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"Some will ask: `Haven't we seen this movie before? Why didn't we do this a year ago?' That was then, this is now." --AT&T Chairman Robert Allen announcing the appointment of successor Michael Armstrong, who was passed over for the post a year agoEDITED BY LARRY LIGHTReturn to top

LAST THANKS FROM COKE

THE LATE ROBERTO GOIZUETA was the first CEO to accumulate more than $1 billion in pay during his tenure. The Coca-Cola chief earned about $1.4 billion during his 16 years as CEO--about $87.6 million a year.

That's not all. Up to $1.26 billion of his pay had been deferred or restricted until his retirement or death. And his Oct. 18 death poses an intriguing challenge for the Internal Revenue Service. This year, Coca-Cola is expected to take a $1 billion-plus corporate tax deduction on its payout to Goizueta's estate. "It would be the single largest tax deduction for executive pay ever," says Graef "Bud" Crystal, the compensation consultant.

The payout won't hurt earnings because charges against the piled-up bonuses and restricted stock already were taken in past years. But the tax deduction--if allowed by the IRS, which recently challenged the deductibility of a $125-million option gain for Columbia/HCA's Thomas Frist --could help boost Coke's 1997 net income. Last year, it paid $1.1 billion in taxes on $4.6 billion in operating earnings. Coke doesn't dispute the numbers but notes the stock surged under Goizueta.EDITED BY LARRY LIGHT John A. ByrneReturn to top

TABLE

Gains To Goizueta's Estate

IN MILLIONS

Restricted stock $674

Tax reimbursement on restricted stock 126

Delayed bonuses and tax reimbursement 300

Stock-option gains 162

TOTAL $1,262

DATA: GRAEF CRYSTAL

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A UNION WITH A POISON PILL

COMPANIES HAVE USED POISON pills for years to protect against hostile takeovers. Now, in a novel twist, a labor union is doing it. The provision is part of the contract the Air Line Pilots Assn. recently struck with US Airways Group. The pact allows company Chairman Stephen Wolf to slash costs, which he says is necessary to spur growth by buying 400 new planes.

Skeptical pilots suspect Wolf really is gussying up the carrier for sale. So they won a clause in the contract calling for US Airways to pay the union $250 million if a buyout "adversely impacts" them. Any buyer would have to cough up some 5% of the airline's $5 billion market cap. That, says PaineWebber analyst Sam Buttrick, would be "a factor but not a deal-breaker" for an acquirer.

The point, says the pilots' chief negotiator, Chris Beebe, isn't so much to block a merger as to "get us a seat at the table" if one is pending. The union wants to prevent a merger from hurting pilots' seniority rankings, which determine where they fly and how much they earn. The pact also lets US Airways reduce the pilot payment to $200 million by granting them a board seat, as the union has sought. The carrier won't comment until the deal is ratified. A vote is expected on Oct. 30.EDITED BY LARRY LIGHT Aaron BernsteinReturn to top


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