Downey Exec’s Severance Package Was $1.7 Million

NEWPORT BEACH — Stephen W. Prough, the longtime thrift industry executive who unexpectedly resigned as president of Downey S&L; and its Downey Financial Corp. holding company a year ago, received $800,000 in severance pay, double his $400,000 annual salary.

Downey’s new proxy report to shareholders shows that Prough, who was 52 when he stepped down, received a total of $1.7 million after he resigned Feb. 14, 1997, less than four years after he took the job. The sum included $50,001 in salary and $585,113 cash in return for canceling his options to buy Downey stock.

His final pay package also contained $66,345 compensation for accrued personal time off, $173,873 in accrued deferred wages and a handful of much smaller payments from the company’s retirement and benefit plans.

The smallest number in the package? A $100 payment for interest earned on deferred pay.

Prough said he was resigning because he felt he had accomplished all that he had come to Downey to do. The S&L;, one of the few remaining independent thrifts in the merger-crazy industry, was considered a sleeping giant when Prough came in. Industry analysts say he left a revitalized lender with nearly 100 branches and $5.2 billion in assets.

Prough’s successor, James W. Lokey, received $260,384 in salary and an $82,000 bonus for his work over the remaining 320 days of the year.

In addition to Prough’s severance package, Downey paid a total of $1.3 million in salaries, bonuses, benefits and other forms of compensation to its top five executives last year, the company reported.