Reports this week indicate that Kenneth Feinberg, the Obama administration's pay czar, has a darkly comic definition of "tough love." While Feinberg reduced overall cash compensation for the top earners at American International Group (AIG) by a healthy 63%, a closer look reveals that the insurance company's high-ranking employees are still pulling down the kind of eye-popping annual pay you might expect from a successful business.

Continue reading Is AIG's Chief Executive Really Doing a $3 Million Job?

Is AIG's Chief Executive Really Doing a $3 Million Job? originally appeared on BloggingStocks on Thu, 25 Mar 2010 14:20:00 EST. Please see our terms for use of feeds.

How's this for a kick in the pants: Flying in the face of it's first quarterly loss in 16 years, a seriously questionable compensation package has just been awarded to the new, short-time CEO of Harley-Davidson Inc. (HOG).

Keith E. Wandell, the new Harley-Davidson CEO, and former COO of Johnson Controls Inc. (JCI), has been awarded a compensation package totaling approximately $6.4 million for his participation in Harley-Davidson operations from May 2009 through the end of that year. When given the company's downward slide through 2009, and in consideration of tough times ahead for those who survive on high-end discretionary spending, might there be cause to wonder if Mr. Wandell's compensation package is just a tad excessive?

Continue reading CEO Takes Harley-Davidson for a Ride

CEO Takes Harley-Davidson for a Ride originally appeared on BloggingStocks on Sun, 14 Mar 2010 13:50:00 EST. Please see our terms for use of feeds.

Continue reading Kenneth Feinberg Tries Desperately to Stay Relevant

Kenneth Feinberg Tries Desperately to Stay Relevant originally appeared on BloggingStocks on Tue, 09 Feb 2010 10:20:00 EST. Please see our terms for use of feeds.

Now here's a story that's all about high finance. JPMorgan Chase & Co. (JPM) earned $11.7 billion last year and paid out $26.9 billion in compensation, up 18% from the previous year. Employees on average earn $129,000, while investment bankers earned on average $380,000.

JPMorgan said it hopes to restore its dividend to 75 cents or $1.00 per share by the middle of 2010. This means that if you're a shareholder and you were waiting for a dividend increase, forget about it. Your dividend was used up in the $26.9 billion that went to compensation.

Continue reading Bankers Benefit from JPMorgan's Stellar Results; Shareholders, Not So Much

Bankers Benefit from JPMorgan's Stellar Results; Shareholders, Not So Much originally appeared on BloggingStocks on Sat, 16 Jan 2010 12:40:00 EST. Please see our terms for use of feeds.

For more than a third of private equity employees, employee compensation either stayed the same or declined. A recent report by alternative investment research firm Preqin estimates that 38% of private equity employees saw base salary freezes in 2009, and 6% of firms participating in the survey indicated that they were cutting salaries this year. Of course, this means that 56% kicked base salaries up this year, though the average increase was a mere 2%.

For the employees of 22% of the firms participating in the Preqin survey, the brush with a pay cut was close as these companies considered a freeze. But 40% haven't cut or never considered it.

Continue reading Salaries frozen, down at private equity firms this year

Salaries frozen, down at private equity firms this year originally appeared on BloggingStocks on Wed, 02 Dec 2009 12:00:00 EST. Please see our terms for use of feeds.

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.

Freddie Mac has a new CEO CFO and his name is Ross Kari. Can you guess his compensation? Is it reasonable in light of the fact that Freddie Mac is controlled by the government?

In these days when we have 5.4 million people who have been on unemployment for at least six months, Kari's compensation is $5.5 million, which includes $2 million as a signing on bonus and a generous salary of $2.3 million.

Continue reading New Freddie Mac CFO hits the compensation jackpot

New Freddie Mac CFO hits the compensation jackpot originally appeared on BloggingStocks on Sat, 03 Oct 2009 14:40:00 EST. Please see our terms for use of feeds.

Continue reading Intel freezes top salaries, re-prices worthless options

Intel freezes top salaries, re-prices worthless options originally appeared on BloggingStocks on Mon, 23 Mar 2009 14:35:00 EST. Please see our terms for use of feeds.

Should macroeconomic woes slow CEO pay growth? originally appeared on BloggingStocks on Sun, 15 Jun 2008 11:15:00 EST. Please see our terms for use of feeds.

Continue reading The Payday Pinch -- Cutting at the grass roots

The Payday Pinch -- Cutting at the grass roots originally appeared on BloggingStocks on Mon, 02 Jun 2008 16:51:00 EST. Please see our terms for use of feeds.

Aflac is first US company to give shareholders a say on pay originally appeared on BloggingStocks on Tue, 06 May 2008 10:44:00 EST. Please see our terms for use of feeds.

My perennial near-hero Mark Cuban recently examined the issue of CEO pay, over on his handy soapbox, The Blog Maverick. In his blog post titled "My 2 Cents on CEO Pay," Mr. Cuban outlined his position on the subject and tossed some ideas around. The post makes a good read, and the author makes some good points. Additionally, the 65 or so comments by the readers are well worth the time to cruise them.

I'd like to discuss and expand upon an idea someone presented in addition to those discussed by Mark Cuban. It's actually a reverse scenario to what Mr. Cuban describes as moving chief executive officers into "the cash zone." In the Cuban scenario, the CEO would be paid cash, without additional compensation through stock grants, in order to make their pay more tangible and visible as a business expenditure. Mr. Cuban also asserts that this might more closely align CEO compensation with company performance. It's an admirable idea, but I doubt that it will ever happen.

In this alternate approach, we give the CEO all the stock certificates he or she can swallow. Then we provide an equal number to be divided among all other employees of the company. In this manner of compensation, all employees have their hands on the ball. The concept of laboring to line the pockets of someone else with gold would become extinct. The CEO would suddenly become a real person in the eyes of the rank-and-file laborers. Likewise, the labor force would be inextricably linked to the financial success of the CEO. If labor is to share the risk, they should also share the reward.

A further stop-gap to this scenario would be if upper management deemed that labor cuts were needed to create profitability, or for any reason other than "cause," they and the CEO would be required to surrender share holdings equal to the holdings of the displaced workers. These surrendered shares would then be distributed to the pink-slipped workforce members, with the company paying all applicable taxes on the transfer. Additionally, no party would be allowed to liquidate more than 5% of their holdings in any one year, as long as they were employed by the company, and upper management would be required to maintain holdings at least equal to those of the workforce.

I know it's a lofty scenario, but it sure would beat the heck out of what we have going on now.

Billionaire Mark Cuban addresses CEO pay originally appeared on BloggingStocks on Sat, 03 May 2008 14:40:00 EST. Please see our terms for use of feeds.

With CEOs taking home absurd amounts of money, many top companies are hearing calls from shareholders to limit pay to senior executives. The AP reports: "Fund managers and individual investors alike are campaigning for a 'say on pay' rule giving shareholders a vote on executive compensation at major corporations, especially America's biggest banks. This is the latest salvo in the battle against Wall Street's exorbitance, and this time it appears shareholders might stand a chance."

The argument for limitless compensation says that in order to attract the best leaders you need to pay them. I agree wholeheartedly. In fact one need only look at what happened to Ice-Cream maker Ben and Jerry's to see how the principle works in real life. They wanted to limit the CEO pay to a certain percentage of the lowest paid employee. What happened was that they couldn't find anyone worthy enough to take the job. In the end they gave in to the forces of capitalism and paid a normal CEO salary.

My question is simply why can't we compensate senior executives based on their performance? Why should a CEO who managed to lose his company $5 billion, and lose his shareholders 60% of their investment, receive $50 million plus stock? Why not incentavize CEO's so that if they do a good job, they make tons of money, and if not, they don't. On the other hand a CEO that creates shareholder value as well as corporate profits should make lots of money.

There is no doubting that CEO's work extremely hard and 99% of the population couldn't do their jobs. That being said we shouldn't be rewarding them just because they have the title "CEO." We should reward them based on their success.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/13/08.

How about CEO pay based on performance originally appeared on BloggingStocks on Mon, 14 Apr 2008 15:45:00 EST. Please see our terms for use of feeds.

CEOs voluntarily turn down bonuses -- why did they get them in the first place? originally appeared on BloggingStocks on Mon, 07 Apr 2008 13:35:00 EST. Please see our terms for use of feeds.

Continue reading Study says 'golden parachutes' generally not a surprise

Study says 'golden parachutes' generally not a surprise originally appeared on BloggingStocks on Wed, 26 Mar 2008 17:32:00 EST. Please see our terms for use of feeds.

This week, the Blackstone Group LP (NYSE: BX) announced its Q4 results. It was no surprise that there was plunge in profits (down 89%).

The company's chairman, Stephen Schwarzman, said that "Down cycles are not fun, but they form the basis for enormous future profitability at Blackstone."

Well, today Blackstone released its 10-K report and yes, there's a section on his compensation.

Adding things up, Schwarzman pulled down a cool $350.2 million last year from cash distributions. Also, keep in mind that he netted $684 million from Blackstone's initial public offering (he still has a $3.97 billion equity stake).

Oh, and Schwarzman gets an annual salary of $350,000.

Somehow, this seems fun to me.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Schwarzman's tough year ... netting $350.2 million originally appeared on BloggingStocks on Thu, 13 Mar 2008 14:10:00 EST. Please see our terms for use of feeds.

Will Congress get to the bottom of the executive pay problem? originally appeared on BloggingStocks on Mon, 25 Feb 2008 12:12:00 EST. Please see our terms for use of feeds.

SEC chides 350 companies for executive pay disclosures originally appeared on BloggingStocks on Tue, 29 Jan 2008 16:23:00 EST. Please see our terms for use of feeds.

The Securities and Exchange Commission has unveiled a new internet tool, the Executive Pay Finder, to make it easier for investors to research and compare executive compensation at public companies.

Chairman Chris Cox said that "Gone are the complicated data expeditions that forced investors to hunt through financial statements. The result is quicker and better analysis, and better-informed shareholders."

For now, the service only provides data on the top 500 U.S. companies that have filed proxy statements with the SEC, but it's a pretty cool tool.

Here's the summary table for Coca-Cola (NYSE: KO), and you can compare the compensation of officers by position with those at other companies, all in the same table. Here is a comparison with PepsiCo (NYSE: PEP).

You can even import the results to an Excel spreadsheet if you're feeling especially anal retentive.There's nothing new here, but it's good to see the SEC making an effort to make important disclosures more accessible to investors.

Now if only Cox and his fellow commissioners would stop making it harder for shareholders to actually effect change at the companies they own.

A look at the SEC's new executive compensation tables originally appeared on BloggingStocks on Sat, 22 Dec 2007 15:10:00 EST. Please see our terms for use of feeds.

Dateline, January 3, 2007: Bob Nardelli steps down as CEO at Home Depot (NYSE: HD). In leaving, Nardelli, who had been at the head of Home Depot for six years, scooped up a severance package valued at about $210 million, kindly tipped his hat, and slid his resume across the desks of Chrysler. Does this make the man an opportunistic corporate blood sucker, an overcompensated leadership figurehead, or just plain shrewd? My answer to that question would be, none of the above.

When trying to judge the departure of Robert Nardelli relative to his compensation and performance, two things need to be considered right on the front end. First, our jealousy factor must be removed from the equation. Second, we need to remember that compensation packages at this level are negotiated on the front end. Bob Nardelli didn't "get away" with anything. He executed the terms of an employment contract, plain and simple. How many of the ambitious persons reading this blog wouldn't have done exactly the same when given the same circumstances?

Most of the negative sentiment surrounding Nardelli's well-heeled departure emanated from shareholders who were hurt by a slow yet significant decline in HD's share value. But the fact is that within the past four years of Nardelli's tenure, HD's shares provided more consistent performance than the four years prior. Granted, investor's haven't seen Home Depot shares approach the past high of nearly $70, but in light of today's economy they probably won't see anything like that in the near future, and that's certainly not Nardelli's fault.

Continue reading Money Winners of 2007: Bob Nardelli takes the cake and eats it too

Money Winners of 2007: Bob Nardelli takes the cake and eats it too originally appeared on BloggingStocks on Fri, 14 Dec 2007 15:36:00 EST. Please see our terms for use of feeds.