TORONTO - Frank Stronach, founder and chairman of Canadian auto-parts giant Magna International, spent an hour defending the size of his pay packet to shareholders on Thursday as his company reported higher first-quarter profit.
Stronach's was paid $33.2 million last year, a package that spurred much consternation during the question and answer period at Magna's annual meeting in Toronto.
When it was all over, Stronach, who founded the company in his garage in the early 1950s, simply told reporters, "I should get more."
He refused to comment further.
Shareholder groups, including the powerful Ontario Teachers Pension Plan Board, have opposed Stronach's 2002 pay, which consisted of $200,000 in salary and $31.5 million in consulting fees.
Stronach and other top executives argued the payments were in accordance with Magna's corporate constitution. The scheme, approved in 1984 by shareholders, provides for compensation for Stronach, in addition to a base salary, of as much as 6 percent of the company's profit before tax.
Last year Magna, one of the biggest auto-parts makers in the world, made $554 million.
Belinda Stronach, the founder's daughter who also serves as president and chief executive, defended her father's lofty pay.
"Because it's based on a percentage of the profits and how we split up the pie, the bigger the profits the bigger the slices of the pie become. So if we have more profits, the employees get more, the shareholders get more, management gets more," Belinda Stronach told Reuters.
"The only way we get a greater bonus is by baking a bigger pie. If we don't bake a bigger pie, we don't get a bigger bonus."
BIGGER PROFITS IN FIRST QUARTER
The company may be on its way to record profits again this year. Magna, whose customers include General Motors and Ford Motor Co., said its first-quarter profit was $162 million, or $1.65 a share, for the period ended March 31, up from $153 million, or $1.65 a share, for the same period last year.
That beat an average estimate of $1.45 a share among 16 analysts polled by Thomson First Call.
Sales rose 22 percent to $3.77 billion from $3.12 billion.
Operating income from automotive operations was $263 million, up 12 percent from $234 million for the same quarter the year before.
Based on expected average dollar content per vehicle in North America and Europe, Magna expects its automotive sales for the second quarter to be between $3.4 billion and $3.6 billion.
In the second quarter of 2002, Magna's automotive sales totaled $3.15 billion.
For the full year, Magna estimated vehicle production of 15.8 million units for North America, down from a previous estimate of 16 million, and 16.1 million for Europe, down from 16.2 million. It expects 2003 earnings per share to be between $6.00 and $6.40, up slightly from its previous estimate in January of $5.90 to $6.40
The company also sees full year 2003 automotive sales to range from $13.4 billion to $14.3 billion, compared with 2002 automotive sales of $12.4 billion.
The company is expected to announce contracts totaling $750 million in the next four to six weeks, Manfred Gingl, the company's executive vice-chairman said.