SEARCH

Entries in CEOs (13)

Friday
Oct262012

Fired or Resigned: Should CEOs be Treated Differently?

Andrey Rudakov/Bloomberg via Getty Images(NEW YORK) -- The Securities and Exchange Commission has launched an informal investigation to determine if Citigroup misled shareholders when it claimed former CEO Vikram Pandit "resigned" on Oct. 16.  Pandit and Citigroup Chairman Michael O'Neill told investors in conference calls and interviews that the decision to step down was Pandit's alone.

"Vikram chose to submit his resignation and the board accepted it," O'Neill said that day.

But according to Bloomberg and the Wall Street Journal, just after the market closed a day earlier, the board -- which had allegedly lost confidence in Pandit -- told him to step down later that day.  O'Neill failed to mention this during the company's third-quarter earnings call, which, along with O'Neill's statement that Pandit left on his own volition, is a potential regulatory infraction.

"If the board pushed Pandit out, then Citigroup issued a false statement," former SEC chairman Harvey Pitt told CNBC.  "The reason for the CEO's departure is material, and Citigroup had an obligation to disclose any information necessary to render its statements fair, accurate and complete.  If the board forced Pandit out, Citigroup didn't do that."

Whether Citigroup did anything illegal remains to be seen.  But it does bring up another question: Should CEOs be allowed to say they quit when, in fact they were forced out?  After all, unless they have done something terrible, most employees are allowed to say they quit when in fact they were asked to leave.  Should a CEO be held to different rules?

"What often happens when companies do layoffs or want to push an individual out the door, they will do a 'mutual consent resignation' whereby they agree that the employee will go without a fight, and in turn they will not fight unemployment benefits," said ABC's Good Morning America workplace contributor Tory Johnson.  "It will also look better on your record that you were not terminated or fired."

With the head of a large corporation like Citigroup, "Most people know the 'I've decided to pursue other things' is code for 'They booted me!' she said.  "It's totally a courtesy.  Fired, laid off, voluntarily, involuntarily -- it's semantics."

Outplacement expert John Hotard believes the issue is more about compensation and legal issues than anything else.

"The big guys don't want salary because of PR and taxes.  They prefer stock and options.  The law of compensation is that if you get fired you don't get your unvested stock options.  But if you are allowed to resign, then all that money is yours.  You don't want to have a senior person sue a bank or corporation, so you let them resign," he said.

Michael Kaufman, managing partner at Kaufman Dolowich Voluck & Gonzo, which has a specialty in employment law on behalf of companies, agrees that barring some major offense, chief executives should be given the same opportunities as every other employee in America.

"There are a lot of market forces that aren't necessarily a CEO's fault," he said.  "Look at the economic cycle we're currently in.  In some cases it may not be possible for them to hit their targets.  So, they're given the opportunity to resign.  I think it's fine."

However, he added, there is a difference with CEOs of public companies and their boards because they must also weigh their duties to their shareholders.

The main issue with Pandit is timing, Kaufman said.

"If the company had waited a month after they had done their earnings call, the SEC probably wouldn't be up in arms," he said.  "But a couple of hours later they say 'The CEO has resigned.'  The SEC is saying, why didn't you disclose this on the call?  It may very well be that Pandit, after the call, said 'I can't do this anymore.'  But that's what the SEC wants to know."

Copyright 2012 ABC News Radio

Thursday
Sep272012

CEOS Very Worried About 'Fiscal Cliff,' Survey Finds

Hemera/Thinkstock(NEW YORK) -- America's job creators are bearish on the economy over the next six months, according to Business Roundtable's third quarter CEO Economic Outlook Survey.

The chief executives are mostly concerned with the upcoming "fiscal cliff," the possibility that taxes will go up and deep spending cuts that will be instituted at the beginning of the 2013.

The Federal Reserve and virtually all economists say that if it happens, the economy could be plunged into another recession, throwing millions more out of work.

As a result of this uncertainty, which isn't expected to get resolved by Congress, if at all, until after Election Day, just 29 percent of CEOs say they plan to do more hiring and 34 percent say they'll be trimming staff over the next six months.

While the CEOs aren't expecting miracles at this point, the survey says they would evidently feel better if lawmakers simply come up with a framework that specifies tax increases and what changes might be made to the tax code and other regulations.

Copyright 2012 ABC News Radio

Monday
Sep172012

Salaries of Seven Highest-Paid Millionaire Nonprofit CEOs Revealed

Adam Gault/Thinkstock(NEW YORK) -- For the past decade, the Chronicle of Philanthropy has published the highest salaries of the chief executives of the nation's top charities and foundations. According to the most recent findings, which cover 2010 and half of 2011, the top earners routinely make more than $1 million and received a median pay increase of 3.8 percent in 2011.

In the no. 1 spot was Herbert Pardes, the former head of New York-Presbyterian Hospital who retired in 2011. He earned $4,304,346, including about $2 million in bonuses.

Although that might seem like a large salary, it's nothing compared to the CEOs of for-profit companies in the Standard & Poor's 500, whose total median compensation in 2011 was $9.6 million. They also saw a 28 percent pay increase in 2010 and 6.2 percent in 2011. Nice work if you can get it.

1. Herbert Pardes, New York-Presbyterian Hospital (No longer at the organization.) - $4,304,346
2. Peter Marzio, Museum of Fine Arts, Houston (He died in December 2010.) - $3,943,145
3. Gary Gottlieb, Partners HealthCare System - $3,062,505
4. Delos Cosgrove, Cleveland Clinic Foundation - $2,279,364
5. John Seffrin, American Cancer Society - $2,081,246
6. Mark Wrighton, Washington University in St. Louis - $1,920,107
7. James Mandell, Children's Hospital Boston - $1,861,684

Copyright 2012 ABC News Radio

Thursday
Aug162012

Taxpayers Subsidize CEO Pay, Report Says

Justin Sullivan/Getty Images(WASHINGTON) -- The Institute for Policy Studies, a self-described “progressive multi-issue think tank,” analyzed the link between tax loopholes and excessive executive compensation and concluded that the loopholes created an “uneven playing field” between large companies and small businesses and led to lost tax revenue.

The latest edition of the institute’s annual Executive Excess compensation study found that in 2011, 26 CEOs received more in compensation than their companies paid in taxes, and that the four major tax loopholes contributing to excessive executive pay cost taxpayers about $14.4 billion a year.

“The report is timely at a time when the tax debate is so intense in this country,” Sarah Anderson, the institute’s global economy project director and the report’s co-author, told ABC News.  "Some leaders are saying we need to reduce the corporate tax burden even more while major companies are taking advantage of loopholes to lower their tax bill."

The report critiqued the major tax loopholes, including the preferential treatment of “carried interest” income for hedge fund managers.  "Carried interest" income can be taxed as capital gains -- at 15 percent tops -- instead of at 35 percent, the top income tax rate. The Congressional Budget Office's projected estimate for “carried interest” income -- revenue from investment income or dividends -- for 2012 to 2021 was $21.4 billion.

Companies can deduct executive pay as a business expense, just as they do inventory and appreciation. Because of a tax rule enacted in the early 1990s that limited the amount of cash that could be deducted to $1 million, corporations have increasingly paid executives in stock options. Corporations can exempt stock option compensation, and other performance-based pay, from taxation.

William McBride, chief economist with the Tax Foundation, a conservative-leaning nonpartisan think tank, said this makes sense, because stock options are speculative compensation.

“They’re worth nothing unless they’re in the money,” McBride told ABC News. “It wouldn’t be fair to tax someone for getting paid an option that doesn’t have any real value until it has been exercised.”

Steven Balsam, an accounting professor at the Fox School of Business at Temple University, said from a business viewpoint, “it’s an expense, just like any other person’s salary.”

Others defend performance-based compensation for high-performing executives who have overseen companies with increasing earnings and stock prices.

Balsam said it was unlikely that boards would limit executive pay even if their pay was not tax deductible.

Anderson, who co-wrote the report, said that company boards that might choose to forfeit the deduction and continue paying high compensation packages “are stacked with executives from other firms that have a vested interest in maintaining the status quo.  

“However, we need to keep chipping away at the myth that massive payouts are necessary to attract talented managers,” she said. "Having a meaningful deductibility cap would send the right message, and at least taxpayers wouldn’t have to continue to subsidize excessive pay.”

The report points to the largest beneficiaries of the tax loopholes, saying they benefit the most from the unlimited tax deductibility of executive pay because their compensation has the largest proportion of deductible, performanced-based pay.

Oracle’s Larry Ellison, the sixth richest person in the world with a net worth of $36 billion, according to Forbes, tops the list, and is followed by Discovery Communications’ David Zaslav; Viacom’s Philippe Dauman; Motorola Mobility Holdings’ Sanjay Jha; and CBS Corp.’s  Leslie Moonves.

Neither Oracle, Discovery Communications, Viacom and Motorola Mobility Holdings returned calls requesting comment. A spokeswoman for CBS Corp. and a spokeswoman for Discovery declined to comment.

Copyright 2012 ABC News Radio

Monday
May212012

Shareholders Cut CEO Pay in Backlash

Adam Gault/Thinkstock(NEW YORK) -- Amidst a climate of populist outrage and corporate missteps, shareholders are voting en mass to cut executive pay thanks to a new government rule called "say on pay." The board of directors, who determine CEO pay, don't have to listen to the shareholder vote but most of them are listening.

Sprint CEO Dan Hesse received a $3.25 million pay cut after shareholders expressed concern with a deal Hesse cut with Apple to carry the iPhone on the Sprint Network. The deal will cost Sprint $15.5 billion and the Sprint will reportedly not profit from the move until 2015.

But are "say on pay" shareholder votes, while non-binding, a helpful feedback tool or do they encourage Monday morning quarterbacking?

"I think that there is the risk of a knee-jerk reaction," said Wayne Guay, an accounting professor at the Wharton School of Business. Critics of "say on pay" argue that shareholders don't read proxy statements and are less likely to make an informed decision.

Supporters of the policy say that if a CEO can expect an unscrutinized "golden parachute," he or she may have more of an incentive to engage in risky short-term behavior.

But some experts point out that underperforming CEO's are already punished because many of them own a large amount company stock.

Still, compensation packages are often generous enough to offset the loss in stock value. The most famous example was in 2008 when executives from Lehman Brothers collected $483 million in compensation before the company went under in a bankruptcy that is credited with starting the recent financial meltdown. Without worthless stock options, Lehman's CEO Richard Fuld still made close to $350 million.

"It's risk-free for the individual [the CEO] but it's risky for the company," said Rep. Barney Frank, D-Mass., back in 2009 while the law was being debated. "And when you accumulate risks for companies, it's risky for the economy," said Frank.

When big companies fall, like they did in 2008, there is often a domino effect that takes down other companies that rely on their business.

Will "say on pay" have a long-term positive effect?

The rule has been in effect for only one year here in the U.S. but the law was adopted in the U.K. in 2002.

One study on the U.K. system done by a professor from the Columbia Business School and one by a professor at the University of Southern California found that their system encouraged an enhanced dialogue between the board and shareholders. Those shareholders were most likely to punish a CEO by objecting to a generous severance package. When the boards ignored the "say on pay" vote, the next vote was almost always lopsided against the board.

The boards in the U.K study almost always capitulated after the third vote.

Here in the U.S., say on pay is likely too new to be able to assess the effects.

JPMorgan Chase CEO Jamie Dimon last week apologized immediately and profusely for the company's trading fiasco that reportedly cost the company $3 billion. "We made a terrible egregious mistake. There's almost no excuse for it," said Dimon on NBC's "Meet the Press."

Two days after the apology, 91.5 percent of the company's shareholders voted to approve of Dimon's $23 million pay package. However, many of those votes were likely submitted before the trading fiasco was disclosed.

Copyright 2012 ABC News Radio

Friday
Apr202012

CEO Pay Now 380 Times Average Worker's, Says AFL-CIO

Adam Gault/Thinkstock(NEW YORK) -- Just when you thought executive compensation couldn't get much higher, the average CEO pay increased 14 percent to $12.9 million in 2011, 380 times that of the average worker, according to the AFL-CIO's annual Executive Paywatch report released on Thursday.

The report, called CEO Pay and the 99 percent, found that among the 300 firms of the S&P 500 companies that filed annual proxy reports, the average level of CEO pay rose 13.9 percent, following a 22.8-percent rise in 2010.

The national labor group launched its Executive Paywatch analysis 15 years ago to inform the public about growing inequality in labor wages, AFL-CIO President Richard Trumka said in a press conference about this year's report.

As CEO pay increased, Trumka said more than 12 million workers are without a job, and "those with a job had a 2.8-percent raise, barely keeping up with inflation," he said.

The updated data is searchable by industry and state, and includes a list of the 100 highest-paid CEOs.

The report shows the growing gap between pay of workers and CEOs, allowing visitors to the Executive Paywatch site to compare their own pay to that of various CEOs and the average worker, which was $34,053 in 2011, according to the AFL-CIO.

For the first time, the website details how mutual fund companies have voted as shareholders on executive compensation packages. The report looked at the 40 largest mutual fund families to see how they influence executive compensation, encouraging transparency on behalf of workers who hold fund investments. Trumka explained that investors can see how their mutual funds voted, and can voice their concerns about CEO pay.

"Mutual funds wield enormous clout on CEO pay issues, thanks to the new CEO 'say-on-pay' requirement [in which] shareholders can cast a vote on CEO pay," Trumka said.

Mutual fund company Harbor Funds was labeled as the biggest "pay enabler" by the AFL-CIO for voting against less than 1 percent of executive compensation packages. Mutual funds from Federated Investors allowed that investment company to be crowned the biggest "pay constrainer" for voting against 73.6 percent of pay packages.

FirstMerit Corp. became the fourth company this year on Wednesday to have a failed vote from shareholders about executive compensation. Citigroup had its failed vote on Tuesday after Actuant Corp., an industrial manufacturer and distributor, and International Game Technology, a gaming machines company.

Most companies with publicly traded stock held "say-on-pay" votes in 2011, according to the Dodd-Frank financial regulatory reform law. The U.S. Securities and Exchange Commission exempted smaller companies with less than $75 million in publicly traded stock from holding these votes until 2013. Only 41 out of the 3,000 companies in the Russell 3000 Index had failed "say-on-pay" votes last year, according to Ted Allen, spokesman for ISS Proxy Advisory Services.

The following is the AFL-CIO's list of top 10 mutual fund family "pay enablers" and the percentage of pay packages they voted against.

  1. 0.59 percent -- Harbor Funds
  2. 1.34 percent -- Goldman Sachs Asset Management
  3. 1.37 percent -- The Vanguard group
  4. 2.87 percent -- Lord Abbett and Co.
  5. 3.37 percent -- BlackRock
  6. 3.69 percent -- TIAA-Cref
  7. 4.13 percent -- ING Funds
  8. 5.67 percent -- Putnam Investments
  9. 5.97 percent -- T. Rowe Price
  10. 7.18 percent -- Nationwide Mutual Funds

Copyright 2012 ABC News Radio

Friday
Mar302012

Do You Know What Your Company’s CEO Looks Like?

Photodisc/Thinkstock(NEW YORK) -- In what is probably good news for the producers of the CBS reality series Undercover Boss, which features CEOs donning disguises to work alongside lower-level employees, a new survey reveals many workers have never met their top boss, and a large number don’t even know what their chief executive looks like.

A survey commissioned by CareerBuilder.com shows 40 percent of American workers have never met their company’s head honcho, and 20 percent don’t know what their top boss looks like.

A majority of workers in IT, financial services and retail say they have not met their company’s chief executive.

Workers in the Midwest and South are most likely to not know what their CEO looks like.

The survey also finds that more than two-thirds of American workers don’t know how much their company generates in revenue each year.

The CareerBuilder.com survey of 7,780 workers was conducted by Harris Interactive.

Copyright 2012 ABC News Radio

Thursday
Mar222012

Sears Chief, Other CEOs Riding High Despite Layoffs

Sandy Huffaker/Bloomberg News(NEW YORK) -- It's good to be the king -- or in this case, the CEO of Sears.  At the same time the troubled retailer is shutting stores and laying off "associates," it is paying $800,000 a year to waft Chief Executive Louis J. D'Ambrosio between Philadelphia, where he lives, and Chicago, where he works, by private jet.

The exact amount of these rides, as reported in Sears Holdings' most recent SEC filing, is $793,224.

While using a private jet for one's regular commute might seem excessive, it's just one perquisite among many that public companies are continuing to pay top dogs during tough economic times.

Sears's SEC filing shows it posted its largest quarterly loss in nine years, $3.1 billion.  In addition to stores already closed, it shut another 62, including 43 Hometown Stores, 10 hardware stores and all of its nine Great Indoors stores.  Sears estimates the layoffs at between 40 and 80 associates per store.

Corporate spokesman Chris Brathwaite responded, saying, "If you add the cost of his [Mr. D'Ambrosio's] commuting and related expenses to his salary and bonus, you will see that his compensation package is not out of line with his peers at other major companies (Fortune 100 CEOs or other retail CEOS).  Also that figure takes into account temporary living expenses (housing) and ground transportation."

According to a ranking by Crain's Chicago Business: The Fortunate 100, D'Ambrosio's commuting bill is not the biggest perk among those enjoyed by 100 local CEOs.

As for total compensation, the Crain's list puts Miles D. White, chairman of Abbott Laboratories, at number one, with $25.5 million.  D'Ambrosio's total compensation is just under $10 million.

Corporate jets are just the top of the perk-berg, according to an analysis of recent corporate filings by Footnoted.com, part of Morningstar.

Former CEO of Massey Energy Don Blankenship, who departed the company in 2010, following an explosion in a Massey mine that killed 29, got $39 million in accumulated retirement benefits, plus $14.4 million in severance and perks.  These included five years' use of an office with a secretary, free use of a house and land that formerly were Massey property, and reimbursement of taxes on the free house and land ($257,111).

Martha Stewart, chief content provider for troubled Martha Stewart Living Omnimedia, received $1.95 million just for letting her own company film her television show at one of her own properties.

Jet use, though, remains a favorite perk, even at Expedia, which you'd think would have an inside line on affordable airfares.  Expedia CEO Barry Diller racked up $605,786 worth of private jet travel in 2010, plus another $644, 530 over at IAC/InterActiveCorp, which he also runs.

Copyright 2012 ABC News Radio

Tuesday
Mar132012

SEC Pressured to Implement CEO to Worker Pay Disclosure

Andrew Harrer/Bloomberg via Getty Images(NEW YORK) -- Danny Stauffer of Milwaukee has been working as a baker at Walmart for almost five years.  His salary is $9.40 an hour, up from a starting wage of $7.11.

Stauffer, 26, said has tried to work full-time at the company, but hasn't had success.

"I actually like the work I do," he said.  "The people I work with, the work itself -- they're all great.  It just doesn't pay the bills."

A provision of the Dodd-Frank financial regulatory reform act proposes that public companies disclose the ratio of the CEO's pay to that of the median salary of company workers.  But two years after Dodd-Frank was passed, the Securities and Exchange Commission (SEC) has not yet implemented the rule or initiated the rule-making process.  Business groups have opposed the rule, while advocates for corporate reform have pressured the regulatory agency to work quickly.

Stauffer, who is a member of the Walmart employees group, OURWalmart, said he would support the Dodd-Frank provision to provide more disclosure to not only shareholders, but to the chief executive officers of companies across the U.S.

"Obviously there's only one of them and a lot of us, but it shows how hard we have to work, how much profit there is to go around, and how little we see," Stauffer said.  "It does not make me happy that the CEO gets to enjoy such a great life off of our labor."

Stauffer said he dropped out of college because he struggled to keep up with his tuition on his income.  He said he has tried to find a second job to support himself while living in a basement and receiving public assistance.

If Stauffer was working full-time for 40 hours a week, he would make about $18,800 a year.

The total compensation for Walmart's CEO Michael Duke was $18.7 million, a drop of 2.7 percent, for the last fiscal year which ended in January 2011, the company reported last April.  His salary increased 2.4 percent to $1.2 million.

Based on just Duke's salary and not his total compensation, the ratio would be 63.8 to one.  But based on Duke's total compensation, the ratio would be 994.7 to one.

In a statement to ABC News, Walmart said: "When you look at pay, benefits and opportunities for advancement, Walmart offers some of the best jobs in the retail industry. Last year, we promoted more than 161,000 associates and roughly three-fourths of our store management teams started out in hourly positions with the company."

"It's important to note that 'OURWalmart' is a union-backed, union-funded organization attempting to further its own political and financial agenda," the statement continued. "They do not represent our associates at any of our locations. We've seen other places where they have pitched associates to media for stories and, largely, the experiences they offer up typically don't reflect the norm within our base of 1.2 million associates in the U.S."

"You are correct in saying $12.14 is the average hourly wage for a full-time associate hourly associate in a Wisconsin Walmart store. The current average wage, nationally, for a full-time associate is $12.40," Walmart said.

The company said it hasn't taken a position on the pay disclosure rule.

Sen. Robert Menendez, D-N.J., the author of the provision Section 953(b), and other members of Congress, signed letters to the SEC chairwoman Mary Schapiro last week urging the agency to move forward with the rule-making process.

"It might embarrass some companies to reveal that they pay their CEO in the range of 400 times what they pay their typical worker, but that's important information for both investors and workers to know," he told ABC News.

Copyright 2012 ABC News Radio

Friday
Oct142011

Top CEOs Among Obama’s 351 Campaign Bundlers

SEBASTIAN DERUNGS/AFP/Getty Images(CHICAGO) -- The Obama campaign Friday voluntarily released the names of its 351 top volunteer fundraisers, or “bundlers,” who collect checks from their networks of deep-pocket friends and deliver them to the Obama Victory Fund for the coming campaign.

Movie mogul Harvey Weinstein, UBS Americas CEO Robert Wolf, and former CNET executive and Obama national finance committee chairman Matthew Barzun are among the newest financiers to enlist in the last quarter, which ended Sept. 30. Each brought in more than $500,000 for the 2012 campaign, records show.

They joined Vogue editor in chief Anna Wintour, DreamWorks CEO Jeffry Katzenberg, former New Jersey Gov. and Goldman Sachs CEO Jon Corzine, and 241 other high-profile financiers who enlisted in April.

Mellody Hobson, president of Ariel Investments and a Good Morning America finance contributor, also became a bundler, wrapping up between $200,000-$500,000 for Obama and Democrats.

Obama bundlers have raised $55.5 million combined for the Victory Fund, which funnels cash to both the Obama campaign and Democratic National Committee. Looked at another way, their contributions are 35 percent of the total $156 million raised by Obama and the DNC so far this year.

Forty-one bundlers have raised more than $500,000 each; 95 collected between $200,000 and $500,000; 105 gathered between $100,000 and $200,000; and 110 netted between $50,000 and $100,000. The campaign had set a goal of signing up 400 bundlers for the cycle, asking each to rake in $350,000.

None of the Republican presidential candidates has disclosed a full list of the names and contributions of top fundraisers, breaking from a precedent set by George W. Bush and continued by Sen. John McCain during the 2008 campaign.

Copyright 2011 ABC News Radio







ABC News Radio