It's easy to save the world when you've already taken care of yourself. But, we rely on these mavericks -- the wealthy who realize they can make a difference -- to do what we cannot on our own. So, it comes as a relief that Bill Gates, founder of Microsoft (MSFT) believes executive compensation is still too high.

It's a murky topic, and some forms of regulation, Gates believes, won't help. In a discussion on philanthropy at the 92nd Street Y in Manhattan, where many of the people Gates criticized send their kids for early education, the former CEO and still rich guy cites the $1 million executive salary cap required by law in 1993 as a big mistake. While compensation has to be controlled, he believes this measure backfired and thinks that other, similar efforts are doomed to fail now.

Continue reading Rich still too richly compensated according to richest of them all

Rich still too richly compensated according to richest of them all originally appeared on BloggingStocks on Thu, 12 Nov 2009 15:40:00 EST. Please see our terms for use of feeds.

Continue reading If Andrew Hall made Citigroup money, why shouldn't they pay him?

If Andrew Hall made Citigroup money, why shouldn't they pay him? originally appeared on BloggingStocks on Mon, 27 Jul 2009 16:30:00 EST. Please see our terms for use of feeds.

Obama wants a non-binding vote on executive pay originally appeared on BloggingStocks on Fri, 17 Jul 2009 15:20:00 EST. Please see our terms for use of feeds.

Continue reading Obama picks a Washington lawyer to set executive pay standards

Obama picks a Washington lawyer to set executive pay standards originally appeared on BloggingStocks on Wed, 10 Jun 2009 16:15:00 EST. Please see our terms for use of feeds.

Continue reading SEC may force companies to disclose pay of lower-ranking employees

SEC may force companies to disclose pay of lower-ranking employees originally appeared on BloggingStocks on Fri, 05 Jun 2009 12:10:00 EST. Please see our terms for use of feeds.

Continue reading CEOs to shareholders: Do you think I'm overpaid?

CEOs to shareholders: Do you think I'm overpaid? originally appeared on BloggingStocks on Mon, 06 Apr 2009 17:00:00 EST. Please see our terms for use of feeds.

Continue reading Australia clamps down on CEO pay the right way

Australia clamps down on CEO pay the right way originally appeared on BloggingStocks on Thu, 19 Mar 2009 12:40:00 EST. Please see our terms for use of feeds.

• "And the American people are simply apathetically sitting back while our CORRUPT Congress who enabled and allowed all of the corporate FRAUDS, continues to allow the CORRUPT CEOs and Boards of Directors run those corporations, and to keep their ill gotten "weath" that they amassed while mismanaging the corporations, and orchestrating and perpetuating all of those FRAUDS."

Continue reading Serious Money: Frustration is not apathy!

Serious Money: Frustration is not apathy! originally appeared on BloggingStocks on Tue, 03 Mar 2009 14:00:00 EST. Please see our terms for use of feeds.

The Wall Street Journal reports (subscription required) that "More than 40 financial firms have been hit with pay-related proposals, including Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), J.P. Morgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS). Most of the targets are recipients of government capital from the Troubled Asset Relief Program."

This is great news and represents an increase of more than 60% over last year, according to RiskMetrics. Of course, it doesn't matter nearly as much as it should: The "say on pay" votes are really just advisory: All that they do is put a little box on the proxy ballot where shareholders can say how they feel about their company's egregious executive pay practices.

Continue reading Shareholder proposals on executive pay slam financials

Shareholder proposals on executive pay slam financials originally appeared on BloggingStocks on Fri, 13 Feb 2009 12:40:00 EST. Please see our terms for use of feeds.

"Tomorrow, I'm going to be talking about executive compensation and changes we're going to be making there," he told Anderson Cooper. "We've now learned that people are still getting huge bonuses despite the fact that they're getting taxpayer money, which I think infuriates the public."

Continue reading Is Obama overshooting on executive compensation?

Is Obama overshooting on executive compensation? originally appeared on BloggingStocks on Wed, 04 Feb 2009 17:00:00 EST. Please see our terms for use of feeds.

• A $500,000 cash cap on annual compensation for senior executives
• Requiring top executives at financial institutions to hold stock for several years before they cash out
• Requiring nonbinding "say on pay" resolutions giving shareholders more say on compensation

These provisions would only apply to firms receiving government funds and would be applicable until they are repaid to the government.

This is a dramatic intervention into corporate governance, but then again the government bailouts are also unprecedented as well. Several are claiming that this is another step into more socialist America.

Continue reading The Obama compensation limits: Fiscal responsibility, not socialism

The Obama compensation limits: Fiscal responsibility, not socialism originally appeared on BloggingStocks on Wed, 04 Feb 2009 12:31:00 EST. Please see our terms for use of feeds.

Can President Obama force CEOs to take a massive pay cut? While many others in the economy -- particularly the millions of regular Joes and Janes who have lost their jobs -- are helping to push down wages, CEOs have been immune from the pay cuts. But if Obama forces CEOs who take government money to limit their pay to $500,000 -- 25% more than Obama takes in -- will that cause all CEO pay to tumble? I think the answer is "no."

Why? Many reasons. First, no CEO in his or her right mind would volunteer to take government money given the ensuing pay cut. For example, if the CEO of a car company made $14 million in 2008, why would that same CEO volunteer to make $500,000 in 2009? Instead, the CEO would seek a position with a company that did not take government money and therefore did not limit the CEO's pay.

Continue reading CEO pay in a deflationary spiral?

CEO pay in a deflationary spiral? originally appeared on BloggingStocks on Wed, 04 Feb 2009 09:40:00 EST. Please see our terms for use of feeds.

Continue reading Ambac pays execs $3 million in undeserved bonuses

Ambac pays execs $3 million in undeserved bonuses originally appeared on BloggingStocks on Tue, 03 Feb 2009 08:48:00 EST. Please see our terms for use of feeds.

Just when you think you've heard it all, you hear more. In the last year, Wall Street -- or more specifically, the brokerage units of New York financial companies -- lost $35 billion. (Worldwide, financial institutions have taken $1 trillion in write-offs of bad assets). Those firms received a large proportion of the $350 billion TARP and persuaded the Treasury to guarantee losses from hundreds of billions worth of their financial toxic waste. Their reward? $18.4 billion in bonuses.

How much of the TARP went to paying for those bonuses? The banks have cleverly neglected to report that. But let's face it -- money is fungible. So if they did not use the money from the deposits they received from the Treasury to pay bonuses, our tax dollars freed up cash they may have had from other sources that did go to paying those $18.4 billion in bonuses.

Continue reading Wall Street loses $35 billion in 2008, uses TARP for $18.4 billion bonus

Wall Street loses $35 billion in 2008, uses TARP for $18.4 billion bonus originally appeared on BloggingStocks on Thu, 29 Jan 2009 11:15:00 EST. Please see our terms for use of feeds.

An era of greed that began with the election of Ronald Reagan has come to an abrupt end. That means that the seething emotions of greed and envy that come along with bonus time at investment banks will have fewer dollars attached to them. And talent will flow to government and academia rather than Wall Street. This could be good for the U.S.

Some of those masters of the universe in the investment banking industry have seen the value of their stock tumble (and many of them are going without bonuses this year). Here are some of the "casualties":

Continue reading Masters of the universe take a pay cut

Masters of the universe take a pay cut originally appeared on BloggingStocks on Tue, 27 Jan 2009 11:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bBACbailoutexecutive compensationexecutive payExecutiveCompensationExecutivePayfeaturedGSjohn thainJohnThainlloyd blankfeinLloydBlankfeinmerrill lynchMerrillLynchvikram panditVikramPanditwall streetWallStreetTue, 27 Jan 2009 11:40:00 ESThttp://www.bloggingstocks.com/2009/01/01/activist-investing-gains-momentum/http://www.bloggingstocks.com/2009/01/01/activist-investing-gains-momentum/http://www.bloggingstocks.com/2009/01/01/activist-investing-gains-momentum/#commentsFiled under: Deals
With stock prices plunging, many investors are mad as hell and they're not going to take it anymore.

Brad M. Barber, a professor of finance at the University of California, Davis, Graduate School of Management told (subscription required) The Wall Street Journal that hedge funds are sparring with management more because it "gives them someone else to blame for their misfortune."

Maybe that's part of it, but I don't think it's just a rationalization thing. The reality is that the vast majority of companies would likely benefit from a large activist hedge fund smacking people around and keeping things honest. Most public companies have seen their operational and stock price performance tumble over the past year but executive compensation hasn't budged. Corporate governance in America is essentially a joke and if a bear market brings about a renewed focus on managerial neglect and incompetence, that's a good thing.

It might well be that many fund managers are motivated by frustration at their declining performance and are lashing out at anyone who had anything to do with it but in many cases investors are victims of bad and self-serving management.

Activist investing gains momentum originally appeared on BloggingStocks on Thu, 01 Jan 2009 11:30:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>activist investingActivistInvestingbrad barberBradBarberexecutive compensationExecutiveCompensationfund managersFundManagershedge fundsHedgeFundsThu, 01 Jan 2009 11:30:00 ESThttp://www.bloggingstocks.com/2008/11/24/riskmetrics-blasts-companies-paying-compensation-taxes/http://www.bloggingstocks.com/2008/11/24/riskmetrics-blasts-companies-paying-compensation-taxes/http://www.bloggingstocks.com/2008/11/24/riskmetrics-blasts-companies-paying-compensation-taxes/#commentsFiled under: Management
The Wall Street Journal reports (subscription required) that RiskMetrics Group is advising investors to withhold votes from corporate directors who approve tax "gross-ups" to cover taxes on forms of executive compensation like perks and golden parachutes offered in the case of a merger or buyout.

I've always thought that the whole tax gross-up thing was ridiculous . Do people earning 8-digit pay packages really need help paying their taxes? Worse, the tax gross-ups could also make it harder to figure out the total compensation given the absurd legalese that is found in proxy statements. But was it really that big of a deal? Or was it just a complication that really didn't result in any additional shareholder cash being wasted? A company that pays $6.5 million plus $3.5 million in tax gross-ups is no worse than one that pays $10 million in cash.

But according to RiskMetrics, tax gross-ups are indicative of an "anything goes" corporate culture: S&P 500 firms offering tax-gross ups to their executives had golden parachutes 61% bigger than those that didn't -- without including the value of the gross-up!

The one nice thing that has come out of the market mayhem is a renewed interest in corporate governance. Tales of executive looting are making the front-page of newspapers, and Congress has taken interest. Whether anything will come of it depends on the willingness of the large institutional investors that control the voting rights to most of the stock in this country to put their foot down.

RiskMetrics blasts companies paying compensation taxes originally appeared on BloggingStocks on Mon, 24 Nov 2008 13:24:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>Corporate GovernanceCorporateGovernanceExecutive Compensationexecutive payExecutiveCompensationExecutivePayinthenewsMon, 24 Nov 2008 13:24:00 ESThttp://www.bloggingstocks.com/2008/11/24/general-motors-cuts-back-on-pencils-batteries-and-voice-mail/http://www.bloggingstocks.com/2008/11/24/general-motors-cuts-back-on-pencils-batteries-and-voice-mail/http://www.bloggingstocks.com/2008/11/24/general-motors-cuts-back-on-pencils-batteries-and-voice-mail/#commentsFiled under: General Motors (GM)
As General Motors (NYSE: GM) brass flail around Washington desperately seeking to avoid bankruptcy, the company is taking some draconian cost-cutting steps (subscription required) at its Detroit offices and plants. The company has stopped replacing the batteries in wall clocks, changed the brand of wipe-up towelettes it buys, and eliminated voice mail at most of its plants.

The company is doing everything it can to conserve cash while it begs for a taxpayer-funded bailout but, unfortunately, CEO Richard Wagoner has been unwilling to take a step that would save the company cash and send a message of solidarity to the company's employees and the taxpayers who are being asked to foot the bill for a restructuring. Last week, Rep. Peter Roskam, R- Ill., asked Wagoner whether he would be willing to cut his salary down to $1 per year while the company navigate through the mess he has helped to navigate it into. He declined.

Here's what so ridiculous about this: In 2007, Mr. Wagoner was paid $14.4 million, on top of another $10.2 million in 2006. In retrospect, he deserved literally none of that. Not a nickel. So the fact is that Congress should be asking him to contribute a good chunk of that to the bailout effort, not merely asking him to take a larger salary cut for 2008 or 2009. But he won't even do that.

Before Congress spends another second even discussing a bailout, they should toss Mr. Wagoner out on the street.

General Motors cuts back on pencils, batteries and voice mail originally appeared on BloggingStocks on Mon, 24 Nov 2008 11:57:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>automakersexecuitve payExecuitvePayexecutive compensationExecutiveCompensationGeneral MotorsGeneralMotorsGMinthenewsMon, 24 Nov 2008 11:57:00 ESThttp://www.bloggingstocks.com/2008/09/16/why-such-a-rapid-meltdown/http://www.bloggingstocks.com/2008/09/16/why-such-a-rapid-meltdown/http://www.bloggingstocks.com/2008/09/16/why-such-a-rapid-meltdown/#commentsFiled under: Economic Data, Federal Reserve, Recession

I have been astonished by the speed of the collapse of our financial system. There is no precedent in my lifetime for such a rapid collapse. And I doubt that the lessons of the Great Depression pertain to the current situation. This is the Greatest Depression -- about which I posted in March -- and the lessons of this one are likely to expose five fundamental flaws in our financial architecture.

These flaws are the reason for the rapid meltdown and they include:

1. Securitization -- the popularity of shifting risk from an originator to a group of investors in a package wrapped in a AAA credit rating based on flawed analysis.
2. Lack of transparency -- the inability to estimate the future cash flows of such a complex security -- thereby creating massive uncertainty in a period of decline.
3. Leverage -- borrowing way too much money with too tiny a sliver of capital to protect against risk -- making it possible to wipe out all the capital with a 6% decline in the value of these securities.
4. Heads-I-win, tails-you-lose pay -- Paying deal makers for the size of their deals and sticking taxpayers and shareholders with the losses.
5. Global interconnectedness -- thanks to information technology and ease of investment rules, a sneeze in the US causes hurricanes around the world.

How could we cure these problems? As I posted, we could end securitization, demand complete transparency, raise capital requirements, link pay to profits rather than sales, and create firewalls to prevent problems in one market from infecting the rest. But with the global financial architecture crumbling worldwide, there's no time for this now.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Why such a rapid meltdown? originally appeared on BloggingStocks on Tue, 16 Sep 2008 10:13:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Banksexecutive compensationexecutive payExecutiveCompensationExecutivePayInthenewsinvestment bankingInvestmentBankingsecuritizationWall StreetWallStreetTue, 16 Sep 2008 10:13:00 ESThttp://www.bloggingstocks.com/2008/09/10/lehman-ceo-fuld-may-do-better-than-stan-oneal-if-he-gets-ousted/http://www.bloggingstocks.com/2008/09/10/lehman-ceo-fuld-may-do-better-than-stan-oneal-if-he-gets-ousted/http://www.bloggingstocks.com/2008/09/10/lehman-ceo-fuld-may-do-better-than-stan-oneal-if-he-gets-ousted/#commentsFiled under: Earnings Reports, Merrill Lynch (MER), Lehman Br Holdings (LEH)
Lehman Brothers Holdings Inc. (NYSE: LEH) Chief Executive Richard Fuld, Wall Street's longest serving CEO, has no reason to fear being ousted if he can't turn around the company around. In fact, on some level, he may welcome it because he stands to reap more than $241 million.

Fuld, who has been Lehman's chief executive since 1993, and other members of Lehman's senior management team do not have employment contracts or change in control bonus arrangements, according to the company's most recent proxy statement. He is also declining a bonus for this year for obvious reasons. Nonetheless, his turnaround effort announced this morning, which includes slashing Lehman's dividend by 93%, selling a 55% stake in its investment management division and a spin-off the vast majority of its commercial real estate assets into a public company, got a mixed reception on Wall Street.

Shares of the New York-based company, which fell 45% yesterday, tumbled in pre-market trading. They later rebounded following Lehman's conference call which Fuld personally oversaw. But as my colleague Peter Cohan noted, the company's earnings, which were issued a week early, were even more awful than Wall Street expected. The company reported a preliminary net loss of $3.9 billion, or $5.92 a share. Net revenue was a negative $2.9 billion.

Continue reading Lehman CEO Fuld may do better than Stan O'Neal if he gets ousted

Lehman CEO Fuld may do better than Stan O'Neal if he gets ousted originally appeared on BloggingStocks on Wed, 10 Sep 2008 09:45:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>excutive payExcutivePayexecutive compensationExecutiveCompensationfeaturedLehMerRichard FuldRichardFuldStan ONealStanOnealWed, 10 Sep 2008 09:45:00 EST