The New York Times - JPMorgan Chase kicked off what is expected to be a robust — and controversial — reporting season for the nation’s banks on Friday with news that its profit and pay for 2009 soared.
In a remarkable rebound from the depths of the financial crisis, JPMorgan earned $11.7 billion last year, more than double its profit in 2008, and generated record revenue. The bank earned $3.3 billion in the fourth quarter alone.
Those cheery figures were accompanied by news that JPMorgan had earmarked $26.9 billion to compensate its workers, much of which will be paid out as bonuses. That is up about 18 percent, with employees, on average, earning about $129,000.
Workers in JPMorgan’s investment bank, on average, earned roughly $380,000 each. Top producers, however, expect to collect multimillion-dollar paycheck.
http://www.nytimes.com/2010/01/16/business/16morgan.html
Showing posts with label Executive Pay. Show all posts
Showing posts with label Executive Pay. Show all posts
Sunday, January 17, 2010
A Window Opens on Pay for Bosses
The New York Times - Is it possible that shareholders will finally get a reliable view of what the bosses are getting paid? And that it will come this spring? Yes.
There is no doubt that pay consultants are now looking for ways to keep that from being the case, and it would be a risky wager to say they will not succeed. But it appears that new disclosure rules that take effect with this year’s proxies will provide the most accurate view ever.
Anger over executive pay, particularly at banks, is high. That may have been one reason the Securities and Exchange Commission moved to improve the rules this year, but it was something that would have needed doing even if business leaders were widely deemed to be geniuses. Shareholders need good information, and the disclosures required by the S.E.C. before made the figures unnecessarily confusing.
There is still one area where companies could play games to make their bosses look less well paid than they really are. That is in the area of performance-based awards, where the payout will depend on how well the executive or the company performs relative to undisclosed goals. A company that wants to do so may be able to obscure just how likely a rich reward is for an executive.
http://www.nytimes.com/2010/01/15/business/15norris.html
Wednesday, May 20, 2009
Shell Investors Revolt Over Executive Pay Plan
Editor's Note: We are seeing a revolt against pay packages - but it is occurring in Europe, not in the U.S. Will this same anger show up among U.S. investors?
The Wall Street Journal - Royal Dutch Shell PLC, Europe's largest oil company, suffered a stunning rebuke Tuesday when investors shot down its executive-compensation plan, in the latest display of shareholder anger over big paychecks and boardroom excesses amid the economic crisis.
Shell is the largest among a growing group of British companies whose shareholders have voted down compensation plans in advisory votes, including Royal Bank of Scotland Group, Bellway PLC and Provident Financial PLC.
Large numbers of shareholders, though not a majority, voted against compensation plans at miner Xstrata PLC, oil major BP PLC, and Pearson, owner of the Financial Times.
The Shell vote, although nonbinding, shows how the economic downturn has inspired a new activism among shareholders, particularly in Europe, and a greater willingness to challenge board decisions, especially those perceived as rewarding failure.
In a charged meeting at Shell's headquarters in The Hague, which was broadcast live in London to U.K.-based shareholders, a succession of investors lined up to excoriate the board of the Anglo-Dutch company for awarding performance-based shares to executives despite the company's failure to reach its own internal targets.
Investors gasped in disbelief when results of the vote were displayed.
European investors are angry over bonuses that are relatively modest by U.S. standards. At Exxon Mobil Corp., the largest U.S. oil company, Chief Executive Rex Tillerson received a 2008 compensation package valued at $23.9 million, including $1.87 million in salary, a $4 million bonus and stock grants initially valued at $17.6 million, according to the company's latest proxy.http://online.wsj.com/article/SB124274516683734915.html
The Wall Street Journal - Royal Dutch Shell PLC, Europe's largest oil company, suffered a stunning rebuke Tuesday when investors shot down its executive-compensation plan, in the latest display of shareholder anger over big paychecks and boardroom excesses amid the economic crisis.
Shell is the largest among a growing group of British companies whose shareholders have voted down compensation plans in advisory votes, including Royal Bank of Scotland Group, Bellway PLC and Provident Financial PLC.
Large numbers of shareholders, though not a majority, voted against compensation plans at miner Xstrata PLC, oil major BP PLC, and Pearson, owner of the Financial Times.
The Shell vote, although nonbinding, shows how the economic downturn has inspired a new activism among shareholders, particularly in Europe, and a greater willingness to challenge board decisions, especially those perceived as rewarding failure.
In a charged meeting at Shell's headquarters in The Hague, which was broadcast live in London to U.K.-based shareholders, a succession of investors lined up to excoriate the board of the Anglo-Dutch company for awarding performance-based shares to executives despite the company's failure to reach its own internal targets.
Investors gasped in disbelief when results of the vote were displayed.
European investors are angry over bonuses that are relatively modest by U.S. standards. At Exxon Mobil Corp., the largest U.S. oil company, Chief Executive Rex Tillerson received a 2008 compensation package valued at $23.9 million, including $1.87 million in salary, a $4 million bonus and stock grants initially valued at $17.6 million, according to the company's latest proxy.http://online.wsj.com/article/SB124274516683734915.html
Saturday, February 21, 2009
After Losses, a Move to Reclaim Executives’ Pay
SHOULD executives get to keep lavish pay packages when the profits that generated their compensation go up in smoke?
As the financial crisis deepens, what might have been a philosophical question is now the topic of the day. With losses mounting at the nation’s largest financial institutions, years of earnings have been erased, investors have lost billions, thousands of employees have been let go, and taxpayers have been tapped to rescue the financial system. But executives who helped set the problems in motion, or ignored them as they mounted, are still doing fine. Humbled, perhaps, but well paid for their anguish.
Executives at seven major financial institutions that have collapsed, were sold at distressed prices or are in deep to the taxpayer received $464 million in performance pay since 2005, according to an analysis performed for The New York Times. Almost half of that consisted of cash compensation.
Yet these firms have reported losses of $107 billion since 2007, a result of their own missteps and the ensuing economic downturn. And $740 billion in stock market value has been lost since these companies’ shares peaked in 2007, just before the housing bubble burst.
The New York Times - Against that landscape, a growing chorus is demanding that executive compensation snared shortly before problems emerged be given back.
“There is a line that separates fair compensation from stealing from shareholders,” said Frederick E. Rowe, a money manager in Dallas and a founder of Investors for Director Accountability, a nonprofit group. “When managements ignore that line or can’t see it, then hell, yes, they should be required to give the money back.”
Corporate boards that awarded lush executive pay packages almost always justified them by saying they encouraged superior performance and were directly tied to benchmarks like profitability.
But now, with a public backlash against excessive pay and taxpayer lifelines extended to crippled companies, the idea of recouping compensation, known as “clawback,” is gaining traction.http://www.nytimes.com/2009/02/22/business/22pay.html
As the financial crisis deepens, what might have been a philosophical question is now the topic of the day. With losses mounting at the nation’s largest financial institutions, years of earnings have been erased, investors have lost billions, thousands of employees have been let go, and taxpayers have been tapped to rescue the financial system. But executives who helped set the problems in motion, or ignored them as they mounted, are still doing fine. Humbled, perhaps, but well paid for their anguish.
Executives at seven major financial institutions that have collapsed, were sold at distressed prices or are in deep to the taxpayer received $464 million in performance pay since 2005, according to an analysis performed for The New York Times. Almost half of that consisted of cash compensation.
Yet these firms have reported losses of $107 billion since 2007, a result of their own missteps and the ensuing economic downturn. And $740 billion in stock market value has been lost since these companies’ shares peaked in 2007, just before the housing bubble burst.
The New York Times - Against that landscape, a growing chorus is demanding that executive compensation snared shortly before problems emerged be given back.
“There is a line that separates fair compensation from stealing from shareholders,” said Frederick E. Rowe, a money manager in Dallas and a founder of Investors for Director Accountability, a nonprofit group. “When managements ignore that line or can’t see it, then hell, yes, they should be required to give the money back.”
Corporate boards that awarded lush executive pay packages almost always justified them by saying they encouraged superior performance and were directly tied to benchmarks like profitability.
But now, with a public backlash against excessive pay and taxpayer lifelines extended to crippled companies, the idea of recouping compensation, known as “clawback,” is gaining traction.http://www.nytimes.com/2009/02/22/business/22pay.html
Thursday, February 12, 2009
Bailout Needs Some Strings Attached to Limit Pay
The New York Times - JUST in case you missed it: The Congressional Oversight Panel monitoring the Treasury Department’s bailout of broken banks — the Troubled Asset Relief Program — reported last week that Henry M. Paulson Jr.’s team at Treasury paid significantly more for the assets it bought from banks than they were worth when the deal was announced in the fall.
“The panel’s analysis revealed that in the 10 largest transactions made with TARP funds, for every $100 spent by Treasury, it received assets worth, on average, only $66,” the report said. “This disparity translates into a $78 billion shortfall for the first $254 billion in TARP funds that were spent.”
More taxpayer money down the drain, alas. And all the more reason to focus closely on executive pay restrictions at any bank that receives TARP funding.
Although our long-running financial despond has produced few real positives, surely this is one: Investors are finally seeing just how regally executives live on their shareholders’ dimes. Maybe now they will do something about it.
During good times, banks either hide or try to justify such perks as fleets of corporate jets and Las Vegas junkets. But as companies run to taxpayers for their bailout billions, they are now being forced to forgo the Gulfstreams, the tee times at Pebble Beach and those sumptuous spa treatments.
Could shame, that long-lost American character trait, be making a comeback? Not likely. So it’s important to make Washington’s plan to rein in executive pay airtight. Loud rebukes against executive excess are amusing, but a $500,000 cap on salary means only that the executives will be paid some other way. And requiring companies to recover compensation only if an executive is found to have lied on financial statements? Good luck with that. http://www.nytimes.com/2009/02/08/business/08gret.html?partner=permalink&exprod=permalink
“The panel’s analysis revealed that in the 10 largest transactions made with TARP funds, for every $100 spent by Treasury, it received assets worth, on average, only $66,” the report said. “This disparity translates into a $78 billion shortfall for the first $254 billion in TARP funds that were spent.”
More taxpayer money down the drain, alas. And all the more reason to focus closely on executive pay restrictions at any bank that receives TARP funding.
Although our long-running financial despond has produced few real positives, surely this is one: Investors are finally seeing just how regally executives live on their shareholders’ dimes. Maybe now they will do something about it.
During good times, banks either hide or try to justify such perks as fleets of corporate jets and Las Vegas junkets. But as companies run to taxpayers for their bailout billions, they are now being forced to forgo the Gulfstreams, the tee times at Pebble Beach and those sumptuous spa treatments.
Could shame, that long-lost American character trait, be making a comeback? Not likely. So it’s important to make Washington’s plan to rein in executive pay airtight. Loud rebukes against executive excess are amusing, but a $500,000 cap on salary means only that the executives will be paid some other way. And requiring companies to recover compensation only if an executive is found to have lied on financial statements? Good luck with that. http://www.nytimes.com/2009/02/08/business/08gret.html?partner=permalink&exprod=permalink
Thursday, February 5, 2009
Obama Lays Out Limits on Executive Pay
Firms That Get Bailout Funds Face $500,000 Salary Cap, Must Disclose Luxury Purchases; A Move to 'Claw Back' Bonuses
The Wall Street Journal - WASHINGTON -- President Barack Obama laid out strict new regulations on executive compensation Wednesday, strafing Wall Street with tough talk as Washington asserts increasing control over a financial sector seeking more government funds.
President Barack Obama's unveiled new rules on executive pay caps and expense disclosure. WSJ's Jonathan Weisman speaks about what effects this could have on big business.
The plan, which represents the most aggressive assault on executive pay by federal officials, includes salary caps of $500,000 for top executives at firms that accept "extraordinary assistance" from the government.
It also restricts severance packages, known as "golden parachutes," for dismissed executives and requires the disclosure of policies on so-called luxury spending on things such as holiday parties, corporate jets and office renovations.
The rules do not apply retroactively, not even to those firms that have already been bailed out. But they will be imposed on all companies -- in the financial, auto or other sectors -- receiving any future help. This includes those that h
The administration called the latter part of the initiative the "name and shame" provision, designed to make companies think twice about indulgent outlays.http://online.wsj.com/article/SB123375514020647787.html
The Wall Street Journal - WASHINGTON -- President Barack Obama laid out strict new regulations on executive compensation Wednesday, strafing Wall Street with tough talk as Washington asserts increasing control over a financial sector seeking more government funds.
President Barack Obama's unveiled new rules on executive pay caps and expense disclosure. WSJ's Jonathan Weisman speaks about what effects this could have on big business.
The plan, which represents the most aggressive assault on executive pay by federal officials, includes salary caps of $500,000 for top executives at firms that accept "extraordinary assistance" from the government.
It also restricts severance packages, known as "golden parachutes," for dismissed executives and requires the disclosure of policies on so-called luxury spending on things such as holiday parties, corporate jets and office renovations.
The rules do not apply retroactively, not even to those firms that have already been bailed out. But they will be imposed on all companies -- in the financial, auto or other sectors -- receiving any future help. This includes those that h
The administration called the latter part of the initiative the "name and shame" provision, designed to make companies think twice about indulgent outlays.http://online.wsj.com/article/SB123375514020647787.html
Wall St. Pay Is Cyclical. Guess Where We Are Now.
The New York Times - To most people, a salary cap of $500,000 would be anything but punishment.
But in Wall Street’s executive suites, it amounts to a humbling pay cut — and, just maybe, the beginning of a cultural shift.
True, the rich always seem to find new ways to get richer. But in the sweep of history, high pay on Wall Street comes and goes through cycles of excess and correction. After an age of astonishing wealth, the cycle, experts say, seems to be turning once again.
The Obama administration’s curb on executive pay, announced on Wednesday, is a limited step. But government actions tend to work best when they are in step with market forces and public opinion. Wall Street’s wayward bonus system, analysts note, is now widely criticized, even in banking circles, for contributing to the economy’s woes.
Understandably, pay is a touchy subject for financial executives these days, with reports last week that total bonus payments at New York financial companies last year reached $18.4 billion.
But with tighter regulations on risk-taking and greater public scrutiny, the pay for top bankers could fall into line with pay for other professions, like doctors and lawyers.
Indeed, high pay on Wall Street is an episodic phenomenon. A recent paper by two economists studied pay in finance from 1909 to 2006, comparing the industry’s pay levels with the private sector as a whole, seeking to adjust for education, skills, age and gender of the workers.http://www.nytimes.com/2009/02/05/business/05bonus.html?partner=permalink&exprod=permalink
Friday, January 30, 2009
Obama Calls Wall Street Bonuses ‘Shameful’
Treasury Secretary Timothy F. Geithner, left, President Obama and Vice President Joseph R. Biden Jr. in the Oval Office.
The New York Times - WASHINGTON — President Obama branded Wall Street bankers “shameful” on Thursday for giving themselves nearly $20 billion in bonuses as the economy was deteriorating and the government was spending billions to bail out some of the nation’s most prominent financial institutions.
“There will be time for them to make profits, and there will be time for them to get bonuses,” Mr. Obama said during an appearance in the Oval Office with Treasury Secretary Timothy F. Geithner. “Now’s not that time. And that’s a message that I intend to send directly to them, I expect Secretary Geithner to send to them.”
It was a pointed — if calculated — flash of anger from the president, who frequently railed against excesses in executive compensation on the campaign trail. He struck his populist tone as he confronted the possibility of having to ask Congress for additional large sums of money, beyond the $700 billion already authorized, to prop up the financial system, even as he pushes Congress to move quickly on a separate economic stimulus package that could cost taxpayers as much as $900 billion.
This week alone, American companies reported as many as 65,000 job cuts, and public anger is rising over reports of profligate spending by banks and investment firms that are receiving help from the $700 billion bailout fund. About half of that money is still available, but the new administration has yet to announce how it will use it, and many analysts think it will take far more to stabilize the banking system.
In the meantime, public outrage is already forcing some companies to rein in their lavish spending. John A. Thain, the former Merrill Lynch executive who was forced out of Bank of America, said this week he would reimburse Bank of America for an expensive renovation of his office that included an $87,000 area rug and $35,000 commode.
But it took the urging of the Obama administration to force Citigroup, which received an infusion of taxpayer funds last year, to abandon plans to buy a $50 million corporate jet. On Thursday, Mr. Obama made reference to the jet, without singling out Citigroup by name; his remarks came one day after the president met at the White House with business leaders, including Richard D. Parsons, the new chairman of Citigroup. http://www.nytimes.com/2009/01/30/business/30obama.html?partner=permalink&exprod=permalink
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