Both your public treasury and private investment are ATMs for insiders
Summers got millions from Wall St while shareholders try to corral CEOs
| What can we do about rich rewards for gouging the public? Geonomize. Quit letting wealth puddle up in a few pockets. End favors for insiders. We trim, blend, and append four 2009 articles from: (1) Reuters, Apr 14, on CEO pay hikes by Kim Dixon; and (2) Reuters, Apr 4, on Summers’ hedge fund pay by Roberta Rampton; and (3) Huffington Post, Apr 3, on Summers’ speaking fees by Sam Stein; and (4) The Christian Science Monitor, Apr 16, on shareholder activism by G. Jeffrey MacDonald. |
by Dixon, by Rampton, by Stein, and by MacDonald
- More CEOs got pay hikes than cuts in '08
More US chief executives got pay raises than had their pay cut in 2008, a year when billions in taxpayer dollars went to prop up struggling companies and millions of workers lost jobs, according to an AFL-CIO survey released on Tuesday.
The study by the AFL-CIO included stock options granted to CEOs but not yet vested. Using that methodology, Citigroup Inc CEO Vikram Pandit made $38 million in 2008, compared with the roughly $11 million reported in the company's compensation section in US Securities and Exchange Commission filings.
Citigroup collected $45 billion in government bailout funds in 2008.
The survey used data from 946 companies in the Russell 3000 index with 2008 information available. Of those, 480 executives got pay raises, while 463 had pay cuts.
JJS: What does a CEO do to be rewarded so handsomely? He wins favors from the state.
- Summers got millions from banks, a hedge fund, and Harvard
Lawrence Summers, chairman of the Council of Economic Advisors to US President Barack Obama, was paid about $5.2 million by hedge fund D.E. Shaw in the past year. Summers was a part-time managing director of D.E. Shaw.
Summers, a former US Treasury secretary and Harvard University president, also was paid $2.7 million in speaking fees by a range of organizations and companies that have direct financial interests before the government or are intimately involved in the White House's bank relief programs, including several troubled Wall Street financial firms:
- * $67,500 from JP Morgan Chase, which, has received $25 billion in government bailout funds,
* $45,000 and $54,000 from Citigroup, which has received $50 billion in taxpayer help,
* $135,000 from Goldman Sachs, which has received $10 million in bailout funds, and
* $67,500 from Lehman Brothers, which went bankrupt last year.
Many of the senior advisers to Obama earned large salaries from their companies, served in lucrative positions on corporate boards, and had large holdings of stocks, bonds, and mutual funds. For example, National Security Adviser James Jones reported collecting more than $1 million for serving as a director for Boeing, Chevron, and other companies. He had a salary and bonuses of $900,000 from the US Chamber of Commerce.
- More Summers
Can the advice Summers is providing to the president be impartial? Many think the administration has been forgiving in their approach to the banking industry.
JJS: The state is set up for insider dealing. We could change that. Quit letting politicians control discretionary spending. Instead, control it ourselves: pay ourselves a Citizens Dividend from the value of locations, made more valuable by ending taxes on our efforts. Meanwhile, some stockholders are trying to curb the internal -- compensation or legal robbery? -- in corporations.
- Shareholders seek clout over executive packages
More than 100 companies face resolutions at their annual meeting this spring that would give shareholders a chance to vote on executives' pay packages. These "say on pay" votes would be nonbinding.
But "by having more transparency [in executive recruitment and pay negotiations], it's more likely that you'll get a compensation system that will benefit or be in the interest of shareholders," says Brad Barber at the University of California, Davis. "That would lead to a stronger relationship between pay and performance."
At least five companies in recent weeks have announced plans to hold say-on-pay votes. Mary Schapiro, chair of the Securities and Exchange Commission, has expressed support for shareholders to have an advisory vote on executive pay packages. Congress, through the recent economic stimulus bill, has made say on pay a standard of sorts by requiring it of public companies that receive bailout money through the Troubled Asset Relief Program (TARP). President Obama spoke out in favor of it when he served in the Senate.
Although say on pay is required by law for public companies in Britain, that rule hasn't prevented compensation trends from mirroring those in the United States. Wayne Guay at the University of Pennsylvania says, "The root of the problem has to be that the board of directors is not doing its job" in cases of overcompensation. “I would rather see our efforts go toward seeing that we get good directors in place."
Charles Elson, at the University of Delaware, warns say on pay won't give board members the independence from management that they must have to fix the problem. For that, more than 30 resolutions call for chairs to be independent, i.e., not CEOs.
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Jeffery J. Smith runs the Forum on Geonomics.
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Also see: The prez-elect selects those who put hi-finance first
Don't worry -- Gates and CEOs are still doing just fine
TOP-PAID CEOs DON'T DELIVER TOP-NOTCH RESULTS |
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