Yuen given huge salary increase despite Gemstar's terrible year. (The Executive Pay Crisis - Big Bucks, Mixed Results).

HENRY Yuen saw the company he founded, Gemstar-TV Guide International Inc., lose $600 million in 2001. That same year, he saw the stock plummet 30 percent.

No matter -- Yuen got a raise. A big one. His base salary jumped to $4.6 million from $2.55 million the year before. Plus, he picked up $14.6 million in exercised options, giving him aggregate take-home pay of almost $20 million, more than three times the amount he received a year earlier.

Those results give Yuen the dubious distinction of finishing last in the Business Journal's pay/performance scorecard, which measured the ratio of chief executives' compensation to their company's earnings.

A Gemstar spokeswoman defended the board's decision to reward Yuen despite record losses and a lagging stock price.

"We met virtually all the objectives we set out to accomplish at the beginning of the year, from an operational and strategic viewpoint," bristled a spokeswoman. She added that Gemstar is still cash-flow positive and "has laid down a solid foundation for sustained long term growth." Yuen himself was not made available for comment.

Still, there is disaffection with both Yuen and the company's results. "I think Henry, based on the performance of the company both financially and legally, is wildly overpaid," said a source close to the company.

Last April, Gemstar announced that Yuen was forced to pledge 7 million shares, more than half of his personal stock, as collateral for debt he had incurred to exercise options in 2001 on 1 million shares of Gemstar stock. Yuen never sold the shares, however, and as Gemstar's stock tumbled, a margin call went into effect, requiring him to pay up or provide collateral.

Then came the disclosure that Gemstar never collected more than $100 million it had booked as revenues over the past two years -- and that $20 million in revenues it had recorded was actually part of a barter agreement.

Shares of the once high-flying company have tumbled from more than $100 in March 2000 to less than $5 last week. (Yuen, who holds 3.1 percent of Gemstar's stock, has seen his personal net worth plummet from more than $1 billion.)

None of this has exactly put him on good terms with Gemstar's largest shareholder, News Corp. Its 42 percent stake would have been worth about $14 billion in August 2000, was worth about $700 million last week.

Rupert Murdoch, News Corp.'s chief executive, used the leverage he had through control of six board seats to replace Yuen's co-chief operating officer, Peter Boylan, with Jeff Shell, former president of Fox Cable Networks.

Beyond the debt load and phantom revenue, the company's stunted growth prospects have given investors the jitters.

Its value had long been in a basket of 200-plus patents, including that for the VCR-Plus technology. The advent of digital television recording systems like TiVo, have cut into that market, and the company suffered a further blow in late June when the International Trade Commission ruled that competitors had not infringed on certain Gemstar patents. The company has appealed the ITC's decision. "It's not over," the spokeswoman said.

Times weren't always tumultuous for Yuen. The scientist-lawyer-entrepreneur grabbed headlines in 1999 when his startup, Gemstar International Group Ltd., announced its merger with News Corp.'s TV Guide in a stock deal valued at $7.2 billion.

In the late 1990's Gemstar's stock price jumped on talk of a 500-channel universe. So far that hasn't happened.