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04-27-2012, 09:41 AM | #1 |
Shocking even to Oligarchs
Must have to do w/ not being soo "exclusive"........ Lehman elite stood to get $700 million - latimes.com Quote: The documents, which were among the millions of pages submitted in Lehman's bankruptcy, show the list of top earners each were pledged $8 million to $51 million in cash, stock and other compensation. How much, if any, of the stock was cashed in before the bankruptcy wiped out its value couldn't be determined. Still, the rich pay packages for so many people raised eyebrows even among compensation experts and provided fresh evidence of the money-driven Wall Street culture that was blamed for triggering the financial crisis. "Many people are going to be stunned at how well some people were being paid," said Brian Foley, an executive compensation expert in White Plains, N.Y. "This wasn't a matter of five or six people being paid a lot." | |
04-27-2012, 10:09 AM | #2 |
Really? I don't think this is shocking to the Oligarchs... apart from the two details: 1) that Lehman would go out before they could collect all their deferred comp and 2) that at that kind of money they hadn't yet gone to a hedge fund to get the 15% tax rates...
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04-27-2012, 10:33 AM | #3 |
Quote: The records illustrate that enormous pay wasn't limited to top executives but was dished out to a wide range of traders and others who sometimes took home even bigger paychecks than the CEOs who ran their companies. | |
04-27-2012, 11:26 AM | #4 |
...as it should be, my boy, as it should be Here's something from owl England - a conservative has written a book! Are CEO Bonuses Wrecking the Wider Economy? - Yahoo! Finance Quote: Also this week, a new book about the bonus culture in the UK hit the shelves. Written by famous novelist and Conservative party member Ferdinand Mount, "The New Few: Or a Very British Oligarchy," looks at how power and wealth in the UK has been concentrating in the hands of a small elite while the rest of the country struggles. In an editorial in daily newspaper "Evening Standard," Mount wrote that, for 30 years after WW II, the UK had become a more equal and open society but now "it is painfully obvious that social mobility has slowed again and a new super-class is soaring out of sight." "Without knowing why or how, we seem to have hatched our own oligarchs, and we stand aghast and bewildered at this flock of monstrous cuckoos," Mount wrote. Change in Corporate Behavior He commended the UK government's initiative to give more control to shareholders over what bonuses are awarded, but one analyst said the changes in policy must go much further to reverse a harmful shift in the way companies operate. The rise in the bonus culture, especially in the U.S. and the UK, has led to a "marked change in corporate behavior" that may, over the longer term, put those companies at a disadvantage compared with peers in other countries, economist Andrew Smithers wrote in a report headlined, "The Change in Corporate Behavior." Not just the private sector is likely to suffer, Smithers argues. Bonuses awarded for short-term results rather than long-term business development measures are likely to force governments to keep spending in order to boost their economies, as companies refrain from making investment in order to deliver short-term returns for shareholders, rather than investing it for long-term gain, Smithers says. He explains that business investment has been on a declining trend in the UK and the U.S., while profit margins have been rising, meaning that there is a savings surplus in the business sector that cannot be explained by the economic downturn alone. Because the calculations behind bonus payments depend on short-term results, there is resistance to cuts in profit margins and to increasing investment, Smithers wrote. "If no public pressure is exerted to change bonus systems, large fiscal deficits will need to continue if recession is to be avoided, at least until there is another change in corporate culture," he said. According to Smithers, the change in corporate behavior due to the bonus culture has been "a major case of increasing disparity of incomes in the UK and US" which have seen "a large rise in the incomes of the highly paid at the expense of the rest." Government policy should tackle bonuses as the cause of the savings surplus in the business sector and should set increases in output and investment among the requirements that would need to be met for bonuses to be paid, he wrote. There's a footnote about German (low PDI) and French (high PDI) manufacturing plants in the same industries and of similar sizes. The French plants on average had 26% of the employees in management or specialist positions, while the German companies had 16%. The French paid top management substantially more than the Germans. "What we are seeing in that comparison, Hofstede argued, is a difference in cultural attitudes towards hierarchy. The French have a power distance index twice that of Germans. They require and support hierarchy in a way the Germans simply don't" Another interesting sidelight - when we moved from Finland, the American culture was a strange mix when it came to hierarchy. On the one hand, doctors and managers - bosses - strutted around self-importantly compared to the same in Finland. But on the other hand, especially compared to Cold War Finland, the crazy Americans felt free to talk back politically and seemed to have little respect for their government officials. Culturally, the US is at the bottom of PDI scales. But there is a counter dynamic going on at the same time. We like to see each other as equals, except in certain contexts? The comp debate is along these tensions, perhaps? | |
04-27-2012, 11:56 AM | #5 |
Thanks .interesting..not sure 40 is at the bottom though is is OK......higher than the UK, AUS, and northern Scandinavian Countries.. Lower than India, China, Mexico, and S. America. and any "kingdom".. Quote: Compared to Arab countries where the power distance is very high (80) and Austria where it very low (11), Germany is somewhat in the middle. Germany does not have a large gap between the wealthy and the poor, but have a strong belief in equality for each citizen. Germans have the opportunity to rise in society. On the other hand, the power distance in the United States scores a 40 on the cultural scale. The United States exhibits a more unequal distribution of wealth compared to German society. As the years go by it seems that the distance between the ‘have’ and ‘have-nots’ grows larger and larger. | |
04-27-2012, 01:00 PM | #6 |
This phenomenon isn't limited to finance, IIRC Katie Couric is or was paid more than the CEO of CBS (who is in the top 5 of highest paid CEOs). On the smaller scale, it is not uncommon for small and medium sized businesses' CEOs will be the first to miss a paycheck during slim times.
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04-28-2012, 07:29 AM | #7 |
This phenomenon isn't limited to finance, IIRC Katie Couric is or was paid more than the CEO of CBS (who is in the top 5 of highest paid CEOs). On the smaller scale, it is not uncommon for small and medium sized businesses' CEOs will be the first to miss a paycheck during slim times. 1)Couric like say Mick Jagger are not easily replaced as is most mid management or bean counters...One could argue couric et. al. are defacto-heads.. Bit of a stretch. 2) it is not uncommon for small and medium sized businesses......... except for truly "small business" (Koch industries IS classified SMB) most won't cut unless all cut. Owner/operators (w 1-10 employees) may since they have no choice short of bankruptcy. | |
04-30-2012, 07:18 AM | #8 |
Annaly CEO?s $35 Million From REITs Dwarfs Dimon Pay: Mortgages - Bloomberg Interesting in both this context, and the context of the real estate market and bubble Quote: Annaly Capital Management Inc. (NLY) Chief Executive Officer Mike Farrell was paid $35 million last year, more than the CEOs of the six largest U.S. banks, from JPMorgan Chase & Co. (JPM)’s Jamie Dimon to Goldman Sachs Group Inc.’s Lloyd Blankfein, and more than double their average compensation. The bounty underscores the growing influence of real estate investment trusts that buy U.S. home-loan debt, mostly with borrowed money that costs almost nothing as the Federal Reserve keeps rates low to bolster the economy after the worst financial crisis since the Great Depression. Holdings of government-backed mortgage securities by the lightly regulated firms have almost tripled to about $270 billion since 2009. Annaly, the 15-year-old New York-based REIT that more than doubled its assets over four years to enter 2011 with $110 billion, is the largest, followed by American Capital Agency Corp. (AGNC), the debt buyer guided by former Freddie Mac investment chief Gary Kain. The company, which started in 2008, sold enough shares in March to reach more than $70 billion. “The industry has been playing an increasingly important role in the mortgage-securities market,” said FBR & Co. CEO Richard Hendrix, whose Arlington, Virginia-based investment bank was spun off from a REIT. “And right now, they’re providing great returns to shareholders, though there’s no question that when short-term rates rise, those returns will be compromised.” ... The growth may also create new risks. The Securities and Exchange Commission is examining whether REITs should retain their ability to use unlimited leverage. Annaly and American Capital Agency also face tests for determining which firms aside from banks need special oversight because they’re too-big-to- fail, some of which they meet. ‘Systemic Risk’ “They pose systemic risk because their financing structure is so poor,” said Doug Dachille, CEO of investment firm First Principles Capital Management LLC and former head of proprietary trading at JPMorgan. The borrowing is dangerous because it’s short-term and subject to daily margin calls, meaning that they may be forced to sell assets when values are falling, he said. ... Annaly’s returns to shareholders since its initial public offering have totaled more than 580 percent, compared with about 85 percent for the S&P 500 in the same period. That includes a 44 percent decline in its stock price in 2005 as the Fed raised rates, or 39 percent assuming reinvested dividends. With short-term rates now as low as they can go, long-term yields near nadirs and government efforts boosting refinancing of high-rate home loans, the best days for REITs that wager on government-backed securities are already behind them in this economic cycle, said Richard Eckert, an analyst in San Francisco at securities firm B. Riley & Co. Some are sure to be tempted to take larger risks as conditions worsen, he said. “You’re going to see some people make mistakes, big mistakes, perhaps fatal,” said Eckert, who worked as a risk management analyst at the Federal Home Loan Bank of San Francisco in 1990s and started covering REITs in 1998. Tougher Times REITs don’t save much for tougher times because they have to pay out 90 percent of most types of earnings in dividends, a provision that allows the firms to avoid taxes on the income. Unlike other vehicles used by retail investors in the bond market such as mutual funds, mortgage REITs aren’t subject to the Investment Company Act, which limits leverage. Most that invest in agency securities borrow between 6 and 9 times their equity, compared with between 1 and 3 times for non-agency debt, according to the companies’ financial reports. ... He was recruited to American Capital after Freddie Mac and rival Fannie Mae were seized by the government in September 2008. The two companies are being forced to shrink their portfolios, which peaked at a combined $1.7 trillion in 2009. Both Republican and Democratic lawmakers say those holdings, which are separate from their credit guarantees, should be eliminated if the companies are reformed or replaced. “I was extremely bullish on the future of the REIT industry, given that their two largest competitors were not going to be there anymore,” Kain said. The Fed’s low target rate, which it’s pledging to restrain until 2014, has created a so-called steep yield curve, or large difference between short-term borrowing costs and long-term investment yields. One-month repo backed by agency mortgage bonds costs 0.29 percentage point, as yields on those securities average about 2.6 percent, ICAP Plc and Barclays Plc data show. The damage from rising rates will depend on how fast they increase, and probably won’t be as much as when the Fed under former Chairman Alan Greenspan in the mid-2000s contributed to a flat yield curve as it sought to “slow down a runaway housing market,” said Steven Delaney, an analyst at JMP Securities. ... Taxpayers may need REITs to keep growing to shed their own risks. Along with Fannie Mae and Freddie Mac’s shrinking balance sheets, the Fed needs to eventually unwind its about $1 trillion of mortgage holdings, said Calvin Schnure, a vice president at the National Association of Real Estate Investment Trusts. The government also wants to stop covering default risk on most new mortgages, after swelling to serve that role on about 90 percent, said Michael McMahon, a managing director at Redwood, the Mill Valley, California-based REIT specializing in so-called jumbo loans. “The banks certainly can’t do it all, nor do we believe they want to do it,” McMahon said. REITs’ tax advantages and ability to invest for the long-term make them the “ideal” companies to lead the way on the rest, he said. Until last month, Redwood was only issuer of non-agency securities backed by new home loans since the market collapsed in 2008. That’s when Annaly’s Chimera partnered with Credit Suisse Group AG to join it. | |
04-30-2012, 09:30 AM | #9 |
This phenomenon isn't limited to finance, IIRC Katie Couric is or was paid more than the CEO of CBS (who is in the top 5 of highest paid CEOs). On the smaller scale, it is not uncommon for small and medium sized businesses' CEOs will be the first to miss a paycheck during slim times. We are seeing the predicted result where commerce is dominated by large, public companies. Quote: The directors of such companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own.Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master's honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company | |
05-02-2012, 06:28 AM | #10 |
Meanwhile, how the rich roll... http://www.nytimes.com/2012/05/01/us/politics/ties-to-romney-08-helped-fuel-...er=rss&emc=rss Quote: About a month after Mitt Romney ended his bid for the Republican presidential nomination in February 2008, his eldest son, Tagg, and Spencer Zwick, the campaign’s top fund-raiser, met with a beef company executive who had been a major campaign donor over dinner at the posh Torrey Pines resort in San Diego. This meeting, however, was not about politics. Instead, the younger Romney, who had been a senior adviser to his father, and Mr. Zwick presented the executive, John R. Miller, with a business proposition: the opportunity to invest in a private equity fund they were starting, Solamere Capital. Neither had experience in private equity. But what the close friends did have was the Romney name and a Rolodex of deep-pocketed potential investors who had backed Mr. Romney’s presidential run — more than enough to start them down that familiar path from politics to profit. Two years later, despite a challenging fund-raising climate for private equity, Solamere, named after a wealthy enclave in Utah’s Deer Valley where the Romneys have a winter home, finished raising its first fund. The firm blew past its $200 million goal, securing $244 million from 64 investors, including a critical, early $10 million from Mitt Romney and his wife, Ann, and hefty commitments from wealthy supporters of the campaign. The small firm, including Tagg Romney, 42, Mr. Zwick, 32, and a third partner they brought in, Eric Scheuermann, 47, the only one with a private equity background, is in line to collect at least $16.8 million in fees over the first six years of the fund, according to a filing with the Securities and Exchange Commission. The firm has earned a 20 percent return since 2010, despite having invested only about half of its money so far. | |
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