So by your own admission, the only difference is whether she'll have to pony up the extra dough to exercise. Once again, the government has the option to exercise those warrants. It didn't. You missed a key part of the pecking order. Oops. The creditors come first, whatever left is first paid to the preferred, and both AIG and Citi have preferred shares OTHER THAN the governmental ones. Had the government converted, it will be among the others fighting for the leftover carcass. And it's not clearly who gets what. If the board ONLY considered the interest of its 80% owner, it would also be inviting a lawsuit. In fact, there would likely be lawsuits either way. By "same difference," you really mean "huge difference" right? Here is the case if it were another shareholder other than the government. If I'm the CEO and I'm thinkin', I'm getting paid peanuts, I may opt to go the diplomatic route and bow out peacefully cuz it's always a good idea, but other than that, I have about zero incentive to maintain a lovey-dovey feelin' with said shareholder. The government on the other hand... can make your life tough in more ways than one. It's hard for me to keep track with you. To "Particular Matters." Once again, did you bother reading your own article? It said the "Designated Preffered Stock (that's the government)" can vote by proxy regarding these "Particular Matters," defined in the paragraphs immediately following as: 1. Authorization of Senior Stock 2. Amendment of Designated Preferred Stock 3. Share Exchanges, Reclassifications, Mergers and Consolidations. Do you see setting executive comp in there somewhere? I must have missed it. As a matter of fact, right at the beginning of the article, it clearly stated: "General. The holders of Designated Preferred Stock shall not have any voting rights except as set forth below or as otherwise from time to time required by law." Need a dictionary? So please, go ahead and challenge again my assertion that the government has "almost no voting rights." Already shown above to be not true. But if the commons want to force out the preferred, they may do so. All they have to do is magically conjure up the money to redeem the Designated Preferreds. Yes. The one you just misread? Absolutely. You have never established with any evidence that the government is the majority owner of Citi, because it isn't. It has voting rights with regards to certain issues, none of which being setting exec comp, which is the issue at hand. It also never followed proper procedures to do so. And btw, even if it were a majority COMMON holder, it would still have to call a proxy instead of calling Win Bischoff and Bob Rubin, before he, ahem, retired and saying "listen buddy, I want to reduce Vikram's pay." That actually would be a pretty good way to get sued. Double points?
No I haven't. It "could" in the case of AIG, as a shareholder, subject to a vote (yes, unfortunately we do have to take care of a couple of procedural issues," but only AFTER it exercises its warrants, which it has yet to do. So it "can't." And it certainlly "CANNOT" in the cases of Citi, JPM, BoA, USB, etc etc etc, which it isn't the majority holder, hasn't called a vote or followed proper procedures, which it tried to do any ways. I called it federal arm twisting. Walks like a duck, quacks like a duck...
but it already paid the money and has become an equityholder to whom fiduciary duties are required - big difference. - uh yeah, guess who's the biggest creditor here? But anyway we're not in bankruptcy yet so this doesn't quite kick in - it's interesting to note whether or not the "vicinty of insolvency"/Credit Lyonnais duties kick in, or even more itneresting, whether or not Revlon duties kicked in, but that's a whole separate enchilada. If somebody owned 80% of my company and pulled it out of bankruptcy, they are my boss, plain and simple. Gov't or no gov't. Dude it's not an article it's a clause of the stock purchasee agreements, setting out their votig rights, which are pretty substantial. No they don't formally have the power (unless they get the seats on the board which they are entitled to) to set comp, but as the de facto owner of the company they really really do. Actually you said "doesn't have voting rights" And anyway other than director elections, what *other* voting rights does the government lack here? They basically have a stranglehold over the existing capital structure and for any change of control transactoin.....and they get seats on the board....directors & change of control are the main things that SH's vote on, so...uh.....yeah, that doesn't qualify as "almost no"(ne) considering that change of control is probably the most common thing put to SH votes..... LOL- can they? I'm not going to bother looking up the terms of redemption of the preferred stock - but anyway good luck finding somebody to get together the 100 billion or so in cash to buy back the government's Citi interest. As a taxpayer I wish they would...but.... What are you even talking about? Please cite laws for this argument, for the third time. Uh actually it wouldn't have to do that, it could install its own directors in a proxy vote and have them fired. Your welcome for this tutorial. Really? What form of action would THAT be? A minority common shareholder would sue ANOTHER majority shareholder for reducing the compensation expenses of the company as well as saving it from bankruptcy? LOL - woudl that be an inverted derivative action? I'd like to see that cause of action...that's like suing the state when you win the lottery.
Just when you thought no one would be stupid enough to want to extend this to all business, Barney Frank proves you wrong. http://www.financialweek.com/apps/p...0203/REG/902039977/1003/TOC&template=printart
That would never pass, if you get federal funds and a condition of getting those funds is a maximum pay scenario ...no problem. But you can not tell a private company how to do business. DS
Then they wouldn't be private, smarts, they'd be public. Hedge funds, which are cited in the article, are all private. This is getting more ridiculous by the minute. How can ANYONE justify what Barney Frank is proposing here? It's ludicrous. It's communism, pure and simple.
LOL there's no such thing as a publicly traded private company. Stop thinking you are the "internet champion" and go lie and spin stuff like lawyers do. You're actually somewhat good at that.
For a lot of these middling level college grads or MBA types like bigtexx and TJ I think it is sort of like teen age girls idolizing a pop star. I remember between careers. going out to lunch with a couple of guys at a boring job I had for a month or two at at title company. The job paid like $8/ hr, was boring and dead end and my coworkers were lamenting that Paul McCartney was in the 50% bracket in England and how unjust it was to take half of his $ 80, million that year if I remember. All they could think about is if half of their $8/hr was taken. The guys were even libertarians!! Edit it would have been funnier if they were libertarians, but it was a typo or brain fart. They were'nt even libertarians.
LOL, that was assumed, genius, or else you can tell me where in the article on Frank it says he is going after private companies. I haven't read the legislation but I assume it amends the federal securities laws, which apply to public companies (mostly), probably because that's the only constitutional way to do it so either DaDakota is using private companies in the colloquial non-legal sense (in the sense that it is not state-owned) and actually referring to public companies (my assumption) or he is talking nonsensicality that is utterly irrelevant to the bill (also a possibility) Anyway, go back to doing what it is you do. You are actually somewhat good at that. For the record, this bill by Frank is part of an ongoing effort to get corporate america to do what it was supposed to do by itself. It's very clear that the executive compensation is broken and not functioning efficiently - as I noted earlier there's a number of economic theories as to this. I don't feel like doing a long post on this now but it has to do with an imbalance of short and long term interests and sequence of messed-up incentives. The proposed legislation by Frank serves as a kick-in-the-ass to corporate america to get moving on Say-on-Pay resolutions - which, horror of all horrors, gives shareholders a non-binding advisory vote on executive compensation. Thus far only a handful of public companies have adopted this, most notably AFLAC, which held it's first vote on CEO compensation this year (they approved it).
Why hasn't there been a salary cap for the top dogs at Freddie and Fannie when they are in fact federal employees? Maybe cause Obama took 100K in donations from these guys? You libs are full of crap.
Way to be informed - those companies are basically in a government conservatorship bro, you think salaries aren't capped? You should be banned from discussing anything to do with finance, economics, or politics. You really suck at it. And that's me being nice.
Assume this, assume that... That's all you do anyways. My post is a response to yours which is a response to DD's. He said that the government cannot tell private companies what to do, while you come running in saying Yeah they can... Well,THEY CAN'T. You responded to the wrong statement, so now you come in with your "that was assumed" bull*****. Please... Ego hurting? I'm sure it takes quite a toll on your mind. Just like the government cannot limit executive pay UNTIL they exercise their warrants. They can express what they would like to see and threaten with the controlling power as they are doing now, but that controlling power doesn't come into play until they excercise. Of course, CITI and AIG are not going to try their luck at that game. (Look, even I can play a semantics and legal game too, chump) So you can play your spins and little games to make your ego think you are the ***** but most of us know better.
Actually government regulates private companies all the time, as they are subject to all manner of state and federal regulation. This even applies to federal securities laws in certain situations. Whether or not they are regulated as issuers under the 33 and 34 acts is an open question - why don't you just do us all a favor and pull up the legislation so we can resolve this ****-measuring contest about what DaDakota meant - as I know we are all waiting with baited breath for the definitive DD spin on this...maybe he'll even put it in a youtube video for us. Anyway - we should let DaDakota explain what he meant - I will wait to claim this internet victory over you until later. You're welcome. See, that's the issue - you're playing semantics, based on the old capital structure and i'm operating in the real world. The government owns 80% of AIG, this was noted in the press release. They can exercise whatever power they want that is commensurate with being an 80% owner. Not to mention the fiduciary obligations that they are owed. Not to mention that, replacement of management, inter alia, was conditional upon the bailout. If there is so much legal power residing in common AIG shareholders (laughably enough, I actually am one, LMFAO) why aren't they doing anything about it? Please identify the basis of your claim that common shareholders are the repository of all power (they are not, in the real world - The laughable part is that you are assuming common shareholders of AIG actually want to pay massive base salaries to CEO's to the extent that they have a legally cognizable claim when majority shareholders feel otherwise.....thta's just absurd on its face. You guys have not identified a single solitary Code provision, internal statute, bylaw, common law rule, CFR Reg, or Exchange rule that is being violated when an 80% majority shareholder gives advice to management on executive comp There is a reason for this. The reason is that there is not one. if there was one, you would know, because I would tell you. You're welcome. The consensus seems to be otherwise. Anyway, ou know better . . . about what precisely? You're welcome.
For the record, I am on a run of serious ownage and internet victories in this thread. This is part of a larger pattern of stirring victories that I have recently accomplished. By this, I refer to the "Icehouse Meltdown," the unmasking of Jorge's joblessness, and the DaDakota "My Way or the Highway" Robbery, as well as a number of other smaller battles won. Thus far my victims, in this thread alone, include MFW, wakkoman, and Trader_Jorge, ghettocheeze, and f_mullegun. Not only have I obtained the rocketsjudoka Ippon of Approval for these feats, but even my longtime enemy, Fatty Fat b*stard, who himself is exiled from these parts by my fickle hand, has chimed in to voice his support. I ask you gentlemen, in all honesty, where is he who next dares challenge me? It is necessary to find another,as currently, I stand alone atop the mountain.
http://www.nytimes.com/2009/02/06/opinion/06hastings.html?em Please Raise My Taxes By REED HASTINGS Los Gatos, Calif. I’M the chief executive of a publicly traded company and, like my peers, I’m very highly paid. The difference between salaries like mine and those of average Americans creates a lot of tension, and I’d like to offer a suggestion. President Obama should celebrate our success, rather than trying to shame us or cap our pay. But he should also take half of our huge earnings in taxes, instead of the current one-third. Then, the next time a chief executive earns an eye-popping amount of money, we can cheer that half of it is going to pay for our soldiers, schools and security. Higher taxes on huge pay days can finance opportunity for the next generation of Americans. Clearly, the efforts over the past few decades to control executive compensation haven’t accomplished much. Improved public disclosure was supposed to shame companies into lowering salaries, and it obviously hasn’t worked. In 1993, President Bill Clinton changed the tax law to effectively cap executives’ salaries at $1 million a year, but that simply drove corporate boards to offer larger bonuses and stock options to attract and keep talent. More recently, “say on pay” proposals would have shareholders opine on their boards’ compensation decisions, but “say and pay” won’t change the fact that luring a top executive away from another company is never easy or cheap. The reality is that the boards of public companies hate overpaying for anything, including executives. But picking the wrong chief executive is an enormous disaster, so boards are willing to pay an arm and a leg for already proven talent. Putting limits on the salaries at public companies, or trying to shame them into coming down, won’t stop this costly competition for talent. Of course, it’s galling when a chief executive fails and is still handsomely rewarded. But with the concept of “tax, not shame,” a shocking $20 million severance package would generate $10 million for the government. That’s a far better solution than what we have today, not least because it works with the market rather than against it. Another advantage is that it would also cover the sometimes huge earnings of hedge fund managers, star athletes, stunning movie stars, venture capitalists and the chief executives of private companies. Surely there is no reason to focus only on executives at publicly traded companies. This week, President Obama proposed imposing a $500,000 compensation cap on companies seeking a bailout. It’s a terrible idea. We all want the taxpayers’ money returned, and capping compensation at bailout recipients will just make it that much harder for those boards to hire and hold on to the executives who can lead their companies to compete and thrive. Perhaps a starting place for “tax, not shame” would be creating a top federal marginal tax rate of 50 percent on all income above $1 million per year. Some will tell you that would reduce the incentive to earn but I don’t see that as likely. Besides, half of a giant compensation package is still pretty huge, and most of our motivation is the sheer challenge of the job anyway. Instead of trying to shame companies and executives, the president should take advantage of our success by using our outsized earnings to pay for the needs of our nation. Reed Hastings is the chief executive of Netflix.
In truee free market economy, these failing companies wouldn't get any TARP and end up like Lehman Brothers. The failed CEOs would go to the best performing companies, retire, or start their a new business. The cap doesn't affect senior bankers, it's just for senior management. In the free market model, the talent would leaving failed shops like Lehman Brothers and go to the strongest companies. The worst employees would be jobless. These other companies would end up being the new leaders of the financial industry, as they scooped up all the good people. I personally don't believe in any TARP at all, let all the inefficient companies fail. Wall street will be worse off for the first few years. The new Wall Street leaders would be run by more conservative leaders with better employees.
Not until it exercises. The whole whether preferreds are more bonds or more equity has been discussed to death by the FASB and they still haven't resolved that issue completely. For the time being though, preferreds != bonds meaning government != creditors, making your point moot. And you missed the point completely, hardly surprising. If my boss pays me millions, I'd have to be diplomatic for good times to roll. When I'm paid peanuts, I can afford to say FU. None of those so called "power" are specifically set out in your stock purchasee agreement. It didn't grant voting rights except in the case of (I'm repeating myself here): 1. Authorization of Senior Stock 2. Amendment of Designated Preferred Stock 3. Share Exchanges, Reclassifications, Mergers and Consolidations. If necessary, I can summarize the above in three words: "share dilution clauses." Essentially says the government maintains priority in the pecking order until the Designated Preferreds are paid off. It also reserve the right restrict new issues of Preferreds, which of course would reduce the value of the governmental holdings. Which brings me again to why you're a sh1tty lawyer. You really suck at interpreting documents. This is pretty standard stuff here. If you've EVER seen a new bond issue, you've seen things like this. Nor does the agreement grant rights to seat on the board, or make it the defacto owner. As a matter of fact, the item said specifically not voting rights except for what I've outlined above. Do you wish to rescind your document? Actually I said "almost no voting rights." Here is a direct quote: Any questions? Director elections, right to approve/disapprove M&A's and liquidations, right to grant/block new share issues, rights to common dividends, you want a full list? And in which companies specifically does the government have a stranglehold on the capital structure? It has so with AIG IF it exercises, which it hasn't. It doesn't with Citi, BoA, JPM, Wells Fargo, USB, etc etc but is trying to set exec pay any ways. That's a nice little twist right there Sammy. Now I don't think the commons can put in billions of dollars, which even if they could, shouldn't any ways. But nice of you to change your argument. Spin master at it again. Let me remind you that your initial assertion is that commons can't, as in not allowed to redeem the preferreds. Here's a quote of your post: The veto power of course has already been proven false. And they don't need to modify any bylaws to force the preferreds out. They can just redeem. Whether they should is a whole separate matter. Epic failure on your part... again. You missed a couple of steps there. It would need to exercise a warrant, call a proxy, vote on the proxy (most likely during the annual shareholders' meeting) to install new board members, call another proxy, vote on the new proxy to fire Vikram Pandit/set his pay/whatever. That'll take you a couple of months. Um yeah let's see, the majority owner treating the company as its own personal piggy bank, didn't follow proper procedures, didn't call a proxy, didn't bring forth a vote, without going through the board, just went right ahead and what, fired the directors, set exec pay. Nope, I can't see any reason why anybody would sue at all. Of course, all of this is only even an issue with AIG, not so with Citi, BoA, etc etc. Actually... Game Over. You Lose. Insert $10 billion to play again.
