October 22, 2009

Special Master Feinberg Forces Serious Pay Cuts

Yesterday, Special Master Kenneth Feinberg revealed the details of the long and contentious negotiations over the pay levels for the top 25 paid executives at five financial institutions and two automakers that received TARP money. Although Feinberg’s plan itself hasn’t yet been made public (but will be later today or within the next day or so), the details of the plan are fully reported in numerous articles in the papers today.

It appears that the key components of this pay reform include:

– About a 50% overall compensation cut
– Salary cuts of about 90%
– Some of the reduced salaries replaced with restricted stock, vesting immediately but paid out in one-third per year installments after a two-year waiting period
– Limits on perks, with anyone receiving more than $25k having to seek special permission

Here are articles from today’s newspapers describing this story:

– NY Times’ “U.S. to Order Steep Pay Cuts at Firms That Got Most Aid

– NY Times’ “A New Challenge for 2 Ailing Banks

– NY Times’ “Who Gets Paid What

– Washington Post’s “U.S. to cut pay for bailed-out bosses

– WSJ’s “Pay Czar to Slash Compensation at Seven Firms

– WSJ’s “Pay Czar Moves Represent ‘Seismic Shift’

– Forbes’ “Pay Czar Readies Knife

The Battle Over Climate Change Heats Up for Shareholders

Recently, I blogged about the strong likelihood that Corp Fin would act on refining disclosure requirements related to environmental and climate change issues. That blog included statistics from the past proxy season regarding the growing support for ESG shareholder proposals, courtesy of RiskMetrics.

On top of this movement, the news recently has been filled with companies leaving the US Chamber of Commerce due to the Chamber’s position on climate change (egs. Apple, Exelon, PG&E, PNM Resources, Duke Energy and Nike). We may soon see more of these departures – or at least companies publicly distancing themselves from the Chamber which is now in attack mode on climate, health care reform and financial reforms.

As noted in this press release, letters were just sent to 14 large companies from a group of 43 investors and investment-focused organizations – representing over $16 billion in assets under management – urging the companies to “end the ‘glaring contradiction’ between their own policies and the U.S. Chamber of Commerce’s and National Association of Manufacturers’ positions on pending climate legislation. Each of the companies has publicly stated that it supports action on climate change, which the Chamber and NAM strongly oppose.” And Change-to-Win released a scatching report recently about how the Chamber’s leader, Tom Donohue, has hijacked the Chamber’s agenda.

Recently, a bunch of the mass media outlets were tricked into reporting that the Chamber had reversed its climate change stance. And the Washington Post reports how President Obama has reduced the clout that the Chamber has in DC.

Is the 6th Time a Charm? More Internal Control Delays Possible?

As I blogged recently, the SEC has announced a delay for smaller companies to provide auditor attestations – the adopting release is now posted. I think that’s the last of the delays in internal controls, as SEC Chair Schapiro indicated in the press release announcing this last delay. But then again, the efforts to delay – or stop – internal controls reporting shouldn’t be underestimated.

Recently, Representative Scott Garrett (R-N.J.) introduced the “Small Business SOX Compliance Relief Act,” which would permanently exempt non-accelerated filers from the auditor attestation requirements of SOX Section 404(b). I doubt a deregulatory bill will go anywhere in Congress these days – but you never know. Let us know what you think:

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– Broc Romanek