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John, I said his *cash* compensation: $400K, was a pittance, and your own words, in your second sentence below, agree:
>>I disagree with you comment that the compensation is in line with the size of the company. With the size of GNT, Coss should be receiving 3-4 million per year.<<
The fact is, that Coss was *not* paid 3-4 million per year. He was paid $400K or less as detailed in the 10K report copied at my post at techstocks.com to wit:
"Now, with about 140 million shares out, that means that Coss received 4% of the company as his principal compensation for the work since 1991. During that time, his cash comp was max $400,000 per year. A pittance for a company this size and performance."
Now, all but the measly $400k/year was in stock, earned by the terms of his 1991 employment agreement. Now, somebody is suing the board for granting Goss that contract? I'm looking at a five year chart, because a 6 year chart isn't handy. It appears that in the past five years, GNT shares have increased from about $5 (split adjusted) to the present $35 or so. That's a seven-fold capital gain in 5 years.
Now, you said running GNT can't be as hard as, say, running GE. So, I looked at GE's five-year chart. In that time, GE has gone from about $20 to its nearly $70. About a 3.5-fold increase. Half the value gain of GNT.
You're right. GE must be harder to run. AFTER ALL, GNT HAS DRAMATICALLY OUTPERFORMED GE AND THE S&P OVER THE PAST FIVE YEARS. If my company was stuck with the merely good return of GE, you'd have to pay me cash, too, instead of stock. And I'd think my job was harder.
The same beef is made about Sandy Weil, the boss and brains behind the revival of Travelers (whose name Primerica assumed by purchase a few years ago). Like GNT, Mr. Weil is paid in stock rather than cash. And he has received $50 million to $100 million in stock in each of the past few years, if memory serves. And how hard can running a life insurance and loan company be, you ask? Ask the shareholders who watched their value diminish under the old management, and watched it triple in a few years once Weil took over.
As you imply, its *not* hard to loan hundreds of millions of dollars, risking being caught between your cost of capital and your return. It *is* hard to consistently make a *substantial profit* doing it. And for someone able to turn $5 into $35 in only 60 months, I'm happy to see Goss get the benefit of the stock that the board promised him in 1991.
~ Doug ~ |
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