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THIS ARTICLE IS FROM THE BUSINESS SECTION OF THE FEBRUARY 18TH, 2004 SF CHRONICLE. CLICK ON THE ICON BELOW TO VIEW THE ARTICLE AS IT APPEARS ON THE SFGATE WEBSITE.

SBC LINES CEO'S POCKETS

By David Lazarus

That ka-ching sound you hear isn't just AT&T Wireless receiving a $41 billion buyout offer from rival Cingular. It's also Ed Whitacre, chief exec of SBC, notching up another performance milestone for his annual pay package.

SBC is the majority owner of Cingular -- it'll put up nearly two-thirds of the cash for AT&T Wireless -- and is thus the ultimate beneficiary of what will be, assuming the deal goes through, the nation's largest wireless network.

Why will this swell Whitacre's pockets? Well, if he can score millions in bonus money for losing business, imagine how much he'll make for actually expanding SBC's reach.

In a regulatory filing on Friday, as most people were focusing on the three-day holiday weekend, SBC revealed that Whitacre's 2003 compensation was more than double what he made in the previous year.

Whitacre received a base salary of $2.1 million, a bonus of $5.7 million, $2.4 million from the company's long-term incentive program, $7.2 million in restricted stock awards and $2.1 million in additional compensation.

That's a grand total of $19.5 million (not including stock options), compared with $8.6 million in 2002. Whitacre's base salary was unchanged, so the increase comes exclusively in bonus money, returning him to near the $21 million level he enjoyed in 2001.

By comparison, BellSouth CEO Duane Ackerman earned $2.3 million in 2002 salary and bonuses, while Ivan Seidenberg, CEO of Verizon Communications, pulled down $9.5 million that same year. Their 2003 compensation has yet to be revealed.

But what makes Whitacre's whopping pay increase so noteworthy is that SBC, by virtually any yardstick, performed dismally last year.

The company's stock was among the five worst performers in the Dow Jones industrial average, shedding nearly 4 percent of its value for all of 2003 (while the Dow itself posted a 25 percent gain).

SBC's revenues have dropped for 13 straight quarters. Net income, adjusted for accounting changes, also has headed south in recent years.

According to SBC's proxy statement filed last week, the company has underperformed comparable telecom firms and the S&P 500 since 2001.

Nevertheless, Anne Vincent, an SBC spokeswoman, said Whitacre deserved to have his pay more than doubled because he met financial goals set by the board of directors (for which he serves as chairman).

Those goals, Vincent said, are tied to advances made in selling new services like long-distance and high-speed Internet access. They're also tied to customer satisfaction, which SBC says is up, according to the company's own surveys.

"From an operational standpoint," Vincent said, "SBC had a very good year in 2003. Mr. Whitacre's compensation reflects that."

So now we have Cingular on the verge of acquiring AT&T Wireless, which almost certainly will be seen by SBC's board as an operational triumph. Vincent, however, couldn't say what impact the deal will have on Whitacre's pay this year.

"That's for the board to decide," she said. "They'll evaluate each executive's performance against various goals."

Anyone want to take bets that Whitacre won't be disappointed when bonus time rolls around next year?

This is an excerpt From Lazarus at Large by David Lazarus', his column appears Wednesdays, Fridays and Sundays. He also can be seen regularly on KTVU's "Mornings on 2." Send tips or feedback to dlazarus@sfchronicle.com.