The Back Alley Archives

However will we keep those special, special people who are asking for government bailouts?

Country club dues, gym memberships and personal assistants. Home security systems, chauffeur service and parking. And, of course, all those private jets to ensure the comfort and safety of the boss.

Top executives at banks enjoy all sorts of shiny perquisites. Yet despite being propped up by taxpayer bailout money, many banks are not yet ready to give them up.

Like bonuses, these extravagances are likely to come under greater scrutiny. Indeed, in announcing a salary cap on Wednesday for some institutions receiving government financial aid, President Obama also called for greater corporate review of “excessive or luxury items” for executives.

(...)

The perks are widespread. Across the industry, banks and their boards have been spending handsomely on supplemental benefits to augment salaries and burnish their corporate image, according to an analysis prepared for The New York Times by the executive compensation firm Equilar. Pay experts, by contrast, say many technology and pharmaceutical companies have scaled back on perks over the last few years.

“The party may be over but there is still a lot of cleaning up to do,” said Paul Hodgson, a senior research analyst at the Corporate Library, a governance and shareholder advisory group. “Particularly in this climate, change is very seriously needed.”

Before the financial crisis drove banks to seek taxpayer aid, lofty earnings allowed many to justify lavish expenses for executives. Boards often found business reasons to pay for extras like club dues and chauffeur-driven cars, which faced less scrutiny than salary and bonus figures.

The Equilar analysis covers 2008 proxy statements, which reflect the 2007 fiscal year, for banks now relying on the Troubled Asset Relief Program. Of 200 of the largest publicly traded banks that have received taxpayer money, about 61 percent, or 121 banks, paid an average of $10,835 in country club dues for their chief executive in 2007.

Nearly three-quarters, or 147 banks, spent an average of $20,668 in car and parking expenses. Corporate jets, now one of the biggest targets of Washington’s ire, were financed by 36 banks, or 18 percent of those now receiving taxpayer funds. More often than not, the banks let their leaders use the corporate jet for personal travel, at an average cost of $102,216. And regardless of size, many banks said they were “required” for the safety of the chief executive.

http://www.nytimes.com/2009/02/05/business/05perks.html?_r=1&dlbk

My heart just goes out to those special talents who are feeling the squeeze of only being about to make half a million a year if they take the government cheese. Fuck these assholes.

I love the fact that these large organizations pay someone six figured and then gives them a car allowance on top of it. I've never understood that at all. They say they want to make sure their top execs drive a nice car. That is BS, they are fucking making six figures. They can go buy their own car. If not, let the company buy one car to take clients out in, or GHASP, rent one.

Will we see a return to compensation packages that feature more stock options?

http://www.coyoteblog.com/coyote_blog/2009/02/prediction-resurgence-of-options-in-executive-compensation.html

I don’t get too worked up about this one way or another. Once the government is a part owner of these companies, it is perfectly reasonable to expect them to dabble with things like compensation policy, and no surprise that focus of such dabbling would fall on whatever particular hobby horses the party in power seem to obsess about. Which is reason #4097 why government shouldn’t be bailing these guys out.

In terms of executive compensation, options have fallen a bit out of favor as executives have sought more of a guaranteed payday, and changing accounting rules and more scrutiny have made that harder to do with options. The concern is, of course, stock prices can fall or even go to zero and that part of the compensation package would be worth zero. Executives are generally happy to take risks but only with other people’s money (people who take risks with their own money are called entrepreneurs).

But in this case, most of these companies’ stock is at what is likely to be the bottom, and each has the commitment of the government now not to let them go bankrupt, so the danger of stock values going to zero is, well, about zero. Would you take warrants in a company priced at the market trough and with the US government guaranteeing the floor beneath you? I can’t think of a better time to get equity or option-based compensation, and so expect to see a lot of it in order to circumvent the $500,000 limit. And a lot of big paydays 5-7 years hence.

I love the fact that these large organizations pay someone six figured and then gives them a car allowance on top of it. I've never understood that at all. They say they want to make sure their top execs drive a nice car. That is BS, they are fucking making six figures. They can go buy their own car. If not, let the company buy one car to take clients out in, or GHASP, rent one.

Urban Meyer gets a pretty good salary, plus a car allowance, plus a housing allowance, etc. I imagine other top college coaches get similar packages.

In these rough economic times, when so many of our public universities get federal assistance, shouldn't the government do something to limit these excessive benefits?

Why, it's outrageous!


(yes, I know that UF pays Meyer a base salary and all the other stuff comes out of the UAA - but I don't think that's true for many other schools)

I still don't agree with it even for Urban. It's one of those stupid things that one company offered a top exec a car allowance and now they all do it. I think it is ridiculous.

How much money did Urban Meyer lose for his company last year?

How 'bout Tommy Tuberville? What happened to that guy? Is he still asking to keep his job after the results he turned in?

Two words: Phil Fulmer.

Bobby Bowden would be a better example

see josh - that's the difference between you and i



compensation...what is it?

you believe it's a reward (or in your mind, a lack of reward) for what you just accomplished or didn't accomplish.

i believe it's a lure for you to stay for an undefined term longer to either do it again or improve.



in your belief, your performance is absolute and unfortunately (and you know this) there are many, many factors that can affect the outcome of your performance...some you can control and some you know you can't control...you're fucked when you fail and you're 'deserved' of something if you succeed...we all know there's a possible 'you're fucked' in there also if you succeed as companies don't always have the money to reward.

in my belief, your performance is open to interpretation...it can be explained away...performance can be promised for the future...in any case, in my belief, it's ultimately the employers loyalty, trust, and belief in you to overcome and succeed or to continue with what has been delivered....management can say fuck off but then there's a difference of opinion on what your worth is to the company



in other words, these annual meetings one has with their employers when compensation discussions occur:

you are asking for rewards based on past success
- i know i did great...don't have the money to pay me? oh well. you do have the money to pay me? of course you do.
- i know i sucked....don't have the money to pay me? i figured. you do have the money to pay me? can't accept it...i didn't earn it.

i am asking rewards for providing future success
- i know i did great...don't have the money to pay me? i'm bolting. you do have the money to pay me? of course you do and i'll require more or i bolt
- i know i sucked...don't have the money to pay me? i'm bolting. you do have the money to pay me? i can accept it...pass the kool-aid


car allowances, stipends, gas money, private bathrooms, bonuses, private jet, no trade clause, personal hygienist and nutritionist...it's all compensation...you ask for it and you either get it or you don't...if your employer doesn't give it, it's because your employer doesn't believe you can get it from someone else...if your employer DOES give it, it's because he wants you here performing for your CURRENT company and not the competition.

Hey, these guys want the government to become their employer, i.e. they want to take the TARP funds, then we the tax payers can decide what they get from their current company. Because I sure as heck don't believe a lot of these guys can get the compensation they want from the private sector at this point in time.

But hey, they're welcome to try. Best of luck to them.

Question, because no one else is asking it:

Is the salary cap proposed by Obama going to effect companies that have taken TARP money in the past or in the future?

I don't have a problem with it if it's part of the agreement. I DO have a problem with it if the gub'ment comes in after the fact and starts telling them what they can and can't do.

Freedom to contract, and all that.

The salary cap is for any companies asking for TARP monies moving forward and is not going to be applied retroactively. Obama's been pretty clear about that.

I read that it is only tied to companies that take money going forward. Those that have already received it are exempt.

Hell yeah, it gets better by the day...

WASHINGTON -(Dow Jones)- The three government watchdogs overseeing the $700 billion financial rescue package continued to criticize the Treasury Department's implementation of the plan, suggesting a lack of a strategic vision and raising the concern that Treasury is overpaying for its investments in banks.

Representatives from the Government Accountability Office, a congressional oversight panel and a special investigator general said the Treasury continues to face challenges on both general and practical levels. The transparency and accountability surrounding the Troubled Asset Relief Program, or TARP, continue to fall short, leaving taxpayers and policymakers short of information on the program.

"Our money - and our economy - are on the line, and we all have a stake in the outcome," said Harvard Law School professor Elizabeth Warren in her prepared remarks for a Senate Banking Committee hearing.

Warren heads the five-member congressional oversight panel overseeing the TARP, and said that the group on Friday will issue a report suggesting Treasury has significantly overpaid for the assets it has purchased from financial institutions. She said an analysis of 10 of the TARP transactions, when extrapolated for all of the purchases made in 2008, suggests Treasury paid $254 billion for assets worth approximately $176 billion, a shortfall of $78 billion.

http://money.cnn.com/news/newsfeeds/articles/djf500/200902051023DOWJONESDJONLINE000447_FORTUNE5.htm

Heckuvajob, Paulson! Your cronies really made out on this one, thanks to you, Hank!

And the more you dig into the dogshit these banks want us to buy, the better it gets!

As the Obama administration prepares its strategy to rescue the nation’s banks by buying or guaranteeing troubled assets on their books, it confronts one central problem: How should they be valued?

Not just billions, but hundreds of billions of taxpayer dollars are at stake.

The Treasury secretary, Timothy F. Geithner, is expected to announce details of the new plan within weeks. Administration and Congressional officials say it will give the government flexibility to buy some bad assets and guarantee others in an effort to have a broad impact but still tailor the aid for different institutions.

But getting this right will not be easy. The wild variations on the value of many bad bank assets can be seen by looking at one mortgage-backed bond recently analyzed by a division of Standard & Poor’s, the credit rating agency.

The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors.

http://www.nytimes.com/2009/02/02/business/economy/02value.html?_r=1

You see, you might look at what the bank is trying to sell you and say, "Hey, that's a pile of dog shit," but what you really need to do is take the bank's word that it's really a pile of pure gold!

So rad, your my buddy. You hire me and you think I can do the job and you want me for it. I was daily BJ's (from a woman, not you) or I'm not taking it. You give it to me. Now, someone else hears about it and wants it too. It's a freaking arms race. Where does it stop?

And the TARP restrictions on compensation will only be on companies that need extraordinary help from the Fed. What that defines is still up in the air but it probably won't affect smaller companies too much. And it defines compensation to top level executives but it doesn't yet define what that means. Theoretically, someone working as a sales rep could be making more than $1,000,000 where the CEO is limited to $500,000 since the sales rep doesn't fall under a top level executive.

Theoretically, someone working as a sales rep could be making more than $1,000,000 where the CEO is limited to $500,000 since the sales rep doesn't fall under a top level executive.

This I have a problem with...basically no one will want to run the ship and take on the responsibility of leadership. If you can make more money being a lower level sales guy. I guess we don't really need leadership?

And the more you dig into the dogshit these banks want us to buy, the better it gets!

You see, you might look at what the bank is trying to sell you and say, "Hey, that's a pile of dog shit," but what you really need to do is take the bank's word that it's really a pile of pure gold!

Top talent, Josh. Top fucking talent. If you only understood compensation this would all make sense. It's simple, really.

Hey, these guys want the government to become their employer, i.e. they want to take the TARP funds, then we the tax payers can decide what they get from their current company. Because I sure as heck don't believe a lot of these guys can get the compensation they want from the private sector at this point in time.

But hey, they're welcome to try. Best of luck to them.

capitulation...that's exactly what we're talking about then.


i'll say this...these guys don't want the gov't to become their employer...no one wants the gov't to take over their company...no one wanted the collapse of the housing market and no one wants all the instability that we're seeing right now. coming to the gov't was the action of last resort. i hope no one really thinks that going to the gov't was the action thought to be taken before any other steps to try and right the ship...there were massive layoffs, massive pay freezes, and massive consolidation WAY before 2008 (despite the understanding of a few that this all hell breaking loose just occurred in the last year or so)...coming to the gov't is a last ditch effort...this is why i oppose the gov't intervention of capping CEO salaries. the action of last resort (or what is supposed to be a company's action of last resort) has now effectively been taken away with the stipulation of 'take my money and work it under my rules'....furthermore, i know this 'capping of pay' is not retroactive but we'll have to see what the order of play is going forward...TARP funds in the past were given to companies that didn't need them last time...will that still be the case? i think not but what happens then if a company applies for TARP funds and gets it? obviously that company will be bent over the barrel to the gov't but now the whole world knows you need money...won't there be a massive panic sell? isn't that the reason why they gave to all banks so as to not signal who really needed and who didn't? curious questions as to how this all shakes out now that BHO has decided to impose himself...the alternatives to company's in dire need are unclear to me right now if they choose to surpass the 'offering' of TARP funds....i do know that company's will come up with creative ways to survive and i'm certain BHO has his bases covered on this...he has to be since he's the one who decided to go down this path.

as far as the public being the ones responsible for deciding who gets compensated, that's just not doable...the taxpayer does not know how to run a company...the CEO is the one who knows how to run the company...you may say though, "well he's not doing a great job of it"...fact of the matter is, no one is doing a great job of running a company right now...stock values are down across the board and with good reason...point is - you NEVER sell in a down market...all this talk about changing how companies conduct their business and how gov't can do better is the very definition of capitulation at it's worse.

and as far as pursuing fair value for ones services, i agree with you in that it's a difficult time to play 'pay or walk'...lots of great talent on the sidelines just waiting for a shot...if you play that game, you better know you're going to succeed i agree...but here's the thing...a company's stock is down 30%...board may have the view that the company from the start of all this was well on the road to losing over 60%...down 30% is a great muphucking job in this abysmal environment...let's keep this stud...just IMAGINE what kind of year the company'll have in an up year...give this guy something that'll show our commitment and assurances that he's our guy....that's how we differ on thoughts of compensation...you give it to keep a guy...not necessarily to reward a guy for what he did yesterday.

The salary cap is for any companies asking for TARP monies moving forward and is not going to be applied retroactively. Obama's been pretty clear about that.

that's right...and going for the help doesn't necessarily help and i touched on it in the previous post.

let's say you're cool with the fact that you will relinquish control of aspects of your company to the gov't...let's say you're cool with that and you need the money to survive...in the first wave of handouts, EVERYONE got it so as not to signal to the market who needed it and who REALLY, REALLY needed it...that's why there was such a rush on insurance companies trying to become holding companies so as to take advantage of the handout...companies were buying smaller banks just to BE a bank so they'd be eligible...fast forward to today and you give a handout to one guy - there'll be a massive selloff of that particular stock because going to the gov't is the absolute last action of resort and then what? you're worse off than you were before you got the funds...your competitors are cutting you off and blacklisting you for fear of insolvency...then what? you're going to have to apply again...then what? is BHO gonna come out with another rule? is BHO gonna come out and say "everyone is mandated to do business with company Z because they need your help" - it's interesting times indeed...we'll soon see how this all shakes out.

Hell yeah, it gets better by the day...

WASHINGTON -(Dow Jones)- The three government watchdogs overseeing the $700 billion financial rescue package continued to criticize the Treasury Department's implementation of the plan, suggesting a lack of a strategic vision and raising the concern that Treasury is overpaying for its investments in banks.

Representatives from the Government Accountability Office, a congressional oversight panel and a special investigator general said the Treasury continues to face challenges on both general and practical levels. The transparency and accountability surrounding the Troubled Asset Relief Program, or TARP, continue to fall short, leaving taxpayers and policymakers short of information on the program.

"Our money - and our economy - are on the line, and we all have a stake in the outcome," said Harvard Law School professor Elizabeth Warren in her prepared remarks for a Senate Banking Committee hearing.

Warren heads the five-member congressional oversight panel overseeing the TARP, and said that the group on Friday will issue a report suggesting Treasury has significantly overpaid for the assets it has purchased from financial institutions. She said an analysis of 10 of the TARP transactions, when extrapolated for all of the purchases made in 2008, suggests Treasury paid $254 billion for assets worth approximately $176 billion, a shortfall of $78 billion.

http://money.cnn.com/news/newsfeeds/articles/djf500/200902051023DOWJONESDJONLINE000447_FORTUNE5.htm

Heckuvajob, Paulson! Your cronies really made out on this one, thanks to you, Hank!

josh - you're talking about companies in the business of making money...what did you expect?

what gave gov't the impression that companies in the business of making money would 'trade' without getting the best possible value? businesses don't behave any other way...businesses that behave any other way are not businesses...rather, they are non-profit organizations.

this is why i'm bothered by BHO getting involved in how businesses run their businesses...he's running on a moral standard and businesses, as we know, are in the business to make money...nothing else....therein lies the problem.

And the more you dig into the dogshit these banks want us to buy, the better it gets!

As the Obama administration prepares its strategy to rescue the nation’s banks by buying or guaranteeing troubled assets on their books, it confronts one central problem: How should they be valued?

Not just billions, but hundreds of billions of taxpayer dollars are at stake.

The Treasury secretary, Timothy F. Geithner, is expected to announce details of the new plan within weeks. Administration and Congressional officials say it will give the government flexibility to buy some bad assets and guarantee others in an effort to have a broad impact but still tailor the aid for different institutions.

But getting this right will not be easy. The wild variations on the value of many bad bank assets can be seen by looking at one mortgage-backed bond recently analyzed by a division of Standard & Poor’s, the credit rating agency.

The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors.

http://www.nytimes.com/2009/02/02/business/economy/02value.html?_r=1

You see, you might look at what the bank is trying to sell you and say, "Hey, that's a pile of dog shit," but what you really need to do is take the bank's word that it's really a pile of pure gold!

again - what do you expect of a company that is in the business of making money? does anyone expect a CEO to tell their asset managers to sell everything...sell it all at whatever the gov't wants to pay you...NO...that aint gonna happen...this is what makes a "MARKET"...you have 2 sides...one side is an owner and the other side is an acquirer...the acquirer, we already know, sets the value of an asset because he is willing to trade cash for it...if there is an acquirer willing to pay more, then the the owner is pleased as it's asset has now GAINED VALUE...owners need to be realistic...totally understand this...if they're not, they'll own the asset forever...buyers need be realistic too...imo, more importantly so...reason being, you can piss an owner off by continuing to low ball...ill feelings develop....feelings of being taken advantage fester...it gets messy.

so as far as gov't intervention and such - what's next? is BHO gonna put together yet another committee of gov't employees who's sole responsibility is to set the price of these troubled assets? and arbitration board if you will...a board that will be fair to both sides and mandate transactions occur at the price of the boards choosing? is that next?

So rad, your my buddy. You hire me and you think I can do the job and you want me for it. I was daily BJ's (from a woman, not you) or I'm not taking it. You give it to me. Now, someone else hears about it and wants it too. It's a freaking arms race. Where does it stop?

And the TARP restrictions on compensation will only be on companies that need extraordinary help from the Fed. What that defines is still up in the air but it probably won't affect smaller companies too much. And it defines compensation to top level executives but it doesn't yet define what that means. Theoretically, someone working as a sales rep could be making more than $1,000,000 where the CEO is limited to $500,000 since the sales rep doesn't fall under a top level executive.

LOL at the BJ's example but yeah...can happen...in theory yeah...probably tough to get that in writing on a contract...and if this agreement comes to light, it could delegitimize your efforts and accomplishments...probably an 'under the table' agreement (yuk, yuk, yuk)...at the end of the day though, i'd have to ask you to come up with some other form of compensation...i am an ethical person and that type of payment for services is unbecoming of a person like myself...but your point about contemporaries and competitors in your industry and field hearing of such an arrangement is well taken...it's great ammo for someone to use when negotiating salary and compensation when those annual chats arise.



now compensation chats don't occur yet for another several months but wes is an employee who shows great promise for the future...is innovative, shows great creativity...i have no reason to believe he will be successful for our company in the years ahead...give that guy 2 BJs a week NOW and lock him up for 3 years, have him sign off on that right away...this way, we save ourselves a few BJs...i just KNOW when the compensation meetings occur, he'll be asking for 4 a week.

That thought process has worked so well for the NFL.

Theoretically, someone working as a sales rep could be making more than $1,000,000 where the CEO is limited to $500,000 since the sales rep doesn't fall under a top level executive.

This I have a problem with...basically no one will want to run the ship and take on the responsibility of leadership. If you can make more money being a lower level sales guy. I guess we don't really need leadership?

bingo.

de-incentivize

it'll be like what labor unions have become...doesn't matter how hard working or productive you are for the company...it doesn't matter one bit...you'll only get THIS...oh yeah - and don't bother doing more than THIS...you'll not be rewarded anything like THAT...what's that? you want to work do more and you want to show the company you are hard working and have more capacity? why the heck would you do THAT? you wanna make us ALL look bad? lol