Chairman Personally Paid Ex-Officers $2.3 Million : Resignations Costly at Wheeling

PITTSBURGH —  The resignations of former Wheeling-Pittsburgh Steel Chairman Dennis Carney and other officers cost the new chairman nearly $2.3 million, he told the Securities and Exchange Commission.

Allen E. Paulson, who took over as chairman after Carney resigned last month, guaranteed his predecessor’s deferred compensation and retirement benefits worth nearly $1.5 million, he told the agency Wednesday.

Paulson, who owns 34% of the company and is its largest stockholder, has watched his investment slip from an estimated $50 million, which he paid for his stock beginning in 1981, to less than $15 million as the stock’s value declined with the steel business.

Records filed in federal bankruptcy court showed that Paulson was considering ways to remove Carney a year ago and discussed proxy contests in 1984, a move that was never made.

Paulson also paid Carney $33,878, or $7.25 a share, for 4,666 shares of Wheeling-Pittsburgh common stock and took an option on another 7,379 shares held by Carney.

Carney resigned as chairman and chief executive Sept. 20 and as director of the financially ailing steelmaker last Monday.

Two vice presidents who resigned with Carney, George Raynovich Jr. and Joseph Scalise Jr., were paid $400,000 each by Paulson.

Wheeling-Pittsburgh filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on April 16. The United Steelworkers staged a walkout July 21, when Carney canceled the labor contract with the union after receiving a bankruptcy judge’s permission.

In a related story, the steelmaker made a new contract proposal Thursday in an attempt to end the 75-day-old strike that has severely taxed the financially struggling company.

The bargaining session was adjourned for the day so negotiators for the United Steelworkers could meet with their financial advisers to study the proposal, which was not made public. Federal mediator Carmon Newell, participating in the bargaining at a Pittsburgh hotel, said: “I wouldn’t say they were close to agreement.”

While neither side would reveal details of Thursday’s proposal, union negotiator Paul D. Rusen said the offer laid down by company Vice President William J. Miller was better than the proposal made by Carney, the company’s former chairman.