Spinoff Deal Valuable for Telesis Chief : Communications: Some stockholders like the idea of chairman Sam Ginn having a large stake in the new company.

If Pacific Telesis shareholders ultimately benefit from the proposed spinoff of the company’s $1-billion cellular phone operations, few will fare as well as Telesis Chairman Sam Ginn, the plan’s principal architect.

Ginn will leave Telesis to become chairman of the proposed new wireless communications company, where he will exchange his Telesis stock options for a stake in the spinoff that will probably make him its largest non-institutional investor. His new holdings would prove especially valuable if, as some predict, the new venture is sold to another business.

Ginn’s likely stake raises no eyebrows in the investment community or among executive compensation experts. Several large Telesis shareholders, in fact, like the idea of top management having a big stake in the new enterprise. Ginn says his salary “probably will drop significantly,” making his pay highly dependent on the venture’s performance.

But Ginn’s potential stake has attracted attention from consumer activists and state regulators, who are challenging the proposed spinoff as unfair to phone customers.

“Top management is taking the most promising technology the phone company has and is jumping ship with it,” says Michael Phillips, a San Francisco financial adviser representing Public Advocates, a consumer group attacking the plan.

Telesis is firing back in kind. It asserts that opposition to the split has come solely from consumer groups who “quite literally make their living opposing Pacific Telesis” before the state Public Utilities Commission, which is allowed to pay the legal expenses of consumer groups that have made a “substantial contribution” to a PUC decision.

But the deal has critics in the PUC as well.

“It’s hard not to see the ego and greed of senior management in all this,” says John Chan, who is spearheading the PUC staff’s review of the proposal. “Telesis’ cellular operations are a gold mine waiting to be discovered, and management is walking away with it.”

Telesis says the spinoff would be good for Telesis shareholders, each of whom is to get one share of the new company for each Telesis share, and good for California. A California cellular business free of public utility regulation wouild grow fast, Telesis says, which should mean more jobs and investment.

Of his own compensation as chairman of the new company, Ginn says the the final package “will certainly be in line with packages at comparable corporations.”

If the new venture becomes a reality, Ginn will be allowed to exchange all of his 166,600 unexercised Telesis options for shares of the new company, potentially on a three-for-one basis, an even trade based on the value of both securities.

Ginn got 90,000 of those options just months before announcing plans for the split, and is set to receive an additional stake in the new company as part of his initial compensation package.

The precise extent and value of Ginn’s holdings cannot be calculated until the new company files its stock registration with the Securities and Exchange Commission later this month. But according to available records and preliminary estimates from investment analysts, Ginn could end up with well in excess of 500,000 shares.

Analysts expect the new shares to sell for about $15, which would make Ginn’s stake worth $7.5 million--the same as his Telesis stake would be worth if the options were exercised. The difference is the growth potential of the new entity.

With cellular franchises in all the major urban centers in California, a state that is home to more cellular subscribers than any other, and fast-growing operations in Germany, Japan and Portugal, some analysts say the Telesis wireless operation will be an attractive potential takeover target to larger, and possibly foreign, telecommunications companies.

That possibility was strengthened by last week’s announcement from American Telephone & Telegraph that it would pay $12.6 billion for McCaw Cellular, the largest wireless phone operator. Pacific Telesis shares jumped sharply on the news.

According to employee interviews and internal Telesis documents filed with the PUC, Telesis, under a project code-named “Sierra,” was activiely trying to sell its cellular operations last year. Among potential buyers contacted by Telesis, sources say, were cable television giant Tele-Communications Inc., International Business Machines, British Telecom, McCaw and AT&T.;

Officials from Telesis and the other companies declined comment on the subject. But a former member of the Telesis team that studied a possible split said the goal was “to shop the wireless business” and to settle for spinning it off if no deal could be struck. He added that once the spin-off is completed, executives will likely try again to find a buyer.

Telesis officials have never ruled out selling the new company and have stressed that whatever is done will “serve the best interests of the shareholders.”

But consumer groups say they are concerned about the potential impact of a spinoff on telephone subscribers.

For years, they say, ratepayers subsidized Telesis’ development of cellular technology. So these groups object to the notion of splitting the wireless service off just as the business is beginning to generate profits that could be used for a sorely needed, multibillion-dollar upgrade of the phone company’s existing network.

The result they say, could be additional rate hikes to raise money for the improvements.

Lee Selwyn, a Boston utility consultant retained by the PUC to represent Pacific Bell subscribers, is even more emphatic. “On balance, this is a rape of the company,” he says.

In upcoming hearings on the proposed split before the PUC, Selwyn and the commission’s own ratepayer representatives are set to argue that regulatory approval of the spin-off should require Telesis to compensate ratepayers by as much as $1.1 billion.

Telesis officials respond that ratepayers have no claim on company assets.

They charge that subscriber funds were used to pay for development of cellular technology over the last four decades.

Telesis officials respond that ratepayers have no more of an ownership interest in the company’s assets than a Chevrolet buyer has in General Motors.