A Profitable Undertaker

Robert Waltrip is the world's highest-paid undertaker. According to the October 1998 issue of Texas Monthly, Waltrip was paid $20.3 million in 1997. The study of Texas CEO compensation was done by Graef Crystal, the corporate pay analyst who summarized Waltrip's pay package by saying he was "not worth it." In 1996, Crystal assailed Waltrip, calling him the 12th most overpaid CEO in America. And in a June 20, 1999 analysis published in The New York Times, Crystal listed the SCI CEO as the third most overpaid CEO relative to stock performance.

Waltrip once told a reporter that people who don't buy SCI's stock "just don't like money." But lately, SCI's fortunes -- and its stock -- have fallen. In February, the company was hit by a hearse-load of lawsuits following its announcement that its fourth quarter 1998 earnings would be lower than expected. SCI blamed the revenue shortfall on "reduced mortality rates in the Company's major markets resulting in fewer funerals performed at the Company's locations." The announcement caused a massive sell-off of SCI's stock, causing its price to fall by nearly 50% in one day.

But that wasn't the end of the story. Several class action lawsuits were filed shortly after SCI's announcement. One, filed in federal court in Houston in February, alleges that before SCI announced the revenue shortfall, several members of the company's senior management, including Waltrip, sold large amounts of their SCI shares. According to a Feb. 12 press release issued by Arkansas lawyer Steven E. Cauley, the suit was filed on behalf of SCI shareholders, and shareholders of Equity Corporation International (ECI), which merged with SCI in January. In response to the suits, SCI said the company "has made all required disclosures on a timely basis." The company's Feb. 9 press release added that SCI "has initiated aggressive action to defend these lawsuits."

Regardless of what happens to the lawsuits, the company that Waltrip launched from a single funeral home in the Heights neighborhood in Houston during the 1950s will likely continue its domination of the death business. Last year, SCI had revenues of more than $2.8 billion. Its 3,442 funeral homes, 433 cemeteries, and 191 crematoria are located in 20 countries on five continents. It sells everything from embalming services to cemetery plots. And Waltrip has made certain to keep influential people on his payroll. Tony Coelho, the former U.S. Rep. and House majority whip, has served for many years on SCI's board. He is now working as the chairman of Vice President Al Gore's campaign for the presidency.

SCI and Waltrip made sure their voices were heard at the TFSC, as well. May's lawsuit points out that two of the nine TFSC commissioners, Tommy Metcalf and Robert Duncan, are SCI employees, a situation that was questioned repeatedly by May and others because of potential conflicts of interest. The suit alleges that their presence on the commission appears to violate state law, which says that no person shall be a commissioner of the TFSC "if another commissioner is also an officer or employee of the same corporation or business entity."

Daniel Reat, an attorney for SCI, told the Chronicle that Metcalf worked for SCI and that Duncan worked for ECl, which was acquired by SCI last year. Reat said he is not sure how state regulations might have affected their positions on the board, and noted that Duncan has since left the TFSC board. But Reat added that during the months that both men were on the TFSC board, "there was never any major decision made by the commission about SCI that they would have voted on. So basically it was irrelevant that they were both on there at the same time."

Records show, however, that Metcalf and Duncan were not shy about pushing SCI's agenda at the agency. A May 5, 1998 memo from Eliza May to TFSC Commissioner Patricia Keegan says that Duncan used "offensive language" with TFSC staffers, and that he "micromanages many areas of the daily functions of this office, in particular the licensing and provisional program."

The memo says Metcalf "has no respect for the role of staff and mistreats staff and is very rude to the employees of this commission." It concludes by saying that TFSC inspectors and investigators "fear Comms. Metcalf and Duncan. Inspectors know that if they write up one of their facilities, they will have to answer to them when they return to the office. That ought not be occurring."

One former TFSC employee who recently left the agency confirmed Metcalf's abusive behavior, saying that Metcalf was "ugly and rude to the general counsel. I couldn't believe some of the ways he talked to [former general counsel] Jeffrey Schrader." The former employee said it was clear that "Duncan and Metcalf weren't there for the consumer. They were there to protect SCI and to make sure SCI gets what it wants."

Given his success in the funeral business and his apparent ability to convince politicians to do his bidding, it's clear that Waltrip usually gets what he wants. --R.B.