Corporate Pay
It seems like every day we hear of some big company CEO receiving outlandish paychecks for poor performance. Here is one I just read about:
Ray Irani
CEO of Occidental Petroleum, where share value fell by 22 percent for 2008. Yet, the board of directors paid Irani a whopping $60.5 million for his “superior performance.” Of course, his performance must not have been as good as 2007, when he received $77.6 million.
For comparison, let’s look at:
William Crenshaw
CEO of Publix Super Markets, Inc., a grocer that posted a 4 percent increase in sales ($23.9 Billion) in 2008, while other grocery firms trended downward. Because of the recession, Crenshaw asked the company’s board not to increase his pay. Oh, Crenshaw’s 2008 pay?–$795,466.
It appears to me that something is wrong with this situation–no one person is worth $60, $70, $80 million in annual pay. This is especially true when their companies have performed poorly.
I guess it must be all right though, since our Treasury Secretary said the government should not be involved in compensation issues at the big “bailout” banks. Apparently, Mr. Geithner only wants to control auto industry compensation.
Am I the only one that becomes infuriated over this stuff?
Confusion in Lending
I think it is safe to say that anytime the government gets involved in anything to do with business–confusion reigns supreme. The President made it clear in one of his recent addresses (review here) that he wanted banks to start lending, especially to small businesses.
However, yesterday, I read a column from the Associated Press that covered Congressional hearings on the conflict and confusion being experienced by banks. Here are some summarized excerpts from the article:
Regulators at a House hearing Wednesday heard complaints from small business owners, and others, who haven’t missed any payments, but are getting their credit lines deeply cut or yanked away… “There is actually a growing anger from these people,” said Rep Spencer Bachus of Alabama”… “The reduction or denial of credit to credit-worthy customers is occurring every day across America in about every town,” he said.
“The current bank regulatory climate is causing many community banks to unnecessarily restrict their lending activities,” said Michael Menzies, Chairman of the Independent Community Bankers or America. “Actions of bank field examiners are often unnecessarily putting constraints on community bank lending,” he said.
“Banks have to lend money to make money,” Timothy Long, senior deputy comptroller in the Office of the Comptroller of the Currency, told the hearing…Scott Polakoff, acting director of the Office of Thrift Supervision, said “…there is an element of truth in the bankers complaints [that examiners have been ordered to ‘crack down'].”
Bank examiners work for the Federal Deposit Insurance Corporation and the Treasury Department. Don’t tell me this is another boondoggle by Tim Geithner!
Will the political drama never end, so businesses can all get back to work and bring our economy back on track?
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