. The company this week expects to begin shipping the REMstar Choice, the fifth generation of the renamed Sleepeasy line, and already is working on innovations for a sixth generation. McGinnis always pushed his staff to upgrade Respironics' products. But he has redoubled his efforts since 1988, when a competi- NOTICE Of REDEMPTION To The Holders of: Meodville Area Recreation Authority Guaranteed Revenue Bonds, Series of 1978 6 Term Bonds due December 1 1 993 Dated: December 1 1 978 CUSIP: S83268 AM 9 Notice is hereby given pursuant to the Trust Indenture dated December 1 1 978, from Meadville Area Reception Authority to Marine Bank as Trustee, the said Authority intends to redeem ond does hereby call for redemption on December 1, 1991, $1 40,000.00 principal amount of the above described bonds at a price of 100 thereof together with accrued interest to December 1991, and the serial numbers of the bonds called for redemption are as follows: 1 189 through 195 I 256 through 262 I 21 6 through 222 1 301 through 307 The bonds colled for redemption will become due and payable on December 1, 1991, and ore required to be presented for payment with all coupons maturing after said redemption date attached thereto at: Marine Bank, Trustee, co Pittsburgh National Bank, Coupon Collections Department 411, Fifth Avenue and Wood Street, Pittsburgh, PA 15222. The December 1, 1991, interest coupons from the bonds designated for redemption should be detached and presented for payment in the usual manner.

From ond after December 1,1991, interest on the bonds colled for redemption will cease to ac- MARINE BANK, TRUSTEE IMPORTANT: Federal Tax Law requires individual owners of bonds to submit their Taxpayer Identification Number (Social Security Number) with each bond presented for payment. Please attach a completed Form W-9 with the bonds presented for payment. The account information line should be filled in with the complete title of bond issue and certificate number. W-9's are available at your local bank, broker, or Internal Revenue Service office. FAILURE to comply with the Tax Law will subject the payment of PRINCIPAL to the 20 Backup With.

noiaing provisions ot me tax low. MB4 1021 4 By Magliozzi and Ray Magliozzi Press news services DEAR Tom and Ray: I have a 1987 Ford Crown Victoria. I noticed oil on the driveway under the car and found that I was down several quarts. The mechanic looked it over and found that the oil pan was saturated with oil. After he wiped it out with a rag, the pan appeared to be pitted from rustThe mechanic scraped the pan with a scraper and a hole the size of a dime appeared.

He then wire brushed it, and many pits were visible. My mechanic coated the espirpmcs from That may sound like false modesty, but longtime employees at the company, some of whom affectionately call him "Dad," insisted success hasn't gone to McGinnis' head. "Some people, in a position like he is in, would forget about the little people. He's not like that. He treats everybody the same," said Mauritta Moyer, an inspection supervisor who has been with the company 11 years.

A few years ago, when Moyer was having problems with a supervisor, she called McGinnis at home. He agreed to meet her and a coworker at a local tavern and they discussed the problem and other issues for four hours. "The next time I saw him, he asked me, 'Do you have anything else you want to talk I said, 'Yeah, do you have" time for a He just chuckled." McGinnis grew up in Ottawa, 111., a small farm town. The youngest of seven kids, he was always fascinated by gadgets, a trait he inherited from his father, a factory maintenance, worker. None of McGinnis' brothers and sisters went to college, but an older brother gave him two pieces of homespun advice.

"Your security is between your ears. You have to get an education," his brother told him. Secondly, his brother preached, no one ever got anywhere working for someone else. To finance his education, McGinnis joined the Army. He was sent to Korea but, fortunately, he arrived just as the armistice was signed.

"I think the Army was a good experience," he said, then hastened to add, "Of course, I think every experience is a good experience. I like change. That is what gives people around here fits. We are always changing. After getting a bachelor's degree tin mechanical engineering from the.