CEO

  • 22 Feb 2007 at 9:05 AM
  • Banks

Bear Stearns Bonus Pool: Banking In The Shallow End

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bearstearnslogo.jpgIs it too early to start talking about bonuses for 2007? Bear Stearns doesn’t think so. It has already set up a bonus pool for its top executives, according to a recent SEC filing.
From Reuters:

A maximum bonus pool of $165 million has been established for a group of five senior executives that includes Bear Stearns Chief Executive James Cayne, the company said. Payout will be pegged to the company’s return on equity. No executive can get more than 30 percent of the total pool, which can be as little as zero.
Bear Stearns’ compensation committee also approved the performance goals for a second bonus pool for seven other top executives. The maximum amount will be $140 million, with awards based on pretax return on equity, departmental income and expense controls.

These numbers include cash and non-cash bonuses. So if you do the math, the maximum bonus for, say, James Cayne for 2007 will be $49.5 million, or about $3 million dollars less than the co-presidents of Goldman Sachs got for last year.
We can’t help thinking that this suggests a new recruiting slogan for Bear Stearns: “Bear Stearns: It’s like working for Goldman in 2005. Wall Street The Old Fashioned Way.”

Bear Stearns Companies Inc 8-K [SEC]

Bear Stearns sets up $305 mln executive bonus pool [Reuters]

    • 21 Feb 2007 at 9:04 AM
    • CEO

    Who Will Run Univision?

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    The bidding war for the Spanish-language television network Univision was one of the greatest private equity stories of last year. Now the winners of that auction–including, Thomas H. Lee Partners, Texas Pacific Group, Madison Dearborn Partners, Providence Equity Partners and media mogul Haim Saba–are on the hunt for a CEO. Choosing the right man to run a company is one of the things that private equity firms pride themselves on doing very well. According to the New York Post, the owners of Univision are very close to naming their man.
    The announcement is expect in a week or two, and despite rumors it seems unlikely that Univision will be run by former Mexican president Vincente Fox. So who is going to run Univision?
    From the Post

    Univision is viewed as having strong talent internally, including current CFO Andy Hobson and President Ray Rodriguez.
    But Univision’s new owners are believed to be looking for a high-status bilingual exec with close ties to Mexico.

    Leave your best guess in the comments section below. No points for answering “George W. Bush.” He has other commitments until at least 2008.
    Univision Narrowing Search For CEO

      • 16 Feb 2007 at 11:27 AM
      • Banks

      Who Is Brady Dougan? Marathons, Diet Soda, America, Cross-Dressing and Derivatives. A DealBreaker Media Roundup

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      bradydougantakesovercreditsuisse.jpgIt’s now been a full day since Credit Suisse announced it had tapped American Brady Dougan to be its next chief executive. Everyone’s been scrambling to figure out just who this Dougan fellow is and what it means. Fortunately, DealBreaker spent our morning scouring the business media for news, insights and colorful stories so you don’t have to. Bloomberg, the New York Times and the Wall Street Journal‘s “Heard on the Street” seem to have all the best stuff. And since it’s Friday, and we love to do Media Roundups on Fridays, we bring you the Brady Dougan Media Roundup.
      Beverage Preference: Diet Dr. Pepper, according to the New York Times. This clashes with a 2005 Business Week story claiming Dougan was a Diet Pepsi enthusiast.
      To add to the confusion, the NYT notes “When the executive board of Credit Suisse went to dinner at the Savoy in Zurich Wednesday night to celebrate his appointment, Mr. Dougan dined on agnoletti and Diet Coke.”
      The unanswered questions: Has Dougan always preferred Diet Dr. Pepper? Has he switched? Or did someone get this detail wrong? Is Diet Dr. Pepper unavailable at the Savoy in Zurich?
      DealBreaker was too ashamed to contact Credit Suisse with these pressing questions.
      Nationality: American. First American ever to run Credit Suisse.
      Exercise Preference: Marathons, according to the NYT, the Wall Street Journal and just about everyone else. The NYT has the killer detail—”his best time was 2 hours and 21 minutes (a pace of about 5 minutes and 40 seconds a mile).” Sometimes works out twice a day (NYT).
      Personality type: He’s a “shy workaholic” (Times) who sometimes works “18 hour days” (WSJ).
      Work ethic: “Legendary” (NYT). Known to arrive at work at 5 am.
      Age: Forty-seven, which as almost everyone notes, makes him the youngest head ever of “a global banking giant” (NYT).
      Fashion statement: It seems that everyone notes he doesn’t wear cuff-links. But this is old news. Business Week noted it in 2005. Who wears cuff-links in 2007 anyway? The NYT goes further, describing Dougan as ” disheveled.”
      Marital status: Divorced. Two kids. (NYT)
      Social life: “Intensely private” the NYT notes, adding that Dougan “does not appear in the social pages nor does he seem to revel in the fine wine and bright lights of Manhattan’s financial elite.” Indeed, a search of NYSocialDiary.com found not one entry for Dougan.

      Financial background:       He started out as a derivatives guy, and his elevation makes him the first derivatives guy to run a global banking institution. (Bloomberg)
      Managerial Reputation: He’s a famous cost-cutter. He cut back on town cars (NYT), color copying and staff parties (Bloomberg)

      Risks:       “A question mark is Mr. Dougan’s ability to lead Credit Suisse’s other core business, wealth management,” the WSJ says.
      Hidden Talent: From the Times of London: “he has twice dressed up at corporate functions as the blonde one in Abba. The female one, that is. Agnetha. Apparently the Swiss contingent weren’t terribly amused.”

      Stepping Lively at Credit Suisse       [New York Times]

      The American in Zurich       [Wall Street Journal]

      Dougan Leads Derivative Traders to First Top Bank Job       [Bloomberg]

        • 12 Jan 2007 at 3:48 PM
        • CEO

        Those Overpaid, Crooked CEOs

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        Everyone knows that chief executives at public companies are overpaid by the corporate boards they keep in their hip pockets. Afterall, the Pulitzer Prize winning New York Times business writer Gretchen Morgenson tells them so every chance she gets. In fact, they are so overpaid that a lot of them are fleeing to privately held companies…obviously out of embarrassment at their ill-gotten gains. Or, you know, maybe not.
        Here’s Steven Kaplan writing on the Harvard Law School Corporate Governance Blog:

        Consider what this exodus of talented public company executives to private equity-funded companies means. These executives can certainly get hired as CEOs of public companies. If they were so overpaid, they would not leave the public companies. The fact is that many of them are leaving to run private equity-funded companies.
        This also suggests that CEOs do not control their boards and get the boards to overpay them. On the contrary, the fact that CEOs are leaving suggests that public company boards may not be paying their good CEOs enough. I am encouraged because it may finally have become apparent, even to the New York Times, that U.S. CEOs, boards, and corporate governance are subject to market forces. In addition to the fact that public-company CEOs can earn more as private-equity company CEOs, here are a few additional observations that suggest that the criticism of CEOs and boards may have gone too far.

        Are CEOs of U.S. Public Companies Really Overpaid? [HarLaCorGov blog]

          • 08 Jan 2007 at 9:39 AM
          • CEO

          Does Stakeholder Democracy Equal Politicized Corporations?

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          Alan Murray’s essay on the fall of Bob Nardelli in the Wall Street Journal last week got a lot of attention. Murray pointed out that under Nardelli’s tenure, Home Depot had doubled sales and more than doubled earnings but this wasn’t enough to save his job. Nardelli, Murray argued, hadn’t adapted to the new requirements for chief executives of public companies.

          What Mr. Nardelli missed . . . is that in the post-Enron world, CEOs have been forced to respond to a widening array of shareholder advocates, hedge funds, private-equity deal makers, legislators, regulators, attorneys general, nongovernmental organizations and countless others who want a say in how public companies manage their affairs. Today’s CEO, in effect, has to play the role of a politician, answering to varied constituents. And it’s in that role that Mr. Nardelli failed most spectacularly.

          There’s little doubt that this is at least partly correct. The role of a CEOs have become more complex, and the proponents of shareholder democracy and the latest trends in corporate governance want to make it even more so. The question we have, however, is whether or not this is a good idea. The more focused CEOs are on politics, the less they can focus on things like making money. This will no doubt create more and more opportunities for private equity firms taking companies and management teams that don’t want to play politics out of the public markets. But it’s far from clear that this is the best way to run our public companies.
          Over on the Organizations and Markets blog, Peter Klein points out an even more fundamental concern. The very nature of the type of person likely to succeed under the new model of corporate governance is likely to change. Quoting from Ludwig Von Mises 1944 book Bureacracy, Klein notes:

          In such an environment the entrepreneur must resort to two means: diplomacy and bribery. He must use these methods not only with regard to the ruling party, but no less with regard to the outlawed and persecuted opposition groups which one day may seize the reins. It is a dangerous kind of double-dealing; only men devoid of fear and inhibitions can last in this rotten milieu.

          What a mighty strange way to respond to the last round of corporate scandals–by introducing the concerns of one field even more dominated by scandal than corporate governance: politics.
          The New Model CEO [Organizations and Markets]

            • 03 Jan 2007 at 12:02 PM
            • CEO

            Home Depot, Now $210M Poorer, Still Has No Where To Open New Stores

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            nardelli.jpgWe were going to try our usual contrarian take here and explain that $435 million over six years isn’t that much money. But you know what? It is. Especially with falling profits diminishing profit growth and declining market share.
            We know that Bob Nardelli was probably forced out but really, how much forcing does it take when a guy’s got $210 million in severance coming to him? We keep thinking that Nardelli was probably humming “Damn, It Feels Good To Be A Gangster” as he walked out the door yesterday.

            Home Depot Inc., the world’s largest home-improvement retailer, ousted Chief Executive Officer Robert Nardelli after investors criticized him for earning $225 million during his six-year tenure.
            Home Depot invited further criticism by sending Nardelli, 58, off with $210 million as part of his separation package. Vice Chairman Frank Blake, 57, will replace Nardelli immediately, the company said in a statement.
            Home Depot lost market share to Lowe’s Cos. since Nardelli started in December 2000, and the shares declined 7.9 percent. The company is headed for its smallest annual gain in profit in at least nine years.

            Home Depot’s Nardelli Ousted After Six-Year Tenure [Bloomberg]

              • 05 Dec 2006 at 4:25 PM
              • Airbus

              The Yacht Wars Are Over: Let The Super-Corporate Jet Wars Begin

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              airbus380.jpgSomeone has finally discovered a use for the useless Airbus superjumbomamoth jet A380—converting them into personal jets for corporate executives!
              Writing in his Tuesday Morning Quarterback column, Greg Easterbrook describes plans how versions of the new superjets from Boeing and Airbus into luxury personal jets.

              The new Boeing 787 Dreamliner, due at airports in a couple years, is expected to sell to airlines for about $180 million and seat 300 passengers. Last month, Technik unveiled its concept studies for a personal luxury 787, expected to cost around $250 million. In Technik’s proposed layout, the VIP 787 “master stateroom” has “his and hers bathrooms.” There are also “two en-suite guest cabins.” More: “The dining and conference room with full communication facilities is a prime feature of the design, highly visible on entering the plane. The centrally located feature dining table seats 10 for elegant and comfortable dining, in fully certified seats. Dinner service is effortlessly carried out from the buffet credenzas on either side of the dining table. Full height wardrobe storage is provided for guest coats and bags. As required, a 42-inch plasma screen can rise up from the credenza to the aft of the dining table. This room can be privatized from the entrance hall and forward lounge by solid sliding doors. The integrated movie theatre is a complete entertainment extravaganza. It is the ideal live entertainment venue as well.” Plasma TVs everywhere — you’re going to climb aboard your own private $250 million mega-luxury jet and just watch television?
              Most overdone and offensive will be the personal version of the A380, a jetliner designed to carry about 600 passengers. The personal version will be called the VVIP380 and will sell for $400 million or more, depending on the level of interior luxury. Technik says it expects at least 10 VVIP380s will be purchased, and implies most will be bought by oil sheiks. Because the A380 has two decks, in a corporate-jet version, one entire deck would be reserved for the CEO, the other deck for underlings. Go here and have a look for yourself. Airbus calls the proposed plane “a flying palace.”

              How Long Until Some CEO Flies in an Entire Personal Airbus 380 to a Conference to Denounce Fossil Fuel Waste? [ESPN.com]