Results tagged “executivecompensation”

The Obama administration is set to ask that executive compensation be dramatically lowered at seven companies which received the most government help. While the plan hasn't been made public yet, it's expected that pay will fall an average of 50% for the top 25 paid executives at Citigroup, Bank of America, American International Group, General Motors, Chrysler, GMAC and Chrysler Financial.

In case you need more cause besides Balloon Boy to vomit, then revel in details of Goldman Sachs' success. The NY Times reports, "Only months after paying back billions of taxpayer dollars, Goldman Sachs is on pace to pay annual bonuses that will rival the record payouts that it made in 2007, at the height of the bubble. In the last nine months, the bank set aside about $16.7 billion for compensation — on track to pay each of its 31,700 employees close to $700,000 this year. Top producers are expecting multimillion-dollar paydays." The Times adds, "This much is indisputable: Goldman Sachs is minting money."

After The Guardian reported, "Staff at Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year, sparking concern that the big investment banks which survived the credit crunch will derail financial regulation reforms," it was taken as a sign that excess is back. But now the investment firm is denying the report, having its spokesman tell the media, "We won't know what our compensation benefit number is until the end of the fourth quarter, which is at the end of December." The firm did return $10 billion in TARP money to the government, adding in a letter, "Our return of the government's investment does not, in any way, end our obligations to the public interest." We guess we'll have to wait until next January for stories about $1000 bottles of wine and dropping cash on new condos and cars.

Hey, hey: The Wall Street Journal reports, "Citigroup Inc. has told about five former top executives that it won't pay them tens of millions of dollars in promised severance payouts, according to people familiar with the matter." While Citi has already paid "more than half of the roughly $100 million it promised to the former executives..company officials recently decided not to proceed with the remaining payments, concluding that they wanted to avoid even the possibility of a public backlash over the money." The U.S. government has aided Citigroup with $50 billion. While the former employees' contracts with Citi require the company to pay out the severances, the WSJ explains, "bank officials essentially are wagering that the former executives will conclude that it would be publicly embarrassing for them to file lawsuits against the struggling, taxpayer-backed company seeking the money."

AIG CEO Edward Liddy will be stepping down from the troubled insurance behemoth—once a replacement can be found, natch. Liddy, whose salary was $1, became CEO last September "within hours" of the firm's bailout; CNBC explains his "mandate [was] to sell off assets to generate funds to repay taxpayers." Liddy, who weathered criticism when hundreds of millions were handed out in bonuses, is the fifth person to run the company since 2005. An analyst told Bloomberg News, "It really is a terrible job, I’m not sure who would really want it. There is so much political baggage that whoever takes over the company is going to find it an extremely difficult and thankless job." In other news, Richard Fuld announced his resignation from Lehman Brothers last night, "I believe that we have worked together effectively in achieving an appropriate transition."

Treasury Secretary Timothy Geithner wants reform of corporate incentives, rather than capping executive pay. He said yesterday, during a Newsweek-sponsored luncheon, "I don't think our government should set caps on compensation," even for companies getting TARP money. He pointed out, "You had a crisis magnified by the fact that people were paid to take a huge amount of short-term risk. And that's something that's preventable...I think we can bring about broader reforms of compensation incentives in finance as a whole. We’ll make it much less likely that people get paid to take large amounts of short-term risk at the expense of their firm and the system as a whole." He suggested instead that the government require that compensation be tied into long-term performance.

So, you know how there was a lot of populist outrage over AIG's $165 million in bonuses? Well, now, Politico reports that the number is now almost three times bigger: "In a response to detailed questions from Rep. Elijah Cummings (D-M.D.), the company has offered a third assessment of exactly how much it paid out in bonuses last year. And the new number, offered in a document submitted to Cummings on May 1, is the highest figure the company has disclosed to date. AIG now says it paid out more than $454 million in bonuses to its employees for work performed in 2008." Politico points out that when it asked an AIG spokesman about bonuses, he gave them a $120 million number. The spokesman now says the $454 million “reflects all types of variable compensation across all of our businesses," while the $120 million was for folks at headquarters and other "high ranking officers."

Maybe financial executives on Wall Street can stop whining: Based on banks' recent profits, that many bankers will be seeing sweet paychecks this year. Sure, layoffs may have thinned the ranks a little, but the NY Times reports, "The average pay for those who remain — rank-and-file workers whose earnings are not affected by government-imposed limits — appears to be rebounding... In [JPMorgan Chase]’s trading and investment banking unit, if revenue stays at first-quarter levels, workers are on track to earn an average of $509,524 over the year. That figure was $345,147 in 2006." One recruiter said there haven't been "huge changes in the way people are talking about compensation. Wall Street is being realistic. You have to retain your human capital," while an analyst was more blunt, "Like everything on Wall Street, they’re starting to sin again. As you see a recovery, you’ll see everybody’s compensation beginning to rise."

Attorney General Andrew Cuomo revealed that most AIG executives who received big bonuses returned them. Nine of the top 10 recipients may return their money; casting a slightly wider net, 15 of 20 executives returned their bonuses, which accounts for $30 million of the controversial $165 million bonuses that the extremely bailed out insurer doled out. The NY Times reports, "Mr. Cuomo acknowledged that some bonus recipients declined to give back bonuses, especially those overseas who are outside the jurisdiction of New York State. He said he did not think it would be in the public interest to release the names of those who gave back their bonuses." About $80 million in bonuses were given to American employees, and Cuomo expects to get that money back.

Rep. Charles Rangel introduced the bill that would tax 90% of employee bonuses given by firms that received bailout money and excoriated the companies, "These people are getting away with murder. They’re getting paid for the destruction they’ve caused to our communities." Yet the NY Times finds that Rangel's relationship with Wall Street bullseye target-of-the-week A.I.G. is "complicated": "As recently as last year, he was trying to woo the company to donate $10 million to a school to be named in his honor. And while A.I.G. officials mulled the request, Mr. Rangel supported a provision in a tax bill that saved the company millions of dollars."

Everyone is mad as hell at AIG and they're not going to take it anymore! From President Obama and NY Attorney General Andrew Cuomo railing against AIG and its executive compensation to the House passing a bill to tax 90% of all bonuses from financial firms receiving bailout funds, the anger has also spread to the Connecticut suburbs where many AIG executives live.

NY Attorney General Andrew Cuomo scored a win when a judge ruled that the names of Merrill Lynch employees who received big bonuses are not secret. New York State Supreme Court Justice Bernard Fried wrote, "The record does not support the intervenors' claim that the employee compensation information is a trade secret." Cuomo, who has been seizing outrage over crazy bonuses for employees at companies receiving bailouts funds, says he'll make the names of the Merrill employees public, possibly even today. While headhunter called it a "witch hunt," Cuomo said it was a "victory for taxpayers" and heeded this warning, "Bank of America [which took over Merrill Lynch] chose litigation over transparency and we are gratified that this tactic has failed. AIG should take heed and immediately turn over the list of bonus recipients we have subpoenaed."

AIG CEO Edward Liddy was in the hot seat today, testifying in front of the House Financial Services Committee, and revealed that he had asked some employees to return their controversial bonuses, "Specifically, I have asked those who received retention payments of $100,000 or more to return at least half of those payments." According to the NY Times, "The A.I.G. chief said that some recipients had already offered to give up all of their bonuses, and he added later that he expected to get most of the money back."

AIG CEO Edward "We're Legally Obligated to Pay Millions to Executives Who Helped Bring the Company Down" Liddy is scheduled to face questions from Congress's Financial Services Committee today. Yesterday, Liddy wrote an op-ed in the Washington Post, "The anger is understandable, and I share it... No one knows better than I do that AIG has been the recipient of generous amounts of government financial aid. We are acutely aware not only that we must be good stewards of the public funds we have received but that the patience of America's taxpayers is wearing thin."

Republican Senator Charles Grassley of Iowa told a Cedar Rapids radio station how he really feels about the AIG executives taking bonuses after needing to be bailed out with $170 billion in federal money: "I suggest, you know, obviously, maybe they ought to be removed. But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide. And in the case of the Japanese, they usually commit suicide before they make any apology." His spokesman later said Grassley was speaking rhetorically.

As AIG weathers the bad PR storm from issuing over $165 million in bonuses to executives that helped bring the company down, the insurer has released the names of the companies and municipalities it paid out. The NY Times reports that AIG repaid "Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion)" as well as foreign banks "Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion)." California and Virginia each received about $1 billion each (NY is getting $210 million). You can see read AIG's statement (PDF)—the company used about two-thirds of its rescue funds for these payments. As for the bonus outrage, Rep. Barney Frank said these execs "may have a right to their bonuses. They don't have a right to their jobs forever," adding "it does appear to be that we're rewarding incompetence."

Insurer AIG, whose business has been shored up by $170 billion in federal funds, says it is proceeding with $165 million in bonuses to, as the NY Times puts it, "executives in the same business unit that brought the company to the brink of collapse last year." Last week, Treasury Secretary Timothy Geithner told AIG it had to scale back its compensation, but, in a letter yesterday to Geithner, AIG CEO Edward Libby cited legal obligations saying its "hands are tied" and said the government's involvement would make it difficult for the company to retain its best employees. Um, wouldn't most people would understand not getting bonuses for crappy performance? Also, the Wall Street Journal says that bonuses total...$450 million. Naturally, this hits the sweet spot of the government (and public) railing against crazy bonuses—Rep. Barney Frank wants to find out if the bonuses are recoverable. Related: AIG reported a 4th quarter loss of $61 billion.

Former Merrill Lynch CEO and connoisseur of finely decorated offices John Thain obeyed a judge's order that he spill the beans on Merrill's $3.6 billion in bonuses. See, Thain claimed he wasn't allowed to discuss the extravagant bonuses—which came right before Merrill announced a $15 billion 4th quarter loss—which pissed off Cuomo, who then filed a motion to force Thain to speak up. The Daily News reports, "Dodging a press gauntlet, Thain slipped into the lower Manhattan tower that houses Cuomo's offices through a subway entrance." But Thain still left through a back entrance, which was perfect opportunity for some photo ops. Thain's former bosses at Bank of America (which took over Merrill) were also subpoenaed by Cuomo.

Do not mess with Attorney General Andrew Cuomo! Cuomo detailed his office's dealings with Merrill Lynch—namely how they asked Merrill what they were doing about 2008 bonuses in October but Merrill ignored them and apparently moved up their bonus schedule to spread billions in bonus money—in a letter to Rep. Barney Frank. You can read the letter (PDF) but here are some calculations: "The top four bonus recipients received a combined $121 million; The next four bonus recipients received a combined $62 million; The next six bonus recipients received a combined $66 million... Overall, the top 149 bonus recipients received a combined $858 million; 696 individuals received bonuses of $1 million or more." Cuomo also accused Bank of America, which bought Merrill Lynch, of being complicit in the bonus debacle.

After the maple syrup mystery was solved, Mayor Bloomberg was asked about President Obama's desire to cap executive pay (to $500,000). The Mayor, a self-made billionaire, pointed out, "One percent of the tax payers pay 44 percent of our taxes." He added that it's not great for the government to tell businesses how to do things but acknowledged, "If you take public moneys, there are strings attached." See video at Politicker NY and related: The NY Times reports today, "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." The !

President Obama, who called Wall Street's bonuses "the height of irresponsibility", and Treasury Secretary Timothy Geithner announced that executive compensation at banks receiving TARP (Troubled Asset Relief Protection) funds should be capped at $500,000. Obama said, “In order to restore our financial system, we’ve got to restore trust. And in order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street," while Geithner added, "There is a deep sense across the country that those who are not responsible for this crisis are bearing a greater burden than those who were." Which is why Goldman Sachs is eager to pay Uncle Sam back for the money the firm received. Goldman CEO David Viniar said, "We’d be under less scrutiny and under less pressure," plus, "It would send a very good signal" if they repaid it. Hey, by all means, pay it back!