WSJ 7/20: Wendt “ To Really Turn This Baby Around “.
After “ really turning GE Capital around “ from 300 mill in profits
to 3.8 billion a year, I am looking forward to CNC’s turn around
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TA
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For New CEO Gary Wendt,
Conseco Post Cost $20 Million
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By JOSEPH T. HALLINAN
Staff Reporter of THE WALL STREET JOURNAL
CARMEL, Ind. -- Taking the top job at Conseco Inc. cost Gary C. Wendt $20 million –
even after the $45 million in cash he is getting to assume the position, Mr. Wendt said in an interview.
Mr. Wendt said that under a noncompete agreement with his former employer,
General Electric Co., he would have received more than $65 million
had he remained "in a hammock" an additional 21 months.
Instead, Conseco issued a warrant for 10.5 million shares of its common stock
to a finance unit of GE to release Mr. Wendt from that agreement.
And Mr. Wendt forfeited the $20 million or so to give himself an incentive
"to really turn this baby around," he says.
As to how he plans to do that, Mr. Wendt declined to offer specifics.
He said he envisioned a "slimmed-down, streamlined" Conseco.
He also indicated that the company's beaten-down finance company,
Conseco Finance, which has been on the block since March, isn't likely to be sold.
Noting the recent liquidation of similar companies,
such as First Union Corp.'s Money Store, he said,
"Can you imagine a worse time to sell?"
Mr. Wendt said he had no plan yet for repaying nearly $1 billion in Conseco debt
coming due in September, "but I'm not panicked."
He said he is intent on restoring the company's credit ratings,
which have been downgraded in recent months,
and on reducing its debt. Exactly how he will do these things,
Mr. Wendt won't announce for another 90 days.
But he hinted that he may close some field offices at Conseco Finance
and also seek an infusion of equity.
"One option is to look for a partner in the finance company," he said, but mentioned no names.
The finance company, a maker of mobile-home loans formerly known as
Green Tree Financial Corp., lies at the heart of Conseco's troubles.
Conseco bought the company in 1998 for $6.44 billion,
but investors balked at the deal and sent Conseco's stock plummeting.
That tailspin led to the resignation earlier this year of the company's highflying
founder and chief executive, Stephen C. Hilbert.
A college dropout and former encyclopedia salesman,
Mr. Hilbert was known for his lavish tastes -- from corporate jets to thoroughbred racehorses.
Those days appear to be over.
Mr. Wendt said he was taken aback by the ornateness of Mr. Hilbert's office
the polished bookcases lined with leather-bound volumes of Thackeray and Shakespeare,
the gilt desk clock, the armchair upholstered in a tiger-skin fabric.
Despite his huge paycheck, Mr. Wendt said he plans to set
a more frugal tone for the organization by scaling back the pay for the CEO.
Mr. Hilbert was one of the most highly paid executives in America,
last year pulling in $57.4 million, most of it in stock.
Under Mr. Wendt's compensation package, the CEO's annual salary will drop
over the next five years to around $1 million a year, which he described as
comparable to the salaries received by CEOs of similar companies.
A GE representative said the company doesn't comment on executive compensation packages. |
