Fairchild Executives Agree to Pay Cuts

Jeffrey Steiner's salary in fiscal 2004 was $2.5 million, and Eric Steiner's was $725,005, according to the company's latest proxy report.

J. Travis Laster, an attorney identified in the court filing as representing Fairchild and some of the individual defendants, declined to comment last night. Efforts to reach the Steiners in New York, Washington and Colorado were unsuccessful, and calls to the company's offices were not returned.

More than a decade ago, Jeffrey Steiner made concessions in response to a shareholder lawsuit. But the controversy didn't go away. In 2001, he compromised further after Mario J. Gabelli, head of an investment firm with a major stake in Fairchild, threatened to vote against all nominees to the Fairchild board.

"Jeff has got to wake up," Gabelli said at the time.

The latest shareholder lawsuit accused Fairchild directors of authorizing wasteful and unwarranted compensation and said the board was so heavily influenced by the Steiners that it was incapable of independently addressing the issues.

The settlement said Fairchild's board formed a committee of outside directors to review the expenses the company incurred for Steiner's defense in France, and the chairman of the committee held a series of discussions with Jeffrey Steiner late last year and early this year.

The settlement document said some of the practices criticized in the shareholder lawsuit have been discontinued.

Saying that its audit expenses are rising sharply, Fairchild recently declared that it "will consider all options for reducing costs" and may consider taking the company private in the coming year.

The company, which has had three audit firms in recent years, attributed the increased audit expenses in part to requirements of the Sarbanes-Oxley Act, which Congress enacted to tighten corporate controls in the aftermath of accounting abuses at Enron Corp. and Worldcom Inc.

Research editor Lucy Shackelford contributed to this report.