Posts Tagged
‘compensation’
by ilene - September 23rd, 2010 2:50 am
Courtesy of Leo Kolivakis at Zero Hedge
Cathy Bussewitz of the Huffington Post reports, CalPERS Bumped Pay as Fund Dived (HT: Peter):
As its investment portfolio was losing nearly a quarter of its value, the country’s largest public pension fund doled out six-figure bonuses and substantial raises to its top employees, an analysis by The Associated Press has found.
Board member Tony Olivera said the California Public Employees’ Retirement System tried to reduce the bonuses but was under contractual obligations to pay them.
CalPERS’ plunging value came as stock values tumbled around the world, the state’s economy suffered its worst decline in decades and basic state services faced severe budget cuts.
Virtually all of CalPERS’ investment managers were awarded bonuses of more than $10,000 each, with several earning bonuses of more than $100,000 during the 2008-09 fiscal year. The cash awards were distributed as the fund lost $59 billion.
Steve Deutsch, director of pensions and endowment at Morningstar Inc., said many public pension plans award performance bonuses, and called CalPERS’ performance during 2008-09 "middle of the road."
"It’s absolutely very widespread, but very low profile in terms of being acknowledged, discussed, or disclosed by the plans," Deutsch said.
The revelations prompted two key Republican lawmakers to call for more oversight of how CalPERS and other state pension funds compensate employees and make investment decisions, while a Democratic lawmaker promised legislation to control salaries and bonuses.
CalPERS spokesman Brad Pacheco said bonuses are based on the fund’s performance over five years, not just the year immediately preceding the bonus, in order to encourage managers to seek long-term investments rather than short-term gains. He said bonuses in the 2008-09 fiscal year were 50 percent lower than in 2006-07 and that the market declines will continue to dampen bonuses in future years.
"Incentives are part of total compensation and critical to the fund’s long-term success as well as recruitment and retention of skilled investment professionals," Pacheco said in an e-mail.
Bonuses also were paid to employees who are not part of the fund’s investment team, including a public affairs officer who received bonuses of nearly $19,000 a year two years in a row and a human resources executive who received bonuses topping $16,000 both years.
The number of CalPERS executives making $200,000 a year or more
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Tags: bonuses, Calpers, Canadian public pension funds, compensation, investment managers, risk
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by ilene - August 29th, 2010 2:24 am
Courtesy of Mish
Now that Schwarzenegger is a certifiable lame duck (dead duck may be a more appropriate term) Schwarzenegger sees fit to take on public unions in a major way. It’s too late now (for him) even as he speaks the truth.
Please consider Public Pensions and Our Fiscal Future by Arnold Schwarzenegger.
Recently some critics have accused me of bullying state employees. Headlines in California papers this month have been screaming "Gov assails state workers" and "Schwarzenegger threatens state workers."
I’m doing no such thing. State employees are hard-working and valuable contributors to our society. But here’s the plain truth: California simply cannot solve its budgetary problems without addressing government-employee compensation and benefits.
Thanks to huge unfunded pension and retirement health-care promises granted by past governments, and also to deceptive pension-fund accounting that understated liabilities and overstated future investment returns, California is now saddled with $550 billion of retirement debt.
The cost of servicing that debt has grown at a rate of more than 15% annually over the last decade. This year, retirement benefits—more than $6 billion—will exceed what the state is spending on higher education. Next year, retirement costs will rise another 15%. In fact, they are destined to grow so much faster than state revenues that they threaten to suck up the money for every other program in the state budget.
At the same time that government-employee costs have been climbing, the private-sector workers whose taxes pay for them have been hurting. Since 2007, one million private jobs have been lost in California. Median incomes of workers in the state’s private sector have stagnated for more than a decade. To make matters worse, the retirement accounts of those workers in California have declined. The average 401(k) is down nationally nearly 20% since 2007. Meanwhile, the defined benefit retirement plans of government employees—for which private-sector workers are on the hook—have risen in value.
Few Californians in the private sector have $1 million in savings, but that’s effectively the retirement account they guarantee to public employees who opt to retire at age 55 and are entitled to a monthly, inflation-protected check of $3,000 for the rest of their lives.
In 2003, just before I became governor, the state assembly even passed a law permitting government employees to purchase additional taxpayer-guaranteed, high-yielding
…
Tags: Arnold Schwarzenegger, benefits, budgetary problems, California, compensation, debt, Government Employees, Health Care, pension promises, public pensions, Public Unions, state employees
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by ilene - August 3rd, 2010 8:04 am
Courtesy of Jr. Deputy Accountant
Those government jobs just aren’t what they used to be. Furloughs, IOUs and increased scrutiny of the cost of public employees. Now, a growing number of state governments are instituting requirements that new employees work longer before being able to retire with full pensions.
WSJ:
The change comes as foreign governments from France to Morocco have either decided to increase or are contemplating a rise in the age at which private and public workers can receive government pensions.
A federal commission studying long-term U.S. fiscal issues is also entertaining the idea of changing the retirement age as one way to shore up Social Security, said a person familiar with the matter. A report is due to President Obama in December.
Individual states, meanwhile, are moving ahead as they respond to the widening gaps between the obligations made to workers and the money expected to be available to pay them, thanks to investment losses and recessionary budget pressures.
"It’s a very positive change that the age for receiving full benefits is increasing," said Alicia Munnell, director of the Center for Retirement Research at Boston College. "Increasing the retirement age is the single most important thing [states] can do" to tame future pension costs, because it reduces the number of years the state is paying a benefit, she said.
Though lengthening lifespans have been expected to pressure pension systems, the looming fiscal predicament has emboldened lawmakers to demand more years from employees. Also, as many American states cut services, scrutiny has fallen on the compensation of public workers.
In Illinois, where state lawmakers voted in March to increase the retirement age for most new hires to 67 from 60, "it had everything to do with the financial straits the state is in," said Tim Blair, the executive secretary of the State Employees’ Retirement System of Illinois. "The scales have tipped."
Chalk it up as another one of those things that most people never gave much thought to when things were good. Most of all, state workers probably never thought the sweet deal would turn sour. Of course, as always, it could be worse. For some government workers, retirement comes extra early.
Tags: benefits, compensation, employees, pension systems, public workers, retirement, state workers
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by ilene - April 30th, 2010 2:59 pm
Courtesy of JESSE’S CAFÉ AMÉRICAIN
"Truth is not only violated by falsehood; it may be equally outraged by silence."
Henri-Frederic Amiel
Yet another whistle blower who had been completely ignored by the SEC just stepped forward.
A Bloomberg analyst reported around noon NY time that they had verified Mr. Budde’s story, and that indeed Dick Fuld easily had received cash in excess of $500 million in compensation for the period in question, higher than even Henry Waxman had asserted in his charts during Dick Fuld’s testimony.
Mr. Budde, a former counsel who was frustrated and plain fed up with the culture of personal greed and deceit among the Lehman executives stepped forward again to tell his story after being completely ignored by the SEC and the Lehman Board of Directors.
Now, I have some sympathy for Dick Fuld. I mean, when you are making the big bucks owed to a master of the universe, and you eat widows and orphans for breakfast, what does it really matter if it is $300 million, or $550 million, or even the one billion that some estimate was the true total compensation? What is a few hundred millions when you wipe your behind with Cohiba cigars, and gargle with Cristal Brut 1990?(Oh yeah, that’s class, real class. I must finally be somebody, and not just some schmuck from the Bronx. I’ll show them, show them all.)
I know I have trouble keeping track of what I have exactly in my own wallet at times, especially after paying the kids a couple of quid to walk the dog. And $200 million is hardly a significant sum anymore in the rapidly expanding compensation universe change on Wall Street. There is the locus of Bernanke’s inflation, the FIRE sector, where the liquidity has been channeled, for years.
But what interests me most is why did Dick Fuld perjure himself over something so obviously verifiable, and largely irrelevant? Doesn’t he file tax returns? Did he mess up using Turbo Tax like other board members of the NY Fed are said to have done? Or was he just a little bit ashamed of taking huge sums from a company that he ran into the ground in a Ponzi scheme? On the other hand Goldman execs…
Tags: compensation, Congress, Dick Fuld, FIRE Sector, Lehman Brothers, Mr. Budde, perjury, SEC, Wall Street
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by ilene - January 28th, 2010 6:54 pm
Courtesy of Joshua M Brown, The Reformed Broker
Rite-Aid ($RAD) is probably one of the worst stocks in the history of stocks. Essentially, its the turnaround story that never turns around. This morning, Michelle Leder of footnoted.org dug up evidence that could almost be looked at as outright stealing. More on that later.
The guys running Rite-Aid in the 90′s were corrupt (when they were busted, the company barely avoided bankruptcy). The team that was brought in to turn it around is merely incompetent. Walgreens ($WAG) and CVS ($CVS) basically take turns beating Rite-Aid with a child’s mini-bat like you would get at a baseball game.
I don’t need to get into specific examples of every failure and stupid decision this management team has made…I can just do this:
A look at the chart above gives you a glimpse of what a decade of frustration, missed opportunity and shareholder abuse looks like. So what is performance like this worth according to Rite-Aid’s vigilant board of directors? Now that CEO Mary Sammons, who has run this plane crash for the last decade, is stepping down, we get a glimpse based on the latest 8-K filing…
in the 8-K that the company filed yesterday, were some of the financial details of the transition. Sammons, who will remain Chairman of Rite Aid through June 2012, will continue to collect the CEO salary of $1 million a year through next June plus any bonus/incentives. After that, her salary will drop to $350K, unless she winds up leaving before the end of the current fiscal year. In that case, she’ll collect three times her salary plus target bonus.
At the same time, Standley, who was hired at $900K a year, will see his salary go up to $1 million and he’ll be eligible for a 200% bonus. So basically, Rite Aid will be paying for two CEOs for the next year, even though starting in June, Standley will be the only one with the actual title.
Here’s what will happen as a result of this blatant example of people being rewarded for destruction of capital. Absolutely nothing. Most of the shares are held by do-nothing mutual fund managers who rarely, if ever, open up the envelope upon receiving proxy materials let alone actually cast a…
Tags: Carl Icahn, compensation, Rite-Aid
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by Chart School - January 20th, 2010 2:39 pm
Outrageous results displayed in colorful charts, by Jake at Econompic Data.
I have no problem with people who work hard, work smart, innovate and produce great things, making lots of money, but this isn’t that (see e.g. Morgan Paying Out 62% of Revenues in Bonuses and Pay While Average Families Face ‘Years of Pain’ and Joseph Stiglitz on ‘Ersatz Capitalism’ and Moral Bankruptcy). - Ilene
At this stage, most of us are familiar with the idea that compensation within the financial services industry has grown much faster than compensation outside the system. As can be seen below, this trend has largely gone uninterrupted throughout the crisis.
And while this level of compensation remains exorbitantly high across all of financial services, the lack of competition among the largest banks has caused compensation within the industry to become even more concentrated.
Before specifically detailing those firms, lets go to Wall Street Pit:
The Journal reported that based on its analysis — which includes banking giants J.P. Morgan, Bank of America and Citigroup, securities firms such as Goldman Sachs and Morgan Stanley, and exchange operators CME Group Inc. and NYSE Euronext Inc. — executives, traders and money managers at 38 top financial firms can expect to earn nearly 18% more than they did last year, and slightly more than they did in the record year of 2007.
While 18% seems like a massive jump (it is) from a level that was already too high (in my opinion), it ignores the broader issue of what has resulted from a government (i.e. taxpayer) guarantee on the downside risks of those banks deemed too big to fail… a MASSIVE increase in compensation (the joys of a "too big to fail" title for the select few).
The chart below details the compensation for all of those 38 firms, grouped here by JP Morgan, Morgan Stanley, Goldman Sachs, Bank of America, Citigroup, and "Other" (all others). BUT, slice off Citi and "other" and we can see that the remaining four make up more than 100% of that 18% jump (let it be known that the data below is not an apples to apples comparison – as Felix points out these charts don’t account for the fact that JP Morgan and Bank of America have swallowed
…
Tags: bankers, bonuses, compensation, financial sector
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by ilene - September 26th, 2009 10:36 am
Courtesy of Lawrence Delevingne at Clusterstock
Relax TARP execs, the mobs aren’t coming for you.
Reuters: President Barack Obama’s "pay czar" said on Friday he will not cap compensation for the top employees at bailed-out companies, and will not reveal names, when he releases the first wave of decisions within a few weeks.
"We don’t want specific names next to dollars," said Kenneth Feinberg, who was appointed in June to decide compensation packages for the highest-paid personnel at companies that received U.S. government bailouts.
So Kenneth Feinberg has probably taken the first step towards making his office irrelevent, though theoretically he still has the power to intervene when a pay package is somehow excessive or likely to induce risk. In reality, he probably won’t do much of anything.
Folks, the pay issue is fading, even if the G20 promises a "coordinated effort ."
At least until Michael Moore’s "Capitalism" drops in October…
See Also:
Citi Is Pissed Off About The Pay Czar’s Comp Restrictions (C)
Obama’s Pay Czar Ready To Crack Heads On Wall Street
Pandit Says He’s Embarrassed By Andrew Hall’s $100 Million Bonus (C)
Tags: AIG, Bailout, Bonus, bonuses, capitalism, compensation, Financial Crisis, Michael Moore, Pay Czar, Payment Plan, regulation, TARP, Wall Street
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by ilene - August 5th, 2009 4:33 pm
In defense of "unsophisticated hicks,"
Courtesy of Jesse’s Café Américain
"Flagrant evils cure themselves by being flagrant; and we are sanguine that the time is come when so great an evil…cannot stand its ground against good feeling and common sense…" John Henry Newman
The reporter on Bloomberg television just mentioned as a snide, smirking editorial aside, that Sheila Bair feels that a million dollars is a lot of pay for one year, and that ten million is excessive for a deposit taking institution. He noted that she is obviously a Washingtonian, and not a New Yorker.
That’s right. A million dollars annual pay is ‘nothing.’ Even ten million is not much pay for an average Wall Street banker that is taking billions in public funds and gaming the financial system.
The obvious implication is that Ms. Bair is some hick regulator who is not as sophisticated as, let’s say, Larry Summers, Tim Geithner, or Ben Bernanake when it comes to rewarding their Wall Street cronies for allowing the economy to continue unimpaired.
Perhaps he was attempting to sneak a bit of irony into the propaganda that passes for news in the States these days, but it was not obvious.
But he might be right. When the monetary inflation from all this financial corruption hits, a million dollars per year might yet be a ‘livable wage.’
And so goes the "downward spiral of dumbness." Keep these metrics in mind when you look at your next credit card bill, mortgage payment, and paycheck, rubes, and send your tribute to Caesar.
By Alison Vekshin and Erik Schatzker
Aug. 5 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said regulators should set pay standards for U.S. banks to ensure incentives encourage long-term performance without setting specific dollar limits.
Banking agencies should “become more active” in using existing authority to set compensation standards that are “principles-based,” Bair said today in an interview with Bloomberg Television in Washington.
“We do need to revamp the system to make sure that the incentives are long-term,” Bair said. “I do wish some of these firms would exercise better restraint and common sense on what they’re paying their folks.”
Bair echoed concerns of House Financial Services Committee Chairman Barney Frank and other lawmakers…
Tags: bonuses, compensation, pay, Sheila Bair
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by ilene - July 14th, 2009 10:56 am
Hope no one misses this summary of Goldman Sach’s blow out earnings, by Tyler at Zero Hedge (below). – Ilene
As if anyone expected less than one of the most ridiculous beats ever.
Some amusing Q1 over Q2 comparisons:
- Equity Underwriting: $48 million vs $736 million
- Equities Trading (not commissions): $1,027 vs $2,157 million
- Total Trading and Principal Investments: $5,706 vs $9.322 million
- ICBC: ($151) vs $948 million
Notable: VaR hits what looks like another record high at $245 million, higher by $5 million from the last March record. Also, the fudge "diversification factor" is almost at $100 million: excluding it the company has a VaR of almost $345 million. One can barely hold their breath to see the number of $100 MM+ trading days in the quarter.
Also, for those curious what comp will be like at Goldman, here is some color:
Compensation and benefits expenses (including salaries, estimated year-end discretionary compensation, amortization of equity awards and other items such as payroll taxes, severance costs and benefits) were $6.65 billion, which was higher than the second quarter of 2008, primarily due to higher net revenues. The ratio of compensation and benefits to net revenues was 49% for the first half of 2009. Total staff decreased 1% during the quarter.
FYI: $6.65 billion for the quarter, $4.712 billion for Q1, annualized this is $22.7 billion, divided by 29,400 employees, means an average comp of $772,925/employee. Enjoy, dear taxpayer.
Tags: bonuses, compensation, Goldman Sachs, profits
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site