Five Things You Need to Know: CEO Pay Up... and So Are Bank Robberies
While executive salaries continues to rise, an increasing number of people are turning to "other" means to boost their compensation.
Kevin Depew's Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. CEO Pay Up...
The Associated Press wrapped up their review of 2007 compensation for the heads of companies in the Standard & Poor's 500, and guess what? Unless you are running a (successful) hedge fund, they probably made more money than you last year, even though five of the top 10 were leading companies whose profits fell sharply, according to the article.
The compensation review, based on data from the past two years, included salary, executive perks, bonuses, above-market interest on pay set aside for later and company estimates for the value of stock options and stock awards on the day they were granted last year, the AP said.
Some of the more egregious examples of pay de-coupled from shareholder return:
- American Express (AXP) CEO Kenneth Chenault saw his compensation increase 124% from 2006, while shareholders lost 13%.
Rick Wagoner, CEO of General Motors (GM), received a 64% bump in compensation while GM stock fell 19%.
Regions Financial (RF) head honcho C. Dowd Ritter's compensation rose 46% while shareholders lost 34%.
Still, there were a few heartwarming compensation stories to be found among the list of S&P 500 execs. Dillard's (DDS) cut CEO William Dillard's pay package by two-thirds, to just $1.1 million. And Google (GOOG) chief Eric Schmidt took home $1 in salary and a bonus of $1,898, down 14% from 2006 while shareholders saw a 50% increase.
2. ...and So Are Bank Robberies
Meanwhile, as executive pay continues to rise, an increasing number of people are turning to "other" means to boost their compensation. According to USA Today, bank robberies are up in cities across the country.
While the article was reluctant to draw a correlation between the increase in robberies and the economy, Chris Swecker, chief security officer for Bank of America and former assistant director of the FBI's criminal division, was a bit more blunt, telling the newspaper the economy is "driving some of this," and pointing out that they're getting "some anecdotal stuff from bank robbers."
Some figures from the article:
- Los Angeles has had 189 bank robberies this year, compared to 156 at this time last year.
Houston bank robberies more than doubled in 2007 to 115, and is on pace to equal that mark with 51 robberies already this year.
Milwaukee has seen 25 bank robberies this year compared with 12 at this time last year.
FBI spokesman Stephen Kodak told the newspaper bank robbery numbers often fluctuate annually, but the change usually is slight. "I've seen trends go up and down," he said. "But I've never seen anything really double."
3. Fires Linked to Gas Hoarding?
By now just about everyone knows the economic link between fires set by arsonists and the foreclosure crisis. In Cleveland arsonists have burned down nearly 100 vacant homes so far this year, a third of which were in foreclosure. Last year arsonists torched 231 vacant homes. But what about the economic link between fires and gasoline prices?
According to Massachusetts newspaper The Republican, recent fires in the eastern part of the state are being blamed on the hoarding of gasoline. In Dartmouth, fumes from gasoline stored in office water-cooler-type jugs started a fire inside an apartment, officials said. A similar fire stemming from gas-hoarding recently erupted in Schenectady, NY, the newspaper said.
4. Now Is It a Bubble?
Remember how housing reality shows really served to usher in the reality of the real estate bubble? A&E's reality series, "Flip This House" debuted on July 24, 2005. (Not sure what the fact the show remains highly-rated says about how far the bubble has deflated, but that's another story.) Anyway, we noticed some hype bubbling up from the ground surrounding this reality series debuting this Wednesday:
Black Gold: 2 Miles Deep or 6 Feet Under, a new reality-based series about "the high-stakes world of drilling for oil and has in Texas."
5. The Latest Victim of Trading Down
Ran across an interesting article over the weekend that appeared in Investor's Business Daily about the latest victim of "trading down": cosmetic surgery. Apparently, when the economy gets tough, the fat, wrinkled, saggy and lumpy choose to stay that way.
According to IBD, plastic surgeons are saying business is down 10% to 20% this year. Sales of cosmetic lasers have gone from double-digit growth to double-digit declines, the article says, and laser eye surgery volume is off 15% to 20%.
Of course, one area - eyes up here, buddy - remains, ahem, perky: breast enhancement surgery. Mentor (MNT), which controls about half of the U.S. breast implant market, continues to grow sales in the double digits, though earnings have (sorry) sagged a bit lately.
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