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Over the past 12 months, shareholders in Ambac (NYSE: ABK) have lost more than 90% of their investments as the bond insurers ill-advised forays into structured finance have resulted in massive losses.But for some reason the company's compensation committee deemed that performance worthy of $3 million in bonuses for 4 of Ambac's top executives. The company's latest proxy statement shows that CFO Sean Lenorard received a $950,000 cash bonus and Executive Vice President Douglas Renfield-Miller got $550,000. Chairman Michael Callen received $975,000 and Chief Executive Officer David Wallis took home $500,000
Given how terribly the company has performed, it's hard to imagine any possible justification for these bonuses. They're down 60% over 2007 levels but that hardly seems adequate given that the company is currently sitting at death's door. And I have to wonder: If executives get mid-six figure bonuses when the stock is down 90%, is there any situation in which they wouldn't receive bonuses? It seems unlikely. If executives get bonuses no matter what, then it isn't performance-based compensation. It's salary and should be disclosed to shareholders as such.
But don't blame the executivse: They absolutely should seek to be paid as much as possible. Blame the board of directors and ultimately the large institutional shareholders who are ripping off their pension and mutual fund clients by failing to provide adequate oversight of the companies they invest in.
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Reader Comments (Page 1 of 1)
2-03-2009 @ 9:48AM
BHarrison said...
Okay, at this point EVERYONE must realize the critical problem of unwarranted excessive CEO and managment payments in salaries, bonuses, and other compensations in corporations that are losing investors monies. If the corporations and the Boards of Directors will not diligently perform their fiduciary responsibilities to curtail and control such unwarranted "enrichments" to CEOs and upper management, then it is up to the government to legislate regulations to address these matters, which are tantamount to CRIMINAL FRAUD against the investor stockholders.
2-03-2009 @ 10:36AM
BHarrison said...
As noted on NPR - Nationoal Public Radio, MANY of the corporations who have received government "bailout" monies have hired hundreds of lobbyists, and are STILL making political contributions, in essence, using "bailout" monies to pay for these items. Should part of the terms of acceptance of "bailout" monies prohibit the expenditure for these types of items that are solely for the benefit of the coportation and/or special interests groups, which is usually contrary to the best interests of the American people.