The Council of Institutional Investors, Washington, announced its second annual list of companies it says have significant performance problems.
Separately, the California Public Employees' Retirement System, Sacramento, gave companies letter grades on each board's consideration of corporate governance issues. Some 41 companies - or one-fifth of those surveyed - got an F for not responding.
The council listed the 20 companies in the Standard & Poor's 500 Stock Index that have most underperformed their industry averages in one-, three- and five-year total shareholder returns as of July 29.
Its Focus List was released at the council's meeting in San Francisco earlier this month.
Council executives said the list was compiled because some of its members don't have the resources for exhaustive separate surveys of companies.
According to the council, Digital Equipment Corp., a computer maker and one of the companies that made the Focus List, had a five-year total shareholder return of -27.2%, compared with -7.9% for the computer systems industry and 8.4% for the S&P 500 when unweighted figures are used.
For three years, Digital Equipment returned -34.4% vs. -6.8% for the industry average and 11% for the index. For one year, Digital returned -45%, vs. 13.2% for the industry and 6.1% for the index.
Another company, Navistar International Corp., a maker of medium- and heavy-duty trucks, had total returns of -24% for five years, -25.4% for three years and -51.2% for one year.
The average total return for the heavy-duty truck industry was 3.6% for five years, 11% for three years and -6% for one year.
Council members were told they can do whatever they want with the list. Some are expected to query corporate executives about why they aren't doing well and how they can do better.
Others on the list were: Alza Corp., Armco Inc., Bally Entertainment Corp., Beverly Enterprises Inc., Borden Inc., Genesco Inc., B.F. Goodrich Co., The Great Atlantic & Pacific Tea Co., Hartmarx Corp., Lotus Development Corp., M/A Com Inc., Melville Corp., National Education Corp., NorAm Energy Corp., USAir Group Inc., USF&G Corp., Westinghouse Electric Co. and Woolworth Corp.
Also at the council meeting, executive compensation specialist Graef Crystal said Sanford I. Weill, chief executive officer of Travelers Corp., had the greatest excess between his 1993 total compensation and competitive pay, among the nation's 200 largest companies.
Mr. Weill's total direct compensation was $45.8 million in 1993, Mr. Crystal said. The competitive total direct compensation for Mr. Weill's job, said Mr. Crystal, was $6.8 million.
(Competitive total direct compensation is a figured arrived at by Mr. Crystal which is based one-third on company size and two-thirds on company performance. Mr. Crystal said that, "Since Travelers is above average in size, one would expect our hypothetical paycheck to exceed the simple average paycheck of $3.4 million. And since Travelers is above average in performance as well, a significant further amount would be added. The result is a hypothetical paycheck of $6.8 million, or double the simple average paycheck.")
For 1991 through 1993, Mr. Weill received $90.7 million more than competitive pay, said Mr. Crystal.
Second on Mr. Crystal's list was Alan C. Greenberg, chief executive officer for Bear, Stearns & Co. Mr. Greenberg received $16.2 million in total direct compensation in 1993, said Mr. Crystal. His competitive pay for the year, he said, was $3.9 million.
For 1991 through 1993, Mr. Greenberg received $29.7 million more in compensation than in competitive pay, said Mr. Crystal.
Meanwhile, the California Employees' fund surveyed 200 of the largest U.S. companies about whether they had reviewed themselves against various corporate governance models.
Fund officials said 79% of the companies responded to the survey, and more than 36% of them were given good or excellent grades by the pension fund.
Companies that submitted a comprehensive list of guidelines carrying the board chairman's signature and had board members involved in the process got an A+. They were: AirTouch Communications Inc., Chevron Corp., Cisco Systems Inc., Dayton Hudson Corp., Exxon Corp., First Interstate Bancorp, FPL Group Inc., IBM Corp., J.C. Penney Co., K mart Corp., Merck & Co. Inc., Northern Telecom Ltd., Time Warner Inc., Westinghouse Electric Corp. and WMX Technologies Inc.
Firms receiving an F+ grade for responding but essentially giving the fund the brushoff were: American Homes Products Corp., AMR Corp., Atlantic Richfield Co., Blockbuster Entertainment, Capital Cities/ABC Inc., Consolidated Edison Co. of New York, CPC International Inc., E.I. du Pont de Nemours & Co. Inc., Gannett Co. Inc., Johnson & Johnson, Ralston Purina Co., The Southern Co., United Technologies Co., Walgreen Co. and Xerox Corp.
