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Mon 3 Mar, 2008 10:44 am
A great interview with the author on C-CPAN'S books. I learned a lot more than I already knew. I ordered the book to learn even more.---BBB
from the huffington post :
Quote:Warren Buffett sat down with Tom Brokaw on "NBC Nightly News" last night to discuss his problems with the US tax structure. He described an informal poll of his office, where the average tax rate was 32.9 percent, compared to his 17.7 percent, citing that as evidence that "the tax system has titled toward the rich in the last 10 years." He also talked about hedge fund managers and the lower tax rates they enjoy. Watch:
From NBC, 10/29
watch video :
WARREN BUFFETT CALLS FOR TAX REFORM
The controversy concerning the "rich" may be simply based on the old vice--Status Envy. It should be remembered that the canard that no one is worth compensation which is a thousand times more than an average worker is based on a measurement of "effort". In reality, compensation is based on "results". When the "Rolling Stones" make ten or twenty Million Dollars after a world tour, they are not being paid for the efforts but rather for the result of drawing thousands of people to their concerts.
Similarly, a CEO who may work 70 hours a week is not being paid for his efforts but his results. If he succeeds in raising his company's stock by ten points in a fiscal year, he is being paid for his "results". Any other peevish analysis is based on ENVY.
barackman wrote :
Quote: a CEO who may work 70 hours a week is not being paid for his efforts but his results. If he succeeds in raising his company's stock by ten points in a fiscal year, he is being paid for his "results". Any other peevish analysis is based on ENVY.
it seems that we need more money losing companies so that their executives can be amply rewarded
the executives of bears sterns and other similar financial wrecks were also paid BIG salaries and hefty bonuses (not for losing money , i hope ? :wink:
nothing wrong with paying executives of successful companies plenty of money , but paying the losers ?
do the coaches of losing sports teams also get rewarded ? usually the coaches get fired , i understand .
hbg
Quote:CEO of money-losing Ford gets $22M
Kevin Krolicki and David Bailey
thestar.com
Apr 04, 2008
DETROIT-Ford Motor Co reported Friday that chief xxecutive Alan Mulally earned more than $22 million (U.S.) in 2007, citing progress in revamping strategy and structure at the struggling No. 2 U.S. automaker.
Ford, which lost $2.7 billion in 2007, noted Mulally steered through a new four-year contract with the United Auto Workers (UAW) that will allow it to hire new workers at lower wages.
In a statement issued with its annual report, Ford listed Mulally's 2007 compensation as $21.7 million based on the current accounting standard that includes stock and option grants that vested during the year.
Under a calculation that excludes the value of stock-based compensation that was granted rather than the amount that vested, Mulally's pay for 2007 was $22.75 million.
from REUTERS NWSSERVICE :
Quote:US AFL-CIO wants shareholder say on executive pay
Mon Apr 14, 2008 6:48pm EDT
WASHINGTON, April 14 (Reuters) - Lavish compensation for some top U.S. executives rewards short-sighted risk-taking, says the largest U.S. labor federation which called on Monday for legislation to give shareholders more say on executive pay.
"CEO pay packages are often linked to performance measures such as revenue growth or return on equity that don't take into account the risk taken on by the company," AFL-CIO Secretary-Treasurer Richard Trumka said in a statement.
For example, Bear Stearns Cos Inc (BSC.N: Quote, Profile, Research) compensation committee determined the size of the 2006 executive bonus pool based on the investment bank's after tax return on equity, the union said on its "Executive PayWatch" online database of CEO pay packages.
In 2006, at the height of the real estate bubble, Bear CEO James Cayne received a $17 million bonus, $14.8 million in restricted stock, $1.7 million in stock options and over $6.1 million in other compensation, AFL-CIO's website said.
Bear Stearns has since been forced to seek emergency funding and agreed last month to be taken over by JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) in an all-stock transaction then valued at $10 a share, 93 percent less than its 52-week high of $159.34.
A Bear Stearns representative could not be reached for comment.
The AFL-CIO said Wachovia Corp's (WB.N: Quote, Profile, Research) executive compensation plan rewards its top executive for revenue growth that results from mergers and acquisitions with no regard to risky or poorly conceived transactions.
Wachovia paid $24.2 billion for mortgage lender Golden West Financial near the height of the U.S. housing boom in 2006.
On Monday, Wachovia announced a quarterly loss after boosting its reserves for losses and writing off $1.56 billion in debt, mostly tied to the U.S. housing slump and strained credit markets.
The AFL-CIO said despite the bank's financial woes, Wachovia Chief Executive Officer Ken Thompson had not suffered as much financially as the company's shareholders.
Although Thompson did not get a $5 million cash bonus in 2007 that he got in 2006, Wachovia granted him stock options and restricted stock with a combined grant date fair value of $14.3 million, a $2.5 million increase over the $11.8 million in equity awards he received in 2006, the labor group said.
But Wachovia spokeswoman Christy Phillips-Brown said the bank's board and the compensation committee were firmly committed to paying for performance.
She said Thompson did not receive an increase in his base salary in 2007, no cash bonus, and although the board awarded stock options, "if you look at the way those options are structured, executives aren't rewarded until shareholders are rewarded."
The AFL-CIO is calling on Congress to pass legislation that would give investors more influence on the pay packages of executives. The bill has been passed by the House of Representatives but is stuck in the Senate.
In addition to the "say-on-pay" bill, the union is pushing for a catch-all shareholder bill of rights that would include giving shareholders a way to influence the composition of the corporate board.
source :
REUTERS NEWSSERVICE
I am very much afraid that Mr> Hamburger does not understand how CEO's and the Boards who hire them work.
If Leroy Washington, star halfback of a famous pro football team, has an agent( they all do), he goes into negotiations with the team before the season begins. In his contract( almost standard for all STARS), there is a clause which provides Leroy with full pay for the season and, in some instances, even the succeeding season if he is injured so that he cannot perform on the gridiron. Similar contracts are rife in all major sports in the USA.
A Board of Directors hires a CEO. Usually, those CEO's have been successful in previous years. Most sought after CEO's( similar to sports stars) could indeed take on safer posts but many strive for the huge challenges( along with enormous problmes). Of course, just as the sports star hedges his bets, the CEO does also--It's called the Golden Parachute.
Those who decry this kind of arrangement are either completely ignorant of the operations involved in big business or else are consumed by status envy.
The first problem can be solved by reading almost any work by Drucker. The second may be helped by reference to a very witty book by Joseph Epstein entitled--"Snobbery"
when i was in the workforce we were paid a performance bonus AFTER the company had had a succeessful year .
not even the president was paid a bonus in advance of a successful year (this was in the life insurance business btw. -one president who wasn't "up-to-scratch" was allowed "to spend more time with his family" - a/t the official announcement
) .
hbg
May I respectfully suggest that you read up on CEO's and how they operate in American Society. Perhaps, some day, the system may be changed. I understand that there were no US style CEO's in the Soviet Union.
I own some stock. Not a great deal but it helps me navigate in this expensive world. I own five hundred shares of IBM. You may, sir, have noted that IBM stock has gone up over 4 dollars per share this past week.
I hope that the Board of Directors give the CEO at IBM a HUGE bonus. I have no concern that he will become too rich. All I wish is that he remains a conservator of my small investments.
barakman
barakman, I'm afraid you are blinded by your corporate bias. I know exactly how corporations operate in a manner that has led to the current and past financial disasters. People who serve on several corporate boards taking care of each other: You give me what I want from this corporation and I will take care of you at your corporation. I will turn a blind eye to your corruption as long as my share dividends are paying off big time. All they care about is high share profits.
It's an old and corrupt story by people who don't give a damn about people, including their share holders, and the common good.
BBB
What excuse will barackman have for this greed?
1 Man, 1 Year: $3.7 Billion Payout
Hedge Fund Manager Won Big by Betting Mortgages Would Fail
By David Cho
Washington Post Staff Writer
Thursday, April 17, 2008; D01
The subprime mortgage mess that caused massive losses for homeowners and banks was a little kinder to hedge fund manager John Paulson. Betting subprime mortgage securities would sour, Paulson personally earned $3.7 billion last year.
Yes, you read that correctly. That's billion with a "b."
He wasn't the only one with Titanic-size profits. Two other fund managers, George Soros and James Simons, who are notoriously secretive about their investments, earned $2.9 billion and $2.8 billion, respectively, according to Alpha Magazine's annual list of top hedge fund earners.
The numbers left jaws agape across Wall Street and Washington. With his windfall from last year alone, Paulson could have bought troubled Wall Street giant Bear Stearns three times over. Or he could have matched the price Delta agreed this week to pay to merge with Northwest Airlines and still have $600 million left over.
A few years ago, individual income reaching into the billions of dollars was unfathomable. In 2002, the first year the magazine tracked hedge fund compensation, the top 25 managers earned $2.8 billion combined.
Paulson's feat was even more astonishing because he started 2007 managing $6 billion, not a massive pool of money by hedge fund standards. Over the course of the year, one of his funds earned a whopping 590 percent return, and another soared 353 percent, according to Alpha. By the end of December, his funds' assets were worth $28 billion.
He amassed his winnings by "shorting" securities linked to subprime mortgages. In a short sale, the investor borrows securities -- in this case, subprime mortgages that were widely held by banks, brokerages and other investors -- and sells them to another buyer. Later, the investor must buy those securities back and return them to the original lender. As the subprime market collapsed, the value of the securities fell, and Paulson was able to pocket the difference. The lenders were stuck with the losses.
Several hedge fund managers, including Philip Falcone, who has been challenging the board of the New York Times Co., also profited from the mortgage crisis by betting that subprime debt securities would plunge in price. Falcone earned $1.7 billion last year. Others made fortunes by betting that the prices of commodities such as oil, sugar and corn would rise.
Hedge funds are pools of private money, largely generated from wealthy individuals, pension funds and endowments, used for a wide range of investments. Usually 80 percent of any gains are given to such investors, while fund managers take 20 percent, plus an annual fee for their services. Alpha's list tracks the income that managers receive after paying their staff members and other expenses.
Some Wall Street analysts who follow the industry said the gigantic compensation figures may prompt Congress to consider raising taxes on the business. Last year, several lawmakers introduced bills aimed at raising the tax rate, usually 15 percent, that fund managers pay on their gains. None of these efforts became law.
"Washington is clearly aware of the numbers and has been following the billions of dollars that are being generated," said Michael Peltz, editor of Alpha.
Daniel Strachman, a former hedge fund consultant and author of several books including "The Fundamentals of Hedge Fund Management," was skeptical of raising taxes on hedge fund managers, saying they should be rewarded for taking huge risks. Most managers have their own money in their funds and suffer massive losses when their investments go bad.
"It's clear somebody has to win and somebody has to lose," he said. "It's not pretty at all because people say, 'Oh my God. Look how much money these guys are making while people are losing their homes and are complaining about the cost of eggs and sugar.' But so what? We don't live in a society that is pretty all the time. That's why it's capitalism."
it sems that the ENRON story has already been forgotten - perhaps some a2k members are too young to remember
hbg
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