Crisis Altering Wall St. As Stars Begin to Scatter

Rick Crescenzo, formerly of Bear Stearns, works at Broadpoint. Smaller firms have been hiring hundreds from bigger banks.

The New York Times - There is an air of exodus on Wall Street — and not just among those being fired. As Washington cracks down on compensation and tightens regulation of banks, a brain drain is occurring at some of the biggest ones. They are some of the same banks blamed for setting off the worst downturn since the Depression.

Top bankers have been leaving Goldman Sachs, Morgan Stanley, Citigroup and others in rising numbers to join banks that do not face tighter regulation, including foreign banks, or start-up companies eager to build themselves into tomorrow’s financial powerhouses. Others are leaving because of culture clashes at merging companies, like Bank of America and Merrill Lynch, and still others are simply retiring early.

This is certainly a concern for the banks losing top talent. But other financial experts believe it is the beginning of a broader and necessary reshaping of Wall Street, too long dominated by a handful of major players that helped to fuel the financial crisis. The country may be better off if the banking industry is less concentrated, they say. http://www.nytimes.com/2009/04/12/business/12wall.html

Lessons From Bonus-Gate

Forget Britney; Media Outrage Hits Big Spenders

Last month, Kenneth D. Lewis took a Bank of America jet from Charlotte, N.C., to New Jersey. ABC News captured the flight.

The New York Times - It could be called “To Catch a Rich Guy.”

The celebrity Web site TMZ and TV shows like “Extra” and “Inside Edition” are expanding their coverage of starlets and Hollywood break-ups to include billion-dollar business scandals and the economic collapse.
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A camera crew for “Extra,” the syndicated entertainment show, huddled alongside the BBC and The Associated Press outside the courtroom as Bernard L. Madoff pleaded guilty on Thursday. That night, the show started by calling him “the most hated man in America.” The previous evening, “Inside Edition” profiled one of Mr. Madoff’s victims who testified in court, a 60-year-old woman who lost millions and had to go to work as a maid.

The tabloid media, of course, have always peered into the excesses of the rich and famous with a mix of puritan disapproval and voyeurism. But these outlets and other news organizations are now recording troubling uses of taxpayer money at country clubs, private airports and glamorous retreats and, in so doing, explicitly tapping into a fierce populist anger at corporate America, and even pressuring Congress to hold companies accountable.

TMZ, a Web site better known for unflattering paparazzi shots of Britney Spears and Rihanna, drove mainstream coverage and Congressional outrage with a blog post late last month that exclaimed, “Bailout Bank Blows Millions Partying in L.A.” The site reported that Northern Trust, a bank that received $1.6 billion in taxpayer money, had hosted hundreds of clients and employees at a golf tournament and a series of parties in Southern California. “Your tax dollars, hard at work,” the site wrote.

Northern Trust never sought the bailout funds, but agreed to take them last fall at the behest of the government. Regardless, the photos of Tiffany gift bags and the grainy video clips of Chicago and Sheryl Crow performing for the group angered readers —as well as Congressional Democrats, who demanded in a letter that Northern Trust repay what the company “frittered away on these lavish events.” The bank said it would do so “as quickly as prudently possible,” news that earned four exclamation points from TMZ. http://www.nytimes.com/2009/03/13/business/media/13shame.html

What's in a Wall Street Bonus Figure? Not Accuracy

Many of the chief executives from financial institutions, testifying before Congress, drew criticism for reported bonus grants at their companies

The Wall Street Journal - Late last month, New York state's comptroller said Wall Street bonuses totaled $18.4 billion last year. The firestorm he provoked helped lead to legislation that may upend compensation at major banks.

So much depended upon a number so few understood. The figure, which is neither precise nor complete, is probably an underestimate.

After the figure came out, President Barack Obama called the bonuses "shameful" in the wake of the government's $700 billion plan to bail out many of these same Wall Street firms. The criticism laid the groundwork for a provision inserted into the stimulus bill signed into law this week that caps bonus payments for top earners at companies that have received taxpayer dollars.

But the $18.4 billion is merely an estimate, derived from tax-withholding data, labor statistics and bank balance sheets. Bonuses aren't always specified as such on tax returns, so they are estimated by New York state officials from bumps in pay during bonus season.

The comptroller's office releases the estimate annually, usually before some bonuses have even been paid. Later estimates, based on more-complete data, sometimes revise the initial ones by more than 40%. And even these are just estimates. Banks don't supply hard numbers, and important components, such as stock options that haven't been exercised, are excluded.

The figures also cover only employees who work in the securities industry in New York City. How many bonuses are excluded as a result is impossible to say: The industry's highest earners work in New York, but most of its employees work elsewhere.

"People have a tendency to jump to the number and not fully understand it," says Ken Bleiwas, state deputy comptroller for New York City, who oversees the number-crunching. "It's not an easy analysis."http://online.wsj.com/article/SB123509366925028921.html

Nationwide's CEO dumped - Columbus Dispatch Asleep at the Wheel

Editor's Note: Another big story where The Dispatch totally misses the boat. Few reasons given, but we are told a lot about what a great corporate citizen Mr. Jurgensen was. Also, notice how the company's 2008 loss isn't mentioned until 10 graphs into the story and we have to read on to the jump to see that Mr. Jurgensen received $23 million for taking the company's publicly traded unit private. Maybe the newspaper will follow up with a more complete story - MT

The Columbus Dispatch - The top executive at Nationwide has stepped down and been replaced by the president and chief operating officer, bringing abrupt change to one of the city's largest employers.

Jerry Jurgensen, chief executive since 2000, and the company's board of directors "mutually agreed" that Jurgensen would step down, Nationwide said in a news release yesterday. He has been replaced by Steve Rasmussen, who has been with the company since 1998.

Rasmussen, 56, has been president and chief operating officer of Nationwide Mutual and Nationwide Mutual Fire Insurance Co. since September 2003. He also has served as chairman, chief operating officer and director of Allied Group Inc., a Nationwide subsidiary.

The company gave little explanation for Jurgensen's departure, and he could not be reached for comment.http://www.dispatch.com/live/content/local_news/stories/2009/02/20/nationwide_print.ART_ART_02-20-09_A1_RNCVP8V.html?sid=101

CEOs Sent Packing in Record Numbers

The Wall Street Journal - When Joseph Galli Jr. got forced out as chief executive officer at Newell Rubbermaid Inc., he was certain he would brush himself off and try for another CEO job. From his father, a school dropout who built a successful scrap yard near Pittsburgh, Mr. Galli learned to work hard and never give up.

But the lessons that propelled Mr. Galli to the top of the corporate world proved less useful in selling himself to a new employer. Instead, he encountered a paradox known to many out-of-work CEOs: Though they are driven like few others to succeed, once they fail, many don't get a second chance to run a public company.

Mr. Galli is an exception. Smarting from his 2005 ouster from Newell -- and branded a brash boss with little regard for boards of directors or the nuances of corporate cultures he had inherited -- he was rebuffed by recruiters. He endured a year of humbling unemployment and self-reflection before returning to the corner office, this time as the CEO of Techtronic Industries Co., a Hong Kong-based manufacturer of Ryobi power tools, Homelite outdoor products and Hoover and Dirt Devil vacuum cleaners.http://online.wsj.com/article/SB123316803228825095.html

Starbucks CEO, Top Officials Didn't Get Bonuses for 2008

The Wall Street Journal - Starbucks Corp. Chief Executive Howard Schultz and several other top executives didn't earn bonuses this past fiscal year as sales and earnings growth slowed at the coffee giant.

Additionally, according to the company's annual proxy statement, filed Thursday, Mr. Schultz won't participate in Starbucks's executive management bonus plan for the current fiscal year, which will end Sept. 27. Instead, he is getting a long-term incentive grant in the form of stock options to "more closely align pay for performance," according to the proxy filing.

Starbucks CEO Howard Schultz

For the year that ended Sept. 28, 2008, Mr. Schultz's compensation package totaled $9.7 million, including his base salary, stock options and other items such as life and disability insurance. That was 8.5% lower than the previous year, when his compensation package totaled $10.6 million.

Five other current and former top executives also failed to earn bonuses for fiscal 2008 as a result of the company's financial performance. Mr. Schultz and the three officers in that group who remain at the company won't get increases in their base salary for fiscal 2009. It will be the fifth year in a row that Mr. Schultz's base salary has been flat.http://online.wsj.com/article/SB123265113051006973.html?mod=wsjcrmain

Companies Tap Workers Pension Plans To Fund Executive Benefits

At a time when scores of companies are freezing pensions for their workers, some are quietly converting their pension plans into resources to finance their executives' retirement benefits and pay.The practice has drawn scant notice. A close examination by The Wall Street Journal shows how it works and reveals that the maneuver, besides being a dubious use of tax law, risks harming regular workers. It can drain assets from pension plans and make them more likely to fail. Now, with the current bear market in stocks weakening many pension plans, this practice could put more in jeopardy.The background: Federal law encourages employers to offer pensions by giving companies a tax deduction when they contribute cash to a pension plan, and by letting the money in the plan grow tax free. Executives, like anyone else, can participate in these plans.

But their benefits can't be disproportionately large. IRS rules say pension plans must not "discriminate in favor of highly compensated employees." If a company wants to give its executives larger pensions -- as most do -- it must provide "supplemental" executive pensions, which don't carry any tax advantages.http://online.wsj.com/article/SB121761989739205497.html?mod=hpp_us_whats_news