Trump This: The Donald Gets Fat Bonus from His Struggling Casino Company

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By Alex Berenson
Staff Reporter

Donald Trump just keeps finding ways to top himself.

In 1991 and 1992, his three Atlantic City casinos filed for bankruptcy (or, in Trump corporate-speak, a "recapitalization"). In the last six months, he has twice announced deals to turn around his troubled Trump Castle casino, only to watch both evaporate.

Now new documents filed with the

Securities and Exchange Commission

reveal that

Trump Hotels & Casino Resorts

(DJT)

, the publicly traded company Trump controls, paid him more than $7 million for his work in 1996, a year when the company's stock nose-dived 44% from 21 1/2 to 12. By way of comparison, the

S&P 500

rose 20% over the same period, while the bellwether

CBOE Gaming Index

of top gambling stocks ended the year basically unchanged. And Trump Resorts' stock has continued to slide. It now stands at 10 1/8.

In addition to his $1 million in salary, Trump got $1.03 million in "other compensation" and a $5 million

bonus

, according to figures buried deep inside a report the company filed with the SEC last week.

"It's bad, but you wouldn't expect any less from Don Trump, would you?" says San Diego-based compensation expert Graef "Bud" Crystal. "Don Trump's a pig is not a breaking news story. Don Trump's a pig has been the story from day one. ¿ That's been, I think, why many of his enterprises have collapsed."

Incidentally, Nicholas Ribis, chief executive of Trump Resorts, didn't do so badly last year either. Ribis took home a $2.5 million bonus in addition to his $2 million base salary. Together, the payments to Ribis and Trump came to about 48 cents for each of the 24 million shares of Trump Resorts in public hands.

Analysts blame much of the recent slide in Trump Resorts' stock on its October purchase of the Trump Castle from a private partnership controlled by Trump. The public company paid the partnership $177 million in stock and assumed another $314 million in the Castle's debt, for a total price of $491 million. But many investors argued Trump had paid himself far too much for the Castle, which lost almost $14 million in 1996.

In January, Ribis triumphantly announced the sale of a 51% stake in the Castle to Los Angeles-based

Colony Capital

for $125 million. That made the Castle worth $563 million, Ribis said -- $249 million in equity plus the $314 million in debt.

But as

Newsweek

columnist Allan Sloan later pointed out, Ribis neglected to mention that Trump had given his new partners an additional $125 million in preferred stock in addition to their regular equity. "So how much is Colony actually paying for the 51 percent ownership stake in Trump's Castle? By my count, zero," Sloan wrote.

In any case, the Trump-Colony deal collapsed last week, with both sides saying they'd walked away. Reached Wednesday at his office in Atlantic City, Ribis said he couldn't comment about the Castle or his bonus because he was in the middle of a deposition. He didn't return further calls.

"Since June of last year, the stock has gone from 35 1/2 to 9 1/2 or so," says gambling industry analyst Marvin Roffman. "The precipitous decline started when Donald said that the public company was buying the Castle for $490 million. The Street felt that that was a very high price," he says.

Asked about Trump's bonus, Roffman, who was fired by investment bank

Janney Montgomery Scott

in 1990 after accurately predicting that Trump's giant Taj Mahal casino in Atlantic City wouldn't be able to repay its massive debt, is philosophical.

"I wish I could do it," he says. "Is it fair? If the stock went up, then it would be fair."