At USF&G Corp.'s stockholders meeting last year, Norman P. Blake Jr. promised a disgruntled shareholder he would "bust my ass for you."
Yesterday, the company's chairman, president and chief executive spent nearly two hours at this year's meeting detailing his labors over the past year and a half, defending his compensation and outlining the fruits of his efforts: Eight of 12 non-insurance businesses that contributed to USF&G's losses have been scaled back or sold; the company's balance sheet is healthier; operating expenses have been trimmed by $215 million; and a modest operating profit was reported in the first quarter.
Those improvements have been accompanied by some troubling events, Mr. Blake noted, including a quarterly dividend that dropped from 73 cents a share in November 1990 to today's 5 cents; a loss of $176 million last year; and the loss of 3,700 jobs, or 31 percent of the work force, in the past 18 months.
There will be no more mass layoffs, he said, although some jobs might be cut here and there as the restructuring continues.
But USF&G's first-quarter operating profit of $4 million, amounting to a loss of 9 cents a share after the payment of preferred dividends, was not an aberration and will be repeated for the rest of the year, he promised. But that doesn't mean shareholders can expect a dividend increase soon, he said.
Mr. Blake said the profits he expects this year won't come from increased premiums, since the company will continue to pare back its least profitable insurance products, including workers' compensation and personal lines of insurance.
Instead, the earnings drive will focus on continuing to reduce the ratio between what the company pays out in claims and the premiums it takes in.
Last year was a profitable year for Mr. Blake and his top executives, according to the company's proxy statement, a subject the chairman addressed himself in the question-and-answer session.
Mr. Blake was paid $996,910 in salary last year, plus a $350,000 bonus. That was in addition to the 275,000 options on common stock he received upon joining the company in November 1990. The options have an average exercise price of $9.32 each; USF&G's stock closed at $10.875 on the New York Stock Exchange yesterday, down 12.5 cents a share but more than $5 a share higher than at the end of last year.
Mr. Blake also stands to benefit when he leaves the company, unless he is "terminated for serious cause." After three years and four months on the job, he'll receive credit for 25 years of service under a supplemental retirement plan, which will entitle him to a pension of about $375,000 a year based on his current salary.