CEO pay hikes double!
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| Wed, 07-28-2004 - 2:15pm |
Corporate Library survey finds median raise for S&P 500 CEO was 22.18% in 2003.
http://money.cnn.com/2004/07/28/news/economy/ceo_pay/index.htm?cnn=yes
The CEO's at the nation's largest companies saw their raises more than doubled in 2003 as the median raise handed out by S&P 500 companies to their top executives was 22.18 percent, according to a study by The Corporate Library.
The watchdog group said that stock options and awards of restricted stock drove the larger pay hikes. But most elements of the pay -- base salary, annual bonuses, restricted stock, long-term incentive payout, value realized from stock options and total compensation -- showed increases. The only type of compensation not to show a gain was the value of stock option grants during the year.
"This double-digit rise in pay shows that calls for pay restraint appear to be being ignored," said the statement from the group.
It said four S&P 500 companies -- Apple Computer (AAPL: Research, Estimates), Oracle (ORCL: Research, Estimates), Yahoo! (YHOO: Research, Estimates) and Colgate-Palmolive (CL: Research, Estimates), upped their CEO pay by well over 1,000 percent.
The compensation for all CEOs, a total sample of 1,429 companies, show median pay increases of 15 percent, up from 9 percent increases in 2002. The median is the pay increase at which there are the same number of pay increases that are greater and that are less.


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August 4, 2004
Halliburton Settles S.E.C. Accusations
By FLOYD NORRIS
The Halliburton Company secretly changed its accounting practices when Vice President Dick Cheney was its chief executive, the Securities and Exchange Commission said yesterday as it fined the company $7.5 million and brought actions against two former financial officials.
The commission said the accounting change enabled Halliburton, one of the nation's largest energy services companies, to report annual earnings in 1998 that were 46 percent higher than they would have been had the change not been made. It also allowed the company to report a substantially higher profit in 1999, the commission said.
The commission did not say that Mr. Cheney acted improperly, and the papers released by the commission did not detail the extent to which he was aware of the change or of the requirement to disclose it to investors. The S.E.C. said that Mr. Cheney had testified under oath and had "cooperated willingly and fully in the investigation conducted by the commission's career staff."
A lawyer for Mr. Cheney, Terrence O'Donnell, said the vice president's "conduct as C.E.O. of Halliburton was proper in all respects,'' adding that the S.E.C. "investigated this matter very, very thoroughly and did not find any responsibility for nondisclosure at the board level or the C.E.O. level.''
Mr. O'Donnell, a partner at Williams & Connolly in Washington, declined to answer a question as to whether Mr. Cheney had been aware of the effect of the accounting change on the company's profits.
The accounting change dealt with the way Halliburton booked cost overruns on projects. At the time, it was having large cost overruns on projects in the Middle East operated by its Brown & Root Energy Services business, which under its old accounting policy would have reduced its reported profit.
The actual change in accounting, the commission said, was permissible under generally accepted accounting principles, but the failure to inform investors that the change had been made - and of its effect on the company's reported profit - violated securities laws.
"At bottom, what this case is about is insuring that investors understand the numbers," said Stephen M. Cutler, the S.E.C.'s enforcement director. "If you change methodologies and don't explain that, then investors are not going to understand what they are seeing."
Halliburton's former controller, Robert C. Muchmore Jr., agreed to settle the S.E.C. action by accepting an order to cease and desist from further violations of securities laws and to pay $50,000. Neither he nor the company admitted or denied the commission's accusations. The company also accepted a cease-and-desist order.
Gary V. Morris, who was the chief financial officer at the time the actions took place, did not settle. The commission filed a civil lawsuit against him in Federal District Court in Houston.
A lawyer for Mr. Muchmore declined to comment while one for Mr. Morris did not return phone calls.
David J. Lesar, who succeeded Mr. Cheney as chief executive in 2000, said, "We are pleased to bring closure to this matter."
The commission said the $7.5 million penalty paid by Halliburton "reflects the commission's view that there were unacceptable lapses in the company's conduct during the course of the investigation, which had the effect of delaying the production of information and documentation necessary to the staff's expeditious completion of its investigation."
Until the second quarter of 1998, Halliburton had dealt with cost overruns on projects by taking a loss for the amount of the overrun unless and until the company that it was working for agreed to pay part or all of the overrun. But confronted with a large overrun on a fixed-fee project to build a gas production plant in the Middle East - the commission did not say in which country - Halliburton changed its policy so that it would record the income it thought the customer would eventually agree to pay.
That change in policy was not disclosed until March 2000, when the company filed its 1999 annual report with the S.E.C. The commission said that pretax profit for all of 1998 was reported at $278.8 million, 46 percent more than the $190.9 million that would have been reported under the old accounting.
The first three quarters of 1999 also had earnings that were about $40 million higher than they would have been, although the percentage increases were smaller.
At the time the accounting was changed, Halliburton was preparing to merge with Dresser Industries and was dealing with a decline in the company's share price partly caused by slumping oil prices. It reported a 34 percent gain in profit for the quarter, far better than other oil services companies were reporting, and Mr. Cheney said then that "Halliburton continues to make good financial progress despite uncertainties over future oil demand."
The commission said yesterday that the gain would have been just 6.7 percent without the undisclosed change in accounting policies.
In a call with analysts at the time, the company said that profit at Brown & Root Energy Services rose 40 percent during the quarter but did not disclose that the operation would have reported a loss had it not changed its accounting practices.
Halliburton's reported profits for the quarter exceeded analysts' estimates but would have fallen far short of them had the change not been made, the S.E.C. said. Nonetheless, the company took a cautious tone in that conference call, leading analysts to cut profit estimates and causing the stock to fall $3, to $37.88.
Halliburton said yesterday that it would take a $7.5 million charge in the second quarter of this year to reflect the penalty it agreed to pay. That will increase the per-share loss previously reported by a penny, to 13 cents.
Shares of Halliburton rose 8 cents yesterday, to $31.38.
http://www.nytimes.com/2004/08/04/business/04halliburton.html
That whole Halliburton/Cheney link stinks.....
Jobs report stuns stocks. Major indexes tumble, led by tech losses following disappointing read on July payrolls.
http://money.cnn.com/2004/08/06/markets/markets_newyork/index.htm?cnn=yes
A hiring shock
July payroll growth far shy of Wall Street forecasts; unemployment rate down to 5.5%.
""This year may be President Bush's best year; it would have been President Clinton's worst year," Kerry economic adviser Aida Alvarez told CNNfn. "
Quote from.......
http://money.cnn.com/2004/08/06/news/economy/jobless_july/index.htm?cnn=yes
None of this will please President George Bush as he battles for re-election in November. He will no doubt try to shift attention away from the job numbers' failure to meet expectations, and towards the 1.5m jobs that have been created in 11 straight months of employment growth (as well as the latest unemployment figure: the rate fell in July, from 5.6% to 5.5%). However, as his opponents are so keen to point out, a net 1.1m jobs have been lost since he took office, and there is no chance of reversing that loss before the election. Furthermore, the fall in unemployment might have as much to do with the low participation rate as with job creation.
Another worry for the president is weaker spending. One of the abiding motifs of America’s recovery so far has been the “indefatigable consumer”. But the American consumer is now looking as tired as the cliché. According to figures released on Tuesday, consumer spending fell by 0.7% in June. The Federal Reserve’s recent anecdotal report on the American economy, the so-called “beige book”, paints a greying picture: Chicago is doing well, but New York, Cleveland, Richmond, Kansas City and San Francisco show evidence of a slowdown, albeit modest.
It is becoming increasingly apparent that the gains from America’s productivity-led recovery have been unevenly distributed. Corporate profits are strong, and business investment leapt by almost 9% in the spring. But pay has lagged behind, and the wages of production workers have stagnated. Of course, through its tax cuts, the White House has done its best to provide what employers will not—a substantial boost to take-home pay. But the effects of those tax cuts are beginning to fade, just as prices at American petrol pumps rise.
What consumers do not earn, or receive back from their government, they must borrow. Household debts grew by more than 10% in the first quarter, and now add up to more than 115% of disposable income. HSBC, a bank, says that the recovery is built on “marshlands of debt”. With interest rates now rising, this ready source of spending power may be about to dry up. Indeed, the beige book reports that borrowing by homebuyers declined in San Francisco and New York, two of the hottest property markets in the country.
According to Alan Greenspan, the chairman of the Fed, the American economy has trespassed on to a “soft patch”. All recoveries go through them from time to time, he says, and this one should prove short-lived. He may well be right. But if the soft patch turns out to be something a bit marshier, the recovery’s foundations may not be as secure as many had thought.
http://www.economist.com/agenda/displayStory.cfm?story_id=3079682
"But pay has lagged behind, and the wages of production workers have stagnated. Of course, through its tax cuts, the White House has done its best to provide what employers will not—a substantial boost to take-home pay."
The tax cuts haven't "trickled down" to the production workers or others in low paying positions.
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