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CALIFORNIA CONTROLLER SIGNALS INSTITUTION INVESTORS WILL NOT BE INTIMIDATED IN EXECUTIVE COMPENSATION EFFORTS

 CALIFORNIA CONTROLLER SIGNALS INSTITUTION INVESTORS
 WILL NOT BE INTIMIDATED IN EXECUTIVE COMPENSATION EFFORTS
 SACRAMENTO, Calif., March 6 /PRNewswire/ -- California Controller Gray Davis, a trustee for the California Public Employees' Retirement System (PERS) and the State Teachers' Retirement System (STRS) today sent a clear signal that institutional investors will not be intimidated in their efforts to focus attention on executive compensation issues.
 "We are witnessing a campaign of corporate intimidation against a 'whistle-blower' who sounded the alarm against excessive compensation," Davis said. "His efforts are aimed at aligning executive compensation with corporate performance."
 Controller Davis' defense of Graef S. "Bud" Crystal, comes in response to a campaign which Champion International is waging against Graef S. Crystal, a compensation consultant hired by PERS and the Council of Institutional Investors. Correspondence initiated by counsel to Champion has threatened litigation against Crystal. The consultatant was subsequently fired by Financial World, where he was a columnist.
 Champion International, a company which has ranked in the bottom 20 percent of S&P 500 companies based on the average return over the past five years, is often cited as an example of a company which has not linked executive compensation to corporate performance.
 As a co-chair of the Council of Institutional Investors, an organization of 70 institutional investors, Controller Davis today invited Andrew Sigler, chairman and chief executive officer of Champion International, to address the annual meeting of the council in April.
 "Executive pay should be linked to a company's performance," Davis said. "CEOs of well-run companies should be handsomely rewarded. CEOs of poorly run companies should take a reduction in pay. Directors of poorly run companies should not reward management while shareholders suffer."
 Davis applauded the efforts of companies including United Airlines, ITT, IBM and Avon which have met with shareholder groups and agreed to change executive compensation packages or the way compensation is reported. Avon chairman, James Preston, for example, froze his salary and lowered his bonus in exchange for stock options, tying his income more closely to Avon's stock value. IBM president, John Akers, agreed to a 40 percent salary cut in 1991.
 Controller Davis' letter to Andrew Sigler indicates he is seeking an independent analysis of Champion's compensation practices and the actions of its counsel. Further, the Controller said that if concerns about compensation practices at Champion are not addressed, "it is my intent to urge PERS and STRS to vote against the current slate of directors and encourage other institutional investors to review this matter."
 PERS has a strong record of success in working with corporations on corporate governance issues.
 PERS and STRS own over 1 percent of Champion stock.
 -0- 3/6/92
 /CONTACT: Jay Ziegler or Edd Fong of the Office of the State Controller, 916-445-1895/ CO: California State Controller ST: California IN: FIN SU:


RM -- SF003 -- 5898 03/06/92 13:27 EST
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Publication:PR Newswire
Date:Mar 6, 1992
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