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Corporations - Page 12
Bonuses for Pillowtex ExecutivesEmployee Advocate – DukeEmployees.com - August 27, 2003
It was just a matter of time. Pillowtex axed over 7,600 employees. Most were owed vacation and severance pay, according to The Charlotte Observer. Pillowtex has a different sort of deal in mind for the executives. What, pray tell? Why, bonuses of course! Hundreds of thousands of dollars in executive bonuses is what Pillowtex is asking the bankruptcy court to bless.
Harris Raynor is the regional director for UNITE, the union representing the employees. He said “It's unconscionable that any respectable management official would ask for such a thing. I don't see how any of these individuals could walk through the Kannapolis community with their heads up and look these workers in the eye and say this was the right thing to do.”
Evidently Pillowtex is embarrassed by this latest example of executive greed. It wants to keep the names of those receiving the bonuses a secret! Pillowtex maintains the information “could be embarrassing to certain employees.”
That reasoning is hard to follow. Have you ever noticed swine being embarrassed to eat slop and wallow in the mud?
Pillowtex proposes giving $4.1 million to 143 oinkers.
29 of the porker could receive up to $1.2 million in bonuses! That’s not bad, considering that most workers received meager salaries and few benefits.
Successful Head TransplantEmployee Advocate - DukeEmployees.com - August 14, 2003
The Associated Press reported that Westar Energy is going to have utility people back in charge of it. A year has made a difference in Westar.
Former CEO David Wittig was another big money chaser. He was going to turn Westar into a non-utility and achieve greatness.
New CEO James Haines realizes that the company needs to focus on running an electric company. Some CEO’s that have made the same mistake, never seem to catch on.
Susan Cunningham, KCC's general counsel, said “We're talking about the difference between an experienced utility executive and a Wall Street mergers-and-acquisitions expert… Mr. Haines understands the company's public utility obligations and what it means to be a regulated public utility. I don't think Mr. Wittig ever got that.”
Anybody can spend money and go into debt! Wittig resigned from Westar in November and has been convicted of federal fraud charges. The Westar board accused Wittig of seeking to enrich himself, intimidating staff, and trying to silence dissent within the company. The Employee Advocate was beginning to believe that was the job description of a CEO.
The “Chief Evasions Officer” often seems to misdirect inquires while enriching himself at the expense of everyone else. The CEO’s that once bought everything in sight are now unloading to survive.
Westar is no longer trying to get ahead by buying political influence. Its donations to Republican congressmen became a disaster. The board now prohibits corporate political contributions.
The trick to buying political influence is to make it look like you are not buying political influence.
If the old head is not working out, sometimes a new one must be transplanted.
Craig Holman, of Public Citizen, said “This will prevent the kind of quid pro quo that the executives had been doing.”
If Public Citizen gives them a clean bill of health, the head transplant must have been successful.
The Republican congressmen are still denying all.
MCI is Dog MeatEmployee Advocate – DukeEmployees.com - July 31, 2003
Does MCI do anything other than incessantly interrupting people’s dinner trying to peddle some phony baloney phone deal? According to the New York Times, they have been accused of doing a lot more.
The integrity of their financial data given to creditors and the bankruptcy court is being called into question.
Analyst Jeffrey Kagan said “This is a new closet opening up and new skeletons coming out.”
You have heard all the dirt on WorldCom. Well, WorldCom is technically the name of MCI. The company agreed to pay Verison $60 million in a fee dispute. MCI is accused of defrauding companies by disguising long-distance phone calls as local calls. Former MCI executives said the company has been pulling these stunts since the 1980’s.
It was reported that MCI is moving aggressively to contain possible damage. Does this mean that MCI will be taking out Wall Street Journal ads? Some companies feel that such ad will fix anything!
A whistleblower spilled the beans and MCI is now in the damage control mode.
Below are links to other MCI boners:
Less Power For CorporationsEmployee Advocate – DukeEmployees.com - July 6, 2003
The New York Times reported that the Securities and Exchange Commission made some long overdue changes on June 30. Companies selling stock on the New York Stock Exchange and the Nasdaq will have to obtain shareholder approval before granting stock options and other equity compensation.
Corporate boards will no longer be able to change the exercise price of existing options without shareholder approval. Executives have been known to change the rules of the game so that they can never lose. This requirement will make it a little more difficult for them.
The CEO’s and directors have abused their power. So, now they have less of it. This is another step in the right direction.
British Shareholders RevoltEmployee Advocate – DukeEmployees.com – June 29, 2003
Pension scams and CEO greed are indeed global assaults on the workforce. Last month in London, GlaxoSmithKline Shareholders rejected a pay package for the CEO, according to the New York Times. How sweet it is!
CEO Jean-Pierre Garner would have received $23.7 million in bonus salary and stock if he were to resign or be dismissed any time through 2007. And, three years would have been added to his age when calculating his pension.
As in the U. S., shareholder resolutions are non-binding. But corporations are growing more reluctant to inviting shareholder wrath.
Corporate Lobbyist Now Party ChiefPublic Citizen – Citizen.org - June 18, 2003
New Report Outlines Ed Gillespie's Lucrative Work on Behalf of Enron, Other Large Corporations
WASHINGTON, D.C. - By appointing Ed Gillespie, a leading corporate lobbyist, to head the Republican National Committee, President Bush has opened a conduit for Corporate America to strengthen its already formidable influence in the White House and Congress, Public Citizen said today.
The lobbying firm Gillespie co-founded in 2000, Quinn, Gillespie & Associates, has grown into one of the capital's most lucrative, in part because of Gillespie's strong ties to the Bush administration.
A party chairman works hand-in-hand with the White House and congressional leaders on policy matters and election strategy, and wields a great deal of influence on legislation that may benefit contributors to the national party. Gillespie access to inside information will be invaluable to the clients and partners at Quinn Gillespie - even if Gillespie does not lobby or engage in any policy discussions with clients of his firm, in which he will continue to hold an ownership stake.
"The party chief is in a unique position to help friends and punish enemies," Public Citizen President Joan Claybrook said. "This is just one more step in the merger of the Republican Party and Corporate America. Ed Gillespie is a richly rewarded lobbyist who greased the wheels in Congress and the White House for Enron, one of the most crooked companies in U.S. history. And now he's at the head of the GOP. That should tell citizens where President Bush's interests lie."
Public Citizen today released a new analysis of Quinn Gillespie's efforts on behalf of a slew of corporate clients on legislation to undercut consumer rights and increase the power of big business. Drawn from federal disclosure forms, the analysis shows that:
- Since its founding by Gillespie and former Clinton White House counsel Jack Quinn in 2000, the firm has reported $27.4 million in lobbying-related income through 2002.
- Gillespie has worked to keep national energy policy in lockstep with the wishes of Enron and other energy giants. Quinn Gillespie earned $700,000 from Enron in 2001 alone to lobby the White House on the electricity crisis on the West Coast. The administration aggressively supported Enron's position against re-regulating electricity markets. Gillespie also channeled money from DaimlerChrysler and Enron to his 21st Energy Project, which bought print and television ads in July 2001 to promote the administration's energy plans, including blocking any increase in fuel-economy standards.
- PricewaterhouseCoopers paid Quinn Gillespie $1.35 million from 2000 to 2002 to lobby against increased oversight of the accounting industry. PricewaterhouseCoopers - which paid a $5 million fine to the Securities and Exchange Commission in 2002 for repeated accounting irregularities, including improperly auditing millions in fees paid to its own consultants - tried to limit restrictions on consulting and other services that an accounting firm could offer its clients. Effectively, Quinn Gillespie was trying to water down accounting reforms in the wake of an unprecedented wave of corporate fraud.
- The U.S. Chamber of Commerce paid Gillespie's firm $860,000 from 2000 to 2002 to lobby for the so-called Class Action Fairness Act - legislation that would benefit corporations by moving lawsuits from state to federal courts, where it is more difficult to certify class actions and delays result from large case backlogs. All told, the firm has collected at least $1.12 million to lobby for this anti-consumer bill.
- After helping set up the Commerce Department as part of the Bush transition team, Gillespie returned to his practice and immediately began lobbying on behalf of clients with business before the department. Gillespie helped secure tariffs against foreign competition for the "Stand Up for Steel" coalition and USEC Inc., the country's largest supplier of enriched uranium fuel to nuclear power plants.
- Tyson Foods paid Quinn Gillespie $440,000 in 2002, in part to downplay federal charges against Tyson for conspiring to smuggle illegal immigrants into the United States to work at its poultry processing plants for lower wages than it paid legal workers. The firm also lobbied on "wage and hour" issues for Tyson, a result of a Labor Department lawsuit against Tyson seeking $300 million in back pay owed to workers.
Other clients of Quinn Gillespie include DirecTV, Microsoft, SBC Communications, Verizon and Viacom.
As chairman of the RNC, Gillespie will be the party's lead fundraiser and spokesman, responsible for raising hundreds of millions of dollars each election cycle and determining which candidates get the money, thereby holding the purse strings for the legislators his firm works to persuade.
"Very few non-governmental positions in American politics offer so much potential for corruption," said Frank Clemente, director of Public Citizen's Congress Watch. "Why would corporations need to hire a lobbyist if they could go straight to lawmakers through Gillespie? President Bush was wrong to appoint such a crony of big business."
SEC Comments SentEmployee Advocate - DukeEmployees.com - June 14, 2003
Thanks to all who sent e-mail to the U.S. Securities and Exchange Commission about possible changes in the proxy rules and regulations. The SEC knows that CEO’s have too much power or they would not be considering changing the rules. The comment period is now closed. If you missed this opportunity, watch for the newsletter for the next one.
Employees and investors need to register their opinions every chance they get. You can bet the lobbyist will be dispatched in full force to promote the CEOs' wishes. The CEO’s do not want to give up power or money.
Click the link below to read one comment sent to the SEC:
More Prisons Needed for CEO’sEmployee Advocate – DukeEmployees.com - June 7, 2003
The Associated Press reported an interesting development in the Martha Stewart case. She is accused of using her denial of guilt as a ploy to inflate the price of stock in her company. Among other things, she has been charged with lying to investigators and is facing prison time.
If CEO’s can now go to jail for lying, the prisons will never hold them all!
You know the first thing that a typical CEO does when charged with a crime – deny, deny, deny. And, every move a CEO makes is designed to boost the price of stock. The only way most CEO’s will be able to stay out of jail will be to wear a muzzle.
CEO’s have been getting a lot of mileage out of the denial defense. They can proclaim innocence for years, no matter how much evidence is weighing against them. When things get too hot, they will often settle out of court with no admission of guilt.
CEO’s usually claim to be “fully cooperation with the investigators,” as if this is going to buy them something. No matter how much they have obstructed an investigation, they will always claim to be fully cooperating.
David Marder, former Securities and Exchange Commission lawyer said “It goes way back to Richard Nixon — you see people get in more trouble for covering things up than of the actual conduct.”
Flight Attendants Sue Over Broken PromisesEmployee Advocate – DukeEmployees.com - June 5, 2003
Often corporations come to the employees with a sob story and ask them to voluntarily make pay and benefits concessions. When these companies recover, the promises made to employees are frequently forgotten. Why keep promises made to employees when the CEO’s nest can be feathered even more?
The New York Times reports that Northwest Airlines pulled this one on the flight attendants. The attendants gave up millions of dollars in pay and benefits a decade ago. Now that it is time for Northwest to make good on its promises, the company is waffling.
Northwest has not fulfilled its agreement to buy back certain stock that was issued to attendants in 1993. The attendants are doing the only reasonable thing. They are suing Northwest.
Universally, employees should be aware by now that as long as they keep giving, the corporations will keep taking. And, then they will come back for more…and more…and more.
Lowe's Shareholders Reject 'Poison-Pill'Employee Advocate – DukeEmployees.com – May 31, 2003
Actions of Lowe's Cos. management have followed a too predictable pattern of executive enrichment at the expense of employees. Shareholders have tried to bridle management through resolutions, according to the Associated Press. Friday, Lowe's Cos. shareholders approved a resolution that the company cancel its “poison-pill” plan or submit it for shareholder approval. A healthy 58 percent voted in favor of the resolution.
A resolution to require that the chairman be an independent director who hasn't been a company officer was proposed. A resolution to adopt global workers' rights standards for its suppliers and allow third-party monitoring of compliance was also proposed. These resolutions were unsuccessful.
Executive HogsEmployee Advocate – DukeEmployees.com – May 28, 2003
Employee Stock Plans sound like good methods to “share the wealth” with employees. But they are not always so great, according to the Houston Business Journal. When the plans are skewed so executives reap millions of dollars and everyone else gets peanuts, some employees would rather terminate the programs. The employees would hardly miss their pittance. Executives would really hate to go from millions to zero, but sometimes that is the price of greed!
Case in point: The Laborers International Union of North America is asking shareholders to reject the employee stock plan at Nabors Industries Ltd.! The battle will be fought at the annual meeting on June 3.
The corporation wants to issue 3.5 million additional shares for the plan. Laborers' General President Terence M. O'Sullivan said five executives had received options worth $137.3 million over the last three years! They hold 74.2 percent of the unexercised options granted under the present plan.
O'Sullivan said "While we understand and agree with the need to provide meaningful incentives, we strongly object to what we see as excessive grants made to Nabors' senior management. We hope shareholders will put their foot down and send a message to management and the board with this vote."
It was said that no company spokesperson was available for comment. It’s just as well. Some things are beyond spin doctoring.
Last year, Nabors shuttled its corporate headquarters to Bermuda, from Houston. Investor relations come from Barbados. The U. S. headquarters remains in Houston.
More Executive HogsEmployee Advocate – DukeEmployees.com – May 28, 2003
The New York Times reports that British shareholders have been exercising their new voting power against hoggish executive pay packages.
William F. Aldinger III, the former chief executive of Household International, may learn more about the new voting powers. His contract was terminated, but that triggered a payout of $20.3 million. He sold his company to British bank HSBC and was hired to head the U. S. operations. He is guaranteed $5 million in bonuses and cash per year. He will also receive $20.5 million in stock over a 3 year period.
What is interesting is that Mr. Aldinger has essentially the same job and benefits, but was able to receive the $20.3 million because he was technically terminated.
Pensions Investment Research Consultants (PIRC) is advising shareholders to vote against this excessive pay package at the annual meeting.
The Trades Union Congress sent this message to pension fund trustees: "This is our money. Our pension funds and insurance policies should be invested in a way that supports good businesses not platinum parachutes for failing directors."
GlaxoSmithKline shareholders have already rejected the excessive pay package for their CEO. Not only that, but the board will be restructured.
The global epidemic of excessive executive pay is being slowly exposed to the sunshine.
Pressure to Change Executive PayAssociated Press – by Michael Liedtke - May 5, 2003
SAN FRANCISCO -- The fallout from a dreary economy, corporate scandals and three straight years of stock market losses hasn't put much of a dent in executive paychecks.
Most of the nation's top executives continued to collect lucrative compensation packages during 2002, angering critics who think that the rewards reflect an insensitivity to the financial duress facing much of the country.
"Times are tough, but executives are still living like we're in the Roaring '20s. It's mind boggling," said Brandon Rees, research analyst for the AFL-CIO, which is lobbying for compensation reform.
Based on a survey of 333 Standard & Poor's 500 companies that have reported their 2002 pay so far, Equilar found that the median salary for CEOs at the firms rose 6.1 percent and bonuses swelled 20.6 percent. That means half of the CEOs for the companies actually received a bigger pay raise.
"It's very disappointing," said Ann Yerger, deputy director for the Council of Institutional Investors, a trade group that represents large shareholders. "A lot of folks think there needs to be a ratcheting down of pay."
By some estimates, investors have lost $7 trillion on paper since the stock market peaked in March 2000. Meanwhile, the nation's unemployment rate rose from 4.7 percent in 2001 to 5.8 percent in 2002, swelling the jobless ranks by another 1.6 million people.
The setbacks haven't significantly changed the overall pay of most chief executive officers, although corporate boards have said they want compensation packages to parallel the ups and downs of the stock market.
The midrange CEO salary and bonus rose to $1.8 million in 2002, a 10 percent improvement from 2001, according to a survey of executive compensation at 350 large publicly held companies conducted by Mercer Human Resource Consulting.
"The goose that has been laying all those golden eggs still hasn't been butchered," said Bruce Ellig, author of "The Complete Guide to Executive Compensation."
News about big paychecks has come out during the past month as publicly held companies submitted annually reports on executive compensation.
Signs of restraint emerged among a few firms that refused to pay executives bonuses amid the economic misery.
James Sinegal, who heads discount merchant Costco Wholesale Corp., refused to take a bonus for the second consecutive year, making do with total compensation of just less than $374,000.
Other top executives who denied themselves bonuses in 2002 included Citigroup Inc.'s Sanford Weill, FleetBoston Financial Corp.'s Charles Gifford and Charles Schwab Corp.'s co-CEOs, David Pottruck and Charles Schwab.
But with most executives still able to command premium prices, corporate boards find it difficult to reduce pay packages because they want to remain competitive, said Robin Ferracone, a partner at Mercer Human Resource Consulting.
"Everybody wants to be above the 50th percentile," she said.
Salaries and bonuses represent just a small part of the generous compensation packages for top executives at many of the nation's largest companies.
Stock options, restricted stock awards, enhanced pensions and long-term incentive plans also elevated executive pay.
For example, at defense contractor Honeywell International Inc., recently hired CEO David Cote's 2002 compensation package included $3.56 million in "other annual compensation" on top of his salary and bonus of $3.17 million.
Meanwhile, Honeywell's stock dropped 29 percent between Cote's February 2002 hiring and the end of the year, wiping out $7.7 billion in shareholder wealth.
Cote's extra pay helped boost his total 2002 pay to $31.9 million, ranking him among the 10 highest paid executives nationwide last year.
Cote was one of the nation's top paid executives identified through Aon Consulting's eComp Database, covering executive compensation disclosures that had been filed with the Securities and Exchange Commission through April 18.
Pariahs of pay
The two highest paid executives on the list -- Tyco International's Mark Swartz and Dennis Kozlowski -- have been vilified as symbols of corporate excess for the money they carted away from the scandal-ridden conglomerate. Both men, who resigned from Tyco last year, face criminal charges of fraud, allegations that they deny.
Swartz, Tyco's former chief financial officer, received compensation valued at $78 million last year while Kozlowski collected $76.6 million, according to Aon's analysis.
Tyco is suing both men to force them to return the money.
Some companies became more frugal last year.
Georgia Pacific Corp., for instance, decided not to pay its CEO, Alston Correll, a $2 million bonus he had earned under an incentive plan because of stock market losses its shareholders suffered. Georgia Pacific's stock plunged by 68 percent between the end of 1999 and the end of 2002, shaving $8.8 billion.
American Electric Power Co. Inc., which runs utilities in 11 states, made a similar move, withholding the 2002 bonus earned by CEO E. Linn Draper Jr. "due to the company's overall financial performance." The Columbus, Ohio-based company lost $519 million last year, and its stock plunged 37 percent.
But PG&E Corp., which owns a Northern California utility that has been in bankruptcy for two years, gave CEO Robert Glynn Jr. a bonus of $787,500 despite losing $874 million in 2002 and seeing its stock shed 28 percent of its value.
For many executives, stock options distributed in previous years remained valuable, despite the market's downfall.
Alfred Lerner, who was CEO of credit card company MBNA Corp., realized a $168.9 million gain on stock options before he died in October, representing the biggest windfall in Aon Consulting's survey. MBNA also paid a posthumous bonus of $6 million to Lerner's estate.
Executives continued to collect "golden parachutes" when they left jobs, as well as lucrative "golden hellos" when they accepted new assignments.
Michael Capellas, who is trying to resurrect bankrupt WorldCom Inc., capitalized on both trends last year. He got a $23 million severance package after resigning as Hewlett-Packard Co.'s president in November, then joined WorldCom in a deal expected to pay him at least $20 million in three years.
Recent corporate scandals have prodded many corporate boards to take a harder look at executive pay.
"There has been a real wake-up call for boards to see what has been going on underneath their noses all these years," Ferracone said.
More shareholders are pressuring for change, too. Through mid-April, 316 shareholder resolutions focused on executive pay had been filed at U.S. companies, up from 106 last year, according to the Investor Responsibility Research Center.
The heightened awareness and public attention eventually will drag down executive paychecks, predicted Pearl Meyer, chairman of Pearl Meyer & Partners, an executive compensation consulting firm.
"The golden era of executive compensation is gone," she said.
Queen of the Corporate GadfliesEmployee Advocate – DukeEmployees.com – April 21, 2003
Evelyn Y. Davis has been taking CEO’s to tasks for over 40 years, according to the Washington Post. She attends about 40 shareholder meetings a year.
At one shareholder meeting she told the CEO: "Let me tell you something, my dear -- I've got you by the [bleep]."
She has been know to not only annoy CEO’s, but other shareholders as well. At one meeting, a fellow shareholder knocked her down! She required five stitches and suffered an ear injury.
She was attending another shareholder meeting an hour later. She said: "The show must go on!"
It took her 18 years to wear down Bristol-Myers Squibb. Her resolution to put all directors up for election each year passed for six years in a row. Finally the company complied with her wishes.
She has won other victories at other corporations. She held a press pass to the United Nations.
When she was excluded from a Mikhail Gorbachev press conference, she called up his press secretary for foreign affairs, Gennadi Gerasimov. She said: "I called Gennadi and chewed him out. I had a tirade that was worse than anything at the stockholders meetings. I think I almost made him cry. And he ended up inviting me to dinner."
Mr. Gerasimov said: "One thing that impressed me was that she was a minority shareholder who traveled to all these shareholder meetings to create publicity for herself and shareholders' rights I even wrote an article on her for a Russian newspaper. We have shareholders but they don't know their rights. I thought it was important for Russians to know that even if you're the owner of only two or three shares, you can raise hell. She was raising hell."
It is not known if Mrs. Davis owns any shares of Duke Energy stock. Probably not, or she would have already put in a few choice words at the shareholder meetings.
Shareholders Are on a RollEmployee Advocate - DukeEmployees.com - April 19, 2003
The Associated Press reported that Union Pacific shareholders passed a proposal requiring executive severance packages to be contingent upon shareholder approval! That is great news to all, except the bloated corporate executives. The not-so-great news is that shareholder proposals are not binding. But still, it is a noteworthy event.
The Securities and Exchange Commission is now reviewing the appropriateness of proxy rules. The non-binding rule can change with the stroke of a pen. Just imagine – CEO’s would actually have to answer to someone. The mere thought of this prospect will make CEO’s break out in a cold sweat!
Under today’s rules, CEO’s heed nothing except their own obsessive cravings for more and more wealth. But day by day, more pressure is being applied to the greedy executives. Several other large corporations have already implemented restraints on windfall executive severance packages. The executives have been too greedy for too long. And they have been exposed for what they are.
More Liberal Proxy RulesEmployee Advocate – DukeEmployees.com – April 17, 2003
The Securities and Exchange Commission announced Monday that it will review proxy regulations, with an eye towards improving corporate democracy. This news did not come too soon!
The SEC has been behaving almost as a coconspirator with corporations to stymie any attempt by shareholders to submit a proposal. The rules seemed designed to wear down anyone attempting to submit a proposal – and they did a good job of it!
If you want an exercise in futility, just try to get a shareholder proposal passed. One must jump through all kinds of hoops just to stand a chance of getting the SEC to allow the proposal to be presented. Then, lots of luck on getting the necessary votes. The institutional shareholders typically vote in lockstep with management.
In spite of these difficulties, some proposals do get passed. Here’s the kicker. After they are passed, the corporation can simply ignore the proposal! That is a classic rigged game, if there ever was one.
CEO’s do not want advice from shareholders; they want only their money. CEO’s do not want input from employees; they want only their labor (and, perhaps, their pensions). CEO’s and sundry executives are then free to direct as much money into their own pockets as possible.
Chairman William Donaldson said "The current rules concerning shareholder proposals and director elections are clear and we are enforcing them as such, but the time has come for a thorough review of the proxy rules and regulations to ensure that they are serving the best interests of today's investors, while at the same time, fostering sound corporate governance and transparent business practices."
Previous SEC articles:
Shareholder Proposals Sometimes WorkEmployee Advocate – DukeEmployees.com – April 12, 2003
Winning a shareholder proposal is very difficult. If won, it will still likely be ignored by the corporation.
The Communication Workers of America (CWA) reported that General Electric has agreed to accept one of their proposals if the union would back off! GE will exclude pension fund income as a factor in determining executive compensation. So, CWA agreed to withdraw its shareholder proposal.
CWA charged: “Linking executive pay to pension income creates an incentive for companies to cut pension benefits for workers and to withhold cost-of-living increases. GE has frozen pension benefits at 2000 levels while continuing to lay off workers and increase health care co-payments for IUE-CWA members.”
The union was prepared to blast GE with proposals at several of its employers' annual shareholder meetings. They will still submit other proposals such as: shareholder approval of executive severance packages and asking shareholders to adopt International Labor Organization standards concerning fundamental workers' rights, including the right to organize.
CWA will submit such proposals at other companies including IBM.
CEO Payback TimeEmployee Advocate – DukeEmployees.com – April 7, 2003
Many airline CEO’s have enjoyed bloated compensation, even as they cut employee benefits, pay, jobs, and seek government aid to cover their company losses. Some CEO’s now have the "opportunity" to shed some of their excessive pay. This development comes as airline executives try to get into the taxpayer’s pockets for over $3 billion.
The CEO of United Airlines will take a 14 percent pay cut, according to the New York Times. But this cut is largely superficial. It will only affect his base salary. The millions of dollars worth of bonuses and other assorted compensation will remain untouched.
Last year his base salary amounted to only 3.2 percent of his $9.65 million total take. While the CEO was raking in this money last year, United had a net loss of $3.2 billion.
The CEO’s of Delta Air Lines and American Airlines also took cuts in pay. Their cuts in pay are more realistic. They are also giving up bonuses. Additionally, the CEO of Delta Air Lines is giving up $5.5. million in retention awards.
This trend does not have to apply only to airline CEO’s. There are many executives in other industries who are making a killing by financially killing their employees. Many have fattened their pay and pensions through “cash balance” and other questionable schemes, designed to deplete employee pensions.
It is time for CEO’s to receive their just deserts. If a judge can nullify a union contract and take away promised employee benefits, why not apply such tactics to CEO contracts? Sometimes the CEO is the only one in the company with a contract. It is absurd to let one person come into a company, wreck it and leave with millions of dollars and lifetime benefits.
Some members of Congress have criticized executives for making obscene pay, while losing billions of dollars for their companies. If action by Congress is needed to break this cycle, so be it.
Pillowtex Execs Were Paid MillionsThe Charlotte Observer – by Tony Mecia – March 30, 2003
(3/29/03) - KANNAPOLIS - Pillowtex Corp. paid more than $1.7 million each to three top executives last year as the Kannapolis textile company emerged from bankruptcy court protection, but soon began to stumble financially.
According to documents filed Friday with the Securities and Exchange Commission, the company handed out a total of $4.3 million in signing bonuses and severance packages to three leaders, none of whom remains with the company.
Former Chief Executive Officer David Perdue received a signing bonus valued at $1.8 million to come to the company from Reebok in July. The signing bonus, a mixture of cash and stock, was part of a compensation package totaling $3.2 million. The company announced last week that Perdue was leaving the company to pursue other endeavors.
Anthony Williams, Pillowtex's former president and chief operating officer, received $1.5 million in severance after his departure from the company in September. He also received a salary of $278,000, plus nearly $600,000 worth of restricted stock.
Scott Shimizu, the company's former executive vice president of sales and marketing, received a severance of $994,000, in addition to a $334,000 salary and $447,000 worth of restricted stock. He left Pillowtex in October.
The compensation packages for the three are by far the largest paid by Pillowtex to executives in recent years.
The company did not return a call for comment Friday afternoon.
The news comes at a tough time for the company.
On Friday, Pillowtex announced its lenders had agreed for a third time to issue waivers on terms of loans, which will keep the company out of bankruptcy-court protection as it apparently seeks a buyer.
Since last fall, Pillowtex has not fulfilled the quarterly conditions of its bank loans, which gives its banks the right to demand immediate repayment. Each time, though, the banks have relented, giving Pillowtex more time to survive.
This time, though, the breather gives Pillowtex time to assemble a deal.
Pillowtex is the country's second-largest manufacturer of bath towels and fourth-largest maker of sheets. It emerged from bankruptcy court protection last May with hopes for financial success, but since then its plans have been hampered by sluggish sales.
The company has not had a profitable quarter since 1999, and its stock, which traded as high as $8.85 in June, closed Friday at 34 cents.
Last week, Pillowtex said it had hired Credit Suisse First Boston to "assist it in reviewing strategic alternatives" -- language commonly interpreted as meaning a company is exploring a sale or merger. Workers say they have seen potential buyers touring the plants, and analysts and industry experts are abuzz with rumors.
The names most often associated with any deal are Pillowtex's biggest competitors: Springs Industries Inc., WestPoint Stevens Inc. and Dan River Inc.
Any consolidation probably would mean job losses in Cabarrus and Rowan counties, where Pillowtex employs about 4,500 workers at four plants.
Also this week, the Union of Needletrades, Industrial and Textile Employees, which represents Pillowtex workers, distributed leaflets telling employees their jobs may be at risk. It blasted what it called Pillowtex's "small board of directors appointed by the investment companies and banks."
"So far, they seem to be more interested in their short-term goals than in the future of our company," the flier said.
$37 Million Severance PackageStar-Telegram – by Mitchell Schnurman – March 28, 2003
(3/26/03) - When Dick Brown was criticized for a huge pay package last year, he told shareholders of Electronic Data Systems that it was more money than he was worth.
He was right, but he didn't give any back.
We could say something similar today about the $37 million severance package that Brown got last week. He didn't earn it, but he gets to keep the money anyway.
Brown benefits from signing his EDS contract five years ago, when people everywhere were paying too much for just about everything, including executive talent.
The EDS board of directors, which then included Dick Cheney and still has James Baker III, followed the lemmings and recruited Brown with an offer that would make most people gasp.
The worst part was a retirement provision guaranteeing that Brown would become a rich man even if EDS' stock tanked.
Which is what happened.
EDS says it won't make the same mistake again, but the same three directors who led the compensation committee then are leading the group today: C. Robert Kidder, William H. Gray III and Ray J. Groves.
In the make-believe world of CEO pay, excess has been the norm for so long that the shock factor is just about gone. But Brown's deal merits some outrage all the same.
He netted about $72 million at EDS, not including stock options, in a little more than four years on the job.
But with Brown, the sin isn't just the big numbers -- it's the performance. Or lack of it.
Since he took over in 1999, EDS has lost two-thirds of its market value, as its stock price fell from over $50 a share to less than $18.
EDS is being investigated by the Securities and Exchange Commission, reportedly for some complex stock market bets that cost the company a few hundred million dollars.
Then there's the very vexing question about the megacontracts at the heart of Brown's growth strategy: When, if ever, will the company make money on them?
Brown is famous for saying "I own this problem" in a Fortune magazine story about EDS' string of failures. Well, now EDS' problems fall to Michael H. Jordan, a former CBS executive who was named CEO, and Jeffrey Heller, an EDS veteran returning to be chief operating officer.
If the business world were a fairer place, Brown would be run of out EDS' Plano headquarters with only some lunch money in his pockets.
Instead, he gets a $37 million going-away gift.
Most of that was negotiated in the initial contract, and EDS says it's simply fulfilling its legal obligation. That's an explanation, not a justification, and you can be sure the company was never so irrationally exuberant with the rank and file.
That treatment is reserved for the chairman and CEO.
Brown's deal includes a severance package of three years of salary, bonuses and health benefits for him and his dependents, plus immediate vesting of all his stock options and stock grants.
And he gets credited with 21 years of service in the EDS pension plan.
Brown worked at EDS for four years and three months. If his severance were based on his actual tenure -- his real performance -- he'd be eligible for about $457,000 in annual pension payments.
Instead, he gets the equivalent of $1.8 million annually, which equals nearly $20 million in present-day value.
What's wrong with this picture?
The double standard is galling. A company and a leader claim to be all about performance -- and paying for performance -- and yet they strike a deal that pays huge bucks even when the CEO lays an egg.
In explaining its pay philosophy in its proxy statement, the board says the compensation committee "believes it is important to place a significant portion of each executive's total compensation at risk."
I thought that "at risk" meant they aren't supposed to get big money if the company lags. Last year, Brown didn't get a bonus or stock option or stock grant.
Just $2 million in salary and other stuff.
I guess that'll show him.
In an earlier proxy, the EDS board said one factor in Brown's contract was that he was giving up benefits at his other employer. But EDS wasn't just promising money on the back end.
To get him, the company paid a signing bonus of $4.5 million in cash and about $2 million in stock. He also was promised 1 million stock options and another 225,000 restricted stock units.
He also was rewarded in real time. In his first three years, when EDS appeared to be doing well, Brown received $14 million in bonuses alone.
EDS once valued his stock options and grants at more than $56 million. But the plunging stock price has put the options under water and cut the value of the grants.
So instead of getting maybe $122 million for four years of work, Brown gets $72 million. Now, is that a risk you'd take?
Brown also gets to hold on to his million-plus options. They could eventually be worth something, if his successors can restore the company.
But that wouldn't do much for thousands of EDS employees who were laid off in the past two years. Under Brown, the company slashed its severance packages, limiting them to two to four weeks of pay and immediately cutting off health benefits.
Hundreds of Tarrant County residents lost thousands of dollars because of the move. But EDS said it was necessary to save costs and enable the company to grow.
Just another rule that applied to everybody but the boss.
SEC Chief Blasts Overpaid CEO’sBloomberg News – by Robert Schmidt – March 26, 2003
WASHINGTON - SEC Chairman William Donaldson called for corporate boards to rein in pay packages and perks for chief executive officers to help restore investor confidence.
CEOs have "steadily increased in power and influence" during the past decade, Donaldson, the former chairman and CEO of Aetna Inc., told a group of business economists. "In some cases, the CEO had become more of a monarch than a manager."
Sworn in as SEC chairman on Feb. 18, Donaldson inherited an agency overhauling U.S. securities law under a mandate passed by Congress in July. He has said he wants to use the position to urge corporate change after accounting and corruption scandals sent Enron Corp., WorldCom Inc. and other U.S. companies into bankruptcy.
Investor anger is exacerbated "by the perception and in many cases unfortunately the reality that those at the top have not shared in their loss -- that those at the top have continued to enjoy massive salaries, bonuses and perks unrelated to performance," Donaldson said.
The SEC chief became chairman of Aetna, the biggest U.S. health insurer, in February 2000. He was given $1 million in salary in 2000 along with a $6 million bonus, $5.6 million in restricted stock and $50,000 in all other compensation, according to the company's SEC filings.
Donaldson said corporate directors should reduce their reliance on management and compensation consultants when setting executive salaries.
"It is the job of the board to set appropriate compensation that is related to the goals and performance of top management, not the pressure to meet an artificial standard informed by outside consultants who do not share the responsibility of being a director," Donaldson said.
War BucksTimes Online (UK) – Dan Sabbagh, Joe Lauria – March 23, 2003
A corporate governance watchdog yesterday voiced concern about the independent status of Richard Perle, the Pentagon adviser on the board of Autonomy, the software group.
The National Association of Pension Funds (NAPF) said it “was minded to recommend that shareholders abstain” should Mr Perle, a non-executive director of Autonomy, seek reappointment when his term of office expires this summer. The NAPF fears that he is not independent of Autonomy’s management.
Autonomy develops “intelligent search” software, which is able to trace patterns in vast and complex sets of data. It does about 30 per cent of its business with defence and intelligence agencies.
Last October it won a major contract with the US Office of Homeland Security, which was created to deal with threats posed by terrorism on US soil.
Donald Rumsfeld, the Defence Secretary, appointed Mr Perle chairman of the powerful Defence Policy Board, which wields heavy influence on US defence policy. Mr Perle, as chairman, is required to follow government ethics rules, which include prohibitions against using his position for private gain. There is no suggestion that Mr Perle used his influence in Washington to help Autonomy to win any contracts. Instead, the NAPF’s concern stems from the way Mr Perle is remunerated.
Since his appointment to Autonomy’s board in February 2000 he has drawn no salary, but has been awarded a total of 122,500 share options, at prices starting at 224p. The company’s shares closed unchanged at 174p yesterday.
NAPF guidelines state that share options are “regarded as compromising the independent status” of independent directors. It typically recommends that its members abstain on the reappointment of a non-executive who holds share options.
Mr Perle was involved in further controversy yesterday, after it emerged that he was being retained by Global Crossing to persuade the US Defence Department to drop its objections to the sale of the telecoms company to a Chinese-Singaporean joint venture. Lawyers in the Global Crossing bankruptcy case say Mr Perle is to be paid $125,000 by the company with a $600,000 bonus if the sale goes through. Mr Perle denies his relationship with Global Crossing is unethical.