Newbridge boss joins million-dollar club
by Simon Tuck - Wednesday, August 18, 1999 Globe and Mail
Ottawa -- Alan Lutz, Newbridge Networks Corp.'s new boss, has joined corporate
Canada's million-dollar club, with a pay packet almost eight times bigger than his
boss.
The company's management proxy circular, released yesterday, shows Mr. Lutz was
paid $1.7-million in fiscal 1999: a base salary of $1,021,706 during his first 11
months on the job, plus a $202,923 bonus, $202,923 to buy Newbridge shares and
an additional $273,966 for expenses associated with his move north.
Mr. Lutz was hired in May, 1998, to be Newbridge's president and chief operating
officer and came from Compaq Computer Corp.
The document shows that Mr. Lutz makes more in base salary than Terence
Matthews, the founder, chairman and chief executive officer of the company and the
man who hired Mr. Lutz. Mr. Matthews earned $200,000 in base salary and
$22,000 in other compensation during fiscal 1999 in the form of a management fee
paid to one of his companies.
But Mr. Matthews also owns 39.7 million shares (or 21.9 per cent) of Newbridge as
well as healthy chunks of many of its smaller affiliates through Celtic House
International Corp., his investment company, or another operation.
The circular also says that Mr. Matthews' compensation has been regularly reviewed
in recent years but he has turned down any pay raises or extra stock options.
According to the documents, Mr. Lutz, also a former executive with Nortel
Networks Corp., is not scheduled to get a pay increase during his first three years
with the Kanata, Ont.-based communications equipment company. But he will qualify
for 500,000 shares through stock options by the end of that term -- June 19, 2003 --
that are now valued at $10.9-million.
Mr. Lutz is also shielded from any fluctuations in the wobbly Canadian dollar -- his
contract states that he's to be paid strictly in U.S. currency, although the figures in the
circular are all in Canadian dollars. If he's fired for any reason during the course of his
three-year contract, Mr. Lutz will get a package that includes 24 months of salary.
Not counting stock options or moving expenses, Mr. Lutz earned $1.2-million in
fiscal 1999, which puts him in elite company among Corporate Canada's top-paid
executives. Among the country's 50 best-paid executives in 1998, only nine earned
more than $1-million in base salary, with only five topping Mr. Lutz's wage. Even
John Roth, chief executive officer of Nortel Networks Corp., Canada's largest
technology company, earned less -- about $9,000 -- in base salary than Mr. Lutz.
Newbridge officials -- including Mr. Lutz -- couldn't be reached for comment late
yesterday.
But at least one Bay Street insider said Mr. Lutz's compensation is by no means
outrageous by technology industry standards. "That's about right for someone in that
position," said Duncan Stewart, a portfolio manager at Tera Capital Corp. in
Toronto.
Mr. Lutz wasn't the only benefactor from Newbridge's executive shuffle during the
past year. Brian Jervis, the company's new executive vice-president for its switching
group, earned a base salary of $375,000, bonuses of $587,500 and stock options
now valued at $8.8-million.
Guilio Gianturco, Newbridge's new executive vice-president, earned $400,000 in
base salary, $485,785 in bonuses and stock options now worth $1.1-million.
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