Ex-Beth Steel CEO got severance of $2.5 million

Official was demoted in Sept. before firm declared bankruptcy

March 29, 2002|By Robert Little | Robert Little,SUN STAFF

Former Bethlehem Steel Corp. Chairman and Chief Executive Officer Duane R. Dunham, who was removed from his post shortly before the steel manufacturer filed for bankruptcy last year, was paid a $2.5 million severance package upon his retirement, company documents released yesterday show.

More than $1 million will compensate Dunham for the taxes on a retirement annuity purchased for him - paid by the same bankrupt company whose health and pension plans for rank-and-file employees is under-funded by $4.85 billion.

Bethlehem Steel is lobbying Congress for a publicly financed bailout of its under-funded "legacy costs." Executives are typically offered retirement benefits beyond what the company pension plan offers, a company spokeswoman said.

Another $1.5 million was paid to Dunham in appreciation of the former CEO's service with the company, which spanned more than three decades.

"Duane had a career of 36 years with the company and retired earlier than he probably anticipated," said Bethlehem Steel spokeswoman Bette Kovach. "The board of directors chose to reward him for that service."

Dunham became president and CEO of Bethlehem Steel in April 2000 and was removed in September because of the company's lackluster financial performance. He remained president and chief operating officer until his retirement in January. His annual salary last year was $766,667, a $136,334 raise from the year before.

Turnaround specialist Robert S. Miller Jr. was hired to replace Dunham in September, a month before the company filed for Chapter 11 bankruptcy protection.

Securities and Exchange Commission documents filed yesterday show Miller's annual salary is $900,000. He is also eligible for annual bonuses of as much as 140 percent of his salary, though no Bethlehem Steel executive got one last year.

Bethlehem Steel directors set Miller's salary by determining an average for top executives at companies of comparable size - then reducing it to allow for the poor performance of the steel industry.

Former Executive Vice President Augustine E. Moffitt Jr., a 28-year company veteran who also retired in January, was paid a severance of $1 million.

While no employees received bonuses last year, 444 employees were granted options in April 2001 to buy company stock at $3.27 per share. Shares of Bethlehem Steel closed yesterday at 45 cents on the New York Stock Exchange.

In February, a Bankruptcy Court judge granted Bethlehem's request to pay bonuses of nearly $9 million to retain about 90 "key employees" during reorganization. Miller would not receive any of the retention funds.

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