CEOs use private jets more in 2008 than previously

Despite the looming recession, large corporate CEOs flew in private jets more in 2008 than in any of the previous five years. This article gives us a list of the top ten offenders. Many of these companies have since declared bankruptcy or accepted TARP fund assistance from the US government.

 

It is no wonder  average americans are indignant about the sacrifices they have had to make during this economic reversal. More money was spent in one year transporting these CEOs than most folks make in five years. The apparent blindness on the part of these corporations is positively stunning.

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Obama's say on pay

The Obama administration is to work with the US Securities and Exchange Commission to get new rules requiring shareholder say on executive pay.

 

The administration also suggested principles on which the pay of executives in public companies should be based.

 

Treasury Secretary Geithner acknowledged that while the financial crisis stemmed from multiple causes, executive pay was a contributing factor.

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Shell executive pay: because we're worth it

Following an investor revolt over executive pay at the oil company's annual meeting, board members are setting out on a charm offensive.

 

A "three strand" roadshow of directors and top executives is planned to rebuild relationships with major investors after shareholders voted 60% against the board's remuneration report. The revolt concerned the payment of £3.6 million in share awards to five top executives even though the group failed to meet the targets that would trigger such payments.

 

The Guardian report quotes fund managers complaining that companies have not woken up to the realities of the aftermath of the crisis. Fund managers are likely to remain activist for the foreseeable future having come in for criticism for being asleep on the job (as owners) while the crisis was taking shape.

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Shell shareholders demand board gives back bonuses

In the weekend drama, investors also demanded the resignation of the chairman of the company's remuneration committee.

 

The investors' anger arises from the fact that bonuses were paid even though performance targets were not reached.

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Obama administration looking at bank pay curbs

Serious consideration is being given to ways to curb pay policies that encourage financial stability-threatening behavior by employees.

 

The rules may come through the Federal Reserve or the Securities and Exchange Commission.

 

Separately, House Financial Services Committee Chairman Barney Frank (D., Mass.) is working on his own proposals.

 

The industry lobby group the Financial Services Roundtable is resisting any such move, so earning its name by ensuring we come back full circle into the same mess.

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A 21st Century "blueprint" for the legal profession

Adam Cohen's Wednesday opinion piece in the IHT discusses the challenges--and opportunities for change--faced by the legal profession in the downturn, as more and more high-end firms are laying off lawyers. 

 

Cohen says now might be a good opportunity to reign in bloated compensation at top private firms, which would in turn reduce pressure on younger associates to work obscene hours, reduce the pay gap between public service and private practice, and reduce the onerous legal fees built into many industries' costs.  Furthermore it could help to reduce the high cost and huge resulting debt of a legal education, which forces many graduates away from public service into private practice. 

 

Cohen concludes: "The past few decades of prosperity made a lot of lawyers wealthy, but they were not always good for the profession. Law school deans, bar association leaders and firm managers should follow Rahm Emanuel’s advice about never allowing a crisis to go to waste and start planning for what comes next."

 

 

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LTEC: and you thought AIG bonuses were bad...

Oh, my.  Apparently AIG's bonuses were a mere speck in the corporate eye compared with the two-by-four that was the Merrill Lynch bonus extravaganza:

 

Huffington Post: "MERRILL LYNCH BONUSES 22 TIMES THE SIZE OF AIG"

 

"Dennis Kucinich sent out a round of letters to top Treasury officials Monday morning, questioning how much they knew about bonuses paid to Merrill Lynch executives that totaled $3.62 billion, nearly 22 times the total bonuses paid to AIG executives. The payouts made up more that 36 percent of the TARP funds the financial institution received from the Federal government.

Kucinich points out that unlike AIG, the bonuses were not locked in by preexisting contracts and were performance bonuses, as opposed to retention bonuses.'"

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Net closes in on rewards for failure

European governments are stepping in to cap bankers' pay as public anger rises in advance of the G20 summit.

 

Four senior executives at French Bank Société Générale (SocGen) paid back their share options under government pressure. The Netherlands finance ministry has followed with pressure of its own on banking major ING, citing the need for a change of culture.

 

Meanwhile in Germany, according to a Bloomberg report, Deutsche Bank CEO Josef Ackermann took a 90 percent pay cut last year following the worst set of financial results in 50 years.

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Reich: you know what's really scandalous?

In the HuffPo, Robert Reich lays out "the real scandal of AIG:" "even at this late date, even in a new administration dedicated to doing it all differently, Americans still have so little say over what is happening with our money."

As the "scandal" of the AIG bonus plan continues to unfold, AIG claims that it is legally obliged to pay the enormous bonuses, and anyway if they weren't forced to legally they'd still have to in order to "retain talent."

Reich: "AIG's arguments are absurd on their face. Had AIG gone into chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid; indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if it laughing weren't already so expensive.

Apart from AIG's sophistry is a much larger point. This sordid story of government helplessness in the face of massive taxpayer commitments illustrates better than anything to date why the government should take over any institution that's "too big to fail" and which has cost taxpayers dearly. Such institutions are no longer within the capitalist system because they are no longer accountable to the market. So to whom should they be accountable? When taxpayers have put up, and essentially own, a large portion of their assets, AIG and other behemoths should be accountable to taxpayers. When our very own Secretary of the Treasury cannot make stick his decision that AIG's bonuses should not be paid, only one conclusion can be drawn: AIG is accountable to no one. Our democracy is seriously broken."

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SA: Draft King 3 corporate governance code released

Another groundbreaking revision of the South African corporate governance code has been produced by the committee run by Mervyn King.

The second King report attracted international attention for its requirement that companies produce sustainability reports in line with recognised benchmarks such as the Global Reporting Initiative.

The new report takes the corporate responsibility agenda even further. It is no longer good enough simply to report on sustainability performance. Now sustainability is pushed as a principle so central to business operation that the report refers throughout to "integrated sustainability performance and reporting" i.e. the integration of sustainability into decision making and the annual report to shareholders.

The draft King 3 places South Africa back in the forefront of 21st century business thinking.

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