Oh, That 80,000 Shares

Earlier this year, Westinghouse Electric Chief Executive Michael Jordan trekked to the West Coast, where he enlisted the support of the California Public Employees' Retirement System (CalPERS) for a new incentive pay plan for executives. But on Apr. 19, the activist pension fund's board reversed field and joined a shareholder revolt against the pay plan.

Why the change? CalPERS, owner of 2 million Westinghouse shares, says it was kept ignorant about options on 80,000 shares the plan would provide to Robert Watson, ex- head of Westinghouse's financial-services unit--even though he no longer works for the company. Watson already has earned more than $10 million for 18 months of work dismantling the troubled finance arm. "We weren't told about the Watson package," says Richard Koppes, CalPERS general counsel. "All that came up after we announced our support for it."

Also upset are the New York City Teachers' Retirement System, which started the shareholder uprising, and the Florida state pension fund. They probably won't prevail, but could embarrass the company. Watson couldn't be reached. Westinghouse's only reply is that the plan serves shareholder interest by "tying executive compensation to performance."

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