First off, in case any of you were unaware, our stance regarding "say on pay" is that no CEO should ever allow him or herself to be roped into such a demeaning situation. You might as well work on commission. We don't even think anyone should entertain a discussion on the matter. The board either believes in you 100 percent or not at all. Unfortunately, sometimes the snakes known as your shareholders trick you into walking into the room under the guise of bagels and lox, and them bam! they surround you, and start demanding your compensation be tied to performance. This happened to Goldman Sachs CEO Lloyd Blankfein yesterday. He handled it all wrong.

Blankfein told shareholders pushing for a "lid on excessive pay" at GS's annual meeting that he was very concerned about the company adopting the proposal, as it would “create a feedback loop. It would create a cloud, a constraint, a limitation on decisions that have been at the heart of what a board has done." The whole thing was said to be very impassioned and that at several moments, one could detect a slight cracking in Blankfein's voice. Huge mistake. Obviously Blankfein, who was paid $70 million last year would like to keep himself in the lifestyle he's become accustomed to. But as the CEO on Wall Street who's fucked up the least in recent memory, he should be playing it cool. He should've walked in there and said "I am Lloyd fucking Blankfein. There will be no say on my pay. In fact, bitches, just because you have offended me, I want my 2008 bonus package to be determined today. $100 million. That's right, a unit, baby." Then dropped the mic and walked off. And you know what? They would've said okay. You want say on pay, I have two words for you, people: Jimmy Cayne. I hear he's looking for work, and will agree to just about anything.

Goldman Chief Says ‘Say on Pay’ Would Be Damaging [DealBook]

Best entry wins one of the free SAC sandwiches.

A Brighter Spotlight, Yet the Pay Rises [NYT]

There’s an outrageous article in Crain’s today about executive perks. Apparently senior management at some banks get to fly on the corporate jet. Others have their country club tabs picked up by the company. A few—VERNON JORDAN, LAZARD LTD, SHAME HIM IN THE STREETS—even get their apartments paid for, at up to $24,000 a month. Crazy, isn’t it? No, it’s not crazy. What’s crazy is that everyone—author, shareholder activists, Tim Robbins and Susan Sarandon-- still fails to get it. If I agree to run one of these things, I want to plied with gifts at every turn. This job is really hard and I’m very sensitive and the suggestion that I’m not worth tons of freebies plays on the deep insecurity I attempt to mask with a self-righteous attitude and shameless bravado. That makes me unhappy and you know what happens when I’m not happy—I destroy billions in shareholder capital (I might do that anyway, but without the gifts the threat is more imminent).

Plus, the notion that shouldering my basic costs of living is a “gift” is absolutely absurd. That’s a basic requirement of your job in keeping me comfortable enough to work. I never, EVER, would’ve taken this gig if I thought I would be asked to pay for wherever I happen to rest my head. It's extremely demeaning. Know what I would consider a “gift” and something I’d even think about standing before shareholders and fighting for? Free access to the Olsen twins, which I hear Goldman has no problem subsidizing for LB, though, as this video shows, he made be getting duped.

Including $45.76 million in vested stock, Lloyd Blankfein "earned" $100 million in 2007, which the Goldman CEO tells DealBreaker he'll be putting toward the Bowflex machine he needs in order to train for his upcoming fight with Lou Dobbs. Other senior executives at firm also got paid a decent amount. Meanwhile, fellow 941 Park Avenue resident, Stan O'Neal, is still, hideously, being asked to explain to Congress why he should get to keep his $163 million paycheck. Thank god Blankfein is moving out of that dump ASAP, otherwise, those elevator rides could get awkward again, and I don't think anyone wants to relive the uncomfortableness that ensued after 2005's non-denominational Key Party, except for Mark Haines, who used his press pass to gain entry, and made out like a bandit.

Goldman Sachs CEO gets $100 mln in pay, stock [Reuters]
Goldman Sachs Proxy Statement [SEC]

Unsurprisingly, only one of these little elves is smiling.

Starting January 1, the U.S. Golf Association’s Golf Handicap Information Network will stop displaying complete scoring records, course locations and dates of rounds played for public consumption and ridicule. Unfortunately, they didn’t take into account the HUGE following Dealbreaker has among caddies, who’ve already promised to take and pass on copious notes regarding who routinely breaks triple digits (on his best days: Blankfein) and who calls the black cads “boy” (surprisingly: O’Neal)*. Nice try, USGA.

Members Only [Breaking Views]

*I'm supposed to inform that these examples of espionage, as far as we know, are made up. Why, what have you heard?

The Wall Street Journal's Carol Hymowitz reports this morning that today's CEOs are devoting far too much time to actually failing at their jobs and not enough to determining who will get to be CEO next when those failures are made public, and they get canned. According to Hymowitz, "Chief execs are too busy focussing on the shit of the present so that when new shit comes to light, their companies are shit out of luck." I think-- I think but I'm not sure-- she might be referring to Chuck Prince/Citigroup and Stan O'Neal/Merrill Lynch. She's obviously not talking about Jimmy Cayne/Bear Stearns, because Big C spent at least an hour last Tuesday afternoon coming up with a few options for what BSC should do in case of an emergency. Unfortunately, Cayne couldn't choose one ("I can't decide, I love them all. It would be like asking me to choose between White Widow and Northern Lights-- impossible.") and in a voicemail he probably regrets leaving, asked us to "put it to the DealBreaker audience." So:

And we’re back to Thain already.

Not that there was any doubt but it’s now official. Here’s the Merrill Lynch press release announcing that Thain takes the helm on December 1st.

"Merrill Lynch & Co., Inc. (NYSE: MER) today announced that John A. Thain, chief executive officer, director and member of Management Committee of NYSE Euronext, Inc. and former president and chief operating officer of Goldman Sachs Group, has been appointed chairman and chief executive officer of Merrill Lynch, effective December 1," Merrill said in a statement.

Full Press Release after the jump.

Let’s take a bit of a breather from the news about John Thain and Merrill Lynch. (We’ll come back to that momentarily, no doubt.) In all the excitement, we almost overlooked an important column by the Wall Street Journal’s Holman Jenkins. In today’s Journal, Jenkins urges some sobriety in the face of losses at Wall Street firms, something that’s been sorely absent in recent weeks.

Indeed, at some point—after the executions of Stan O’Neal and Chuck Prince and while the mobs were turning their attention to Bear Stearns’ Jimmy Cayne—the urge to overthrow the heads of so many Wall Street firms began to take on tones that almost recalled the French Revolution. After losses at Bear Stearns were less than expected, Cayne now looks safe but it’s worth taking a step back and wondering if anger at chief executives over losses might have gone too far.

Certainly calls for jailing O’Neal or Prince—as we heard from Bill Lerach, a plaintiff’s laywer who is himself on the way to prison—went too far. Losing money is not a crime, at least not yet. But the more broadly felt outrage at the size of severance packages for O’Neal and Prince were only slightly more measured. As Holman points out,
“Misplaced moralizing over business losses also infects the discussion of exit packages. Notice how these discussions substitute the language of reward and punishment for what are really matters of contractual relations and strategic, before-the-fact incentives.”

To wit, Merrill Lynch CEO Stan O'Neal's severance is not a bonbon from a loving board, but what the board feels legally obligated to pay him, based on commitments made before the results of his tenure were known. Nor was he without proper incentives, then or now. His chief performance pay was Merrill stock, and his holdings are worth millions less than they were before the subprime losses emerged.

That won't satisfy Mr. Lerach, who thinks Mr. O'Neal should be imprisoned. But nobody in his right mind would take the job on such terms given the risks entailed in running a modern business, including the risk of civil or criminal litigation if things go sour. Indeed, what towering pay in the risk-taking professions really may be telling us is how utterly averse to risk-taking ordinary human nature is.

One fact that will surely drive the Lerach’s of the world up the wall is that the recent ousters on Wall Street are likely to result in even higher pay for management. The risks of running a bank or a brokerage are greater now than they have been at any time in the past—risks of prosecution, lawsuits, and ouster—and the top managers will demand to be compensated for those risks. Already the wires are carrying stories telling us that one of the surviving CEOs—Lloyd Blankfein of the House of Goldman—may receive as much at $75 million this year.

Losing Money Is a Crime [Wall Street Journal]

Whoever said sexism isn’t alive and well in America has been asleep behind the wheel or living under a rock for, well, forever. Now, before you get all PC on us, save your breath. The glass ceiling here at Dealbreaker is not only buttressed by myself and Bess Levin – but John Carney smiles down on us and his other female minions from time to time sitting on his glass thrown in his ivory tower.

In addition to Dealbreaker, Neiman Marcus management has an interesting division of how they divvy up “allowances” to their CEO’s. Karen Katz, President and CEO gets an annual $25k allowance for clothing while CEO Burton Tansky doesn’t get jack. He does however, get a $12k car allowance (will that even get you a Ford Festiva?). James J. Gold, president of Bergdorf Goodman received a $167k “cost of living” adjustment for relocating from Texas to New York and an additional $296k for NY state taxes. Footnoted.org poses the question – are women simply more focused on clothing while men are more focused on cars and taxes?

Dealbreaker.com gets to the heart of the matter – men get more tail when they drive a hot car. Women can only get men to listen to them if they dress slutty.

On how men and women differ… [footnoted.org]

We first heard about the alleged hookers and drugs adventures of former Broadcom chief executive Henry Nicholas while we were live on Squawk Box.

“Have you heard about the Broadcom story,” Becky Quick asked as we sat down and got mic’d in. “You’re going to like this.”

The story was so incredible—allegations of forced drug use, doping clients, ecstasy, heroin, cocaine, sex with prostitutes—that we hardly, well, credited it. Mostly, it seemed like a great lead in to a joke rather than anything more serious.

There were also serious problems with the story. The allegations were coming from a former employee who had used legal maneuvering to make sure the story became public. It was clearly aimed at publicly embarrassing Nicholas, whose attorney characterized the accusations as blackmail.

But the allegations took on a bit more credibility today when the Associated Press revealed that similar charges have been leveled against Nichols in the past. According to court documents the AP has uncovered, Nicholas had an illegal network of tunnels and rooms built underneath his estate. The network allegedly included a secret lair where Nicolas could "indulge his appetite for illegal drugs and sex with prostitutes," according to the work crew that built it. Apparently, the lair was hidden from both his wife and city officials.

But let’s not jump to conclusions. We’re sure it’s totally possible that the illegal, secret, underground lair is really just a workshop where Nicholas built birdhouses or something. And maybe these construction workers are blackmailing Nicholas too. Yeah. That sounds pretty plausible.

Or, you know, maybe the title of this 2004 Orange County weekly profile wasn’t quite as much of a stretch as we though. It’s called: Henry Nicholas, Superhero.

Former Broadcom CEO Accused of Building Secret Lair Under Estate for Sex and Drugs [Associated Press via Fox News]

Carl Icahn, Hank Greenberg and the New York Times all took shots at Wall Street’s love of golf this summer, but as Lloyd Blankfein’s drives will always gravitate toward the water hazard, so too will CEOs always land at the tee, a new book asserts. In “Deal on the Green,” David Rynecki defends the links as a second board room, “where up-and-comers can impress the boss and where CEOs can seal multibillion-dollar deals. Its no coincidence that many of the most admired people in business—Jack Welch, Bill Gates, Warren Buffett, Sandy Weill—always carved out time in their busy schedules for golf.”

In fact, a good putt in a Connecticut country club combined with some around-the-office golf witticisms (we suggest Mark Twain’s “Golf is good walk spoiled”) may be just what the caddy ordered if you want to make eight figures. According to Rynecki, Stan O’Neal rose at Merrill Lynch because, “some of the more influential Merrill people got to spend time with [him] on the course and saw a different side of him.”

O’Neal is tied for 77th in this month’s Golf Digest ranking of the top 200 CEO golfers. Some other notables include: Bear Stearn’s James Cayne (tied at 124), Lehman Brothers’ Richard Fuld (Tied at 154) and Morgan Stanley’s John Mack (200).

Of course, our totally non-scientific study of last quarter's share price movements compared to golf scores indicates that while golfing might be good for the executive it might not be so good for the performance of his company's stock.

CEO List 2006 (note the misspelling of “Executive” in the sub-headline) [Golf Digest]
A Tiger in the boardroom [The Economist]

When the indoor putting green became a necessary accoutrement to the chief executive office, everyone assumed that the “golf or work?” conundrum had been answered with a resounding “both.” But, as the Times reported recently, there is no tenable substitute for well-manicured sand traps and tree-lined fairways, even when your hedge funds are collapsing.

Yesterday, the Bespoke Investment Group blog posted the recent scores and handicaps of five CEOs: Stanley O’Neal of Merrill Lynch, Richard Fuld of Lehman Brothers, James Cayne of Bear Stearns, John Mack of Morgan Stanley and Lloyd Blankfein of Goldman Sachs. The Dealbreaker question of the day: is there any correlation between a CEO’s golf game and that other hobby, making money? Here are the results:

CEOs Ranked by Handicap
1. Stanley O'Neal (9.9)
2. Richard Fuld (10.3)
3. James Cayne (15.9)
4. John Mack (17.0)
5. Lloyd Blankfein (32.1)

CEOs Ranked by Percent Change in Stock Price This Golf Season
1. Lloyd Blankfein (+6.9%)
2. Richard Fuld (+3.14%)
3. Stanley O'Neal (-1.3%)
4. James Cayne (-3.49%)
5. John Mack (-9.86%)

Lloyd Blankfein, by far the worst golfer of the bunch who, on a really good day shoots under 110, pushed Goldman stock up nearly 7% since April. This could mean several things: while other executives hit the links, Blankfein is holed up in the office; his short game is only strong in the financial sector; or he is confused about how golf is scored. You decide.

[click to enlarge]

Have you ever thought your boss’s boss’s boss an incompetent jerk, completely out of touch with reality and only in touch with his bloated compensation package and secretary’s ass? Would you like him to walk a mile in your shoes? Perhaps you ought to suggest to someone that the ogre who signs your checks should voluntarily spend a day working alongside the company plebes (i.e. you), just to feel what you feel. According to the Wall Street Journal, it’s a “trend” that’s gaining in popularity, “thanks to a new breed of hands-on CEOs keen to stay closely in touch with their troops.”

So far, the biggest names involved are Walt Disney, Continental, Sysco, and Amazon.com, but wouldn’t it be radical if some first-year analyst at 277 Park could get Dimon across the street and to the 2nd floor (or as we like to call it, the reverse penthouse, where we’re told by reliable sources it smells like Cheetos and feet), making excels and grabbing ankles with the team? If a brash young trader at SAC could get Stevie Cohen off his high horse so he could see how the other half lives? We don’t need to tell you the joy it would bring to the DealBreaker Headquarters to hear that Tom Hudson had to swab his own deck, water his own hanging plants.

A word of caution to those considering guinea-pigging their CEOs—Harlan Cleaver, chief information officer of DaVita notes that it wasn’t until after he enrolled in Reality 101 that he “really realized how incompetent entry-level people are.”

Top Brass Try Life in the Trenches [WSJ]

[click to enlarge]

If your father is a CEO, here's a gift idea that transcends a bad mug/tie/card/12 pack of golf balls (you should be mailing that today if you haven't by the way). Believe it or not, aside from the golden (but literal) showers of lavish wealth, CEOs are crappy fathers, which is what prompted Tom Stern, the CEO of LA-based recruiting firm Stern Executive Search, to write CEO Dad: How to Avoid Getting Fired by Your Family, published by Davies-Black. Stern used to be a former comedy programmer for HBO and has guest blurbs from pals Jerry Seinfeld and Jay Leno. Fortune's Anne Fisher interviewed Stern about the book. What follows is the (slightly embellished) wackiness that ensued:

Q. Why do successful executives so often fall short when it comes to personal relationships like marriage and parenthood?

A. It's not that CEOs are cold and uncaring [they’re cold, uncaring megalomaniacs] - it's just hard to bond with a kid via e-mail [unless that email is StiffyMail and your son is a teenager]. And those bedtime memos [One Memo, Two Memo, Red Memo, Blue Memo]! Not good! And of course, if you used to work at Enron, well, you tend to drift away from your family while you're in prison [unless you’re Lou Pai and your family consists of mutant shark humanoids on skis with laser beams surrounding your Colorado compound].

But seriously, a lot of executives have a driving desire [the Rolls-Royce Phantom] to be admired, which is why [they can listen to the Cardigans’ “Lovefool” on loop] they're drawn to roles of authority in the first place [although many are submissives on weekends]. Children don't care about your title [Lord Supplebottoms]. You have to relate to them in a totally different way [unless your safeword is “Barbie”], and it's a hard adjustment [to make a leather mask that small].

Also, at work, everything is quantifiable [how much you suck, in joules per second]. But with your family, you can't measure and control things [you can’t know the speed of a small infant and his exact location at the same time, because Heisenberg was a really shitty dad]: It's much more amorphous, and that can be frustrating. And then there's pure ego, the need for power and recognition [isn’t that the id?]. Work is the place to get those things [you can’t do a Juniper Networks pitch without going through me, the spreader of the enterprise networking comps], so work becomes all-important.

I know. I used to be the kind of guy who would be texting clients [Lady Supplebottoms] while riding the Matterhorn at Disneyland with my daughters [if Dante were alive today what circle 8 would consist of]. It was nuts.

More insight into CEO parenthood after the jump...

Against all odds, the story of Overstock continues to get worse. The company has been a laughing stock to almost anyone who can be bothered to think about it anymore. It’s the focus of an SEC investigation. It is run by a chief executive whose name—Patrick Byrne—long ago became synonymous with wacky conspiracy theories. It regularly deploys nasty tactics to defame reporters who dare mention its deterioration. An it’s bleeding directors.

The latest news hit on Thursday when Ray Groves resigned from the board. Groves, who once ran Ernst & Young, was the head of Overstock’s audit committee. He was, in the eyes of some observers, the last and best hope the company had to maintaining a sense of credibility. His departure comes as only the latest of a series of resignations by board members. The past year has seen also seen departures by directors John Fisher and John Byrne, the CEO’s father. When your father bails on your company, you know you are in trouble. Or rather, you would know. Patrick Byrne seems to think it’s a sign of his company's strength. Or something. We’ve long ago given up trying to figure out anything about what goes on inside of Byrne-the-younger’s brain.

But other’s have not. After we took off for the long-weekend, Gary Weiss, Sam Antar and Herb Greenberg all looked into the latest resignation. What’s behind the latest departure? Well, the same thing that was behind the departure of Fischer and Byrne-the-elder: the CEO’s ridiculous “jihad” against the “sith lords” on Wall Street he claims are behind a naked shorting conspiracy that is depressing his company’s stock price.

“In a letter contained in an SEC filing this morning, Groves told the company, ‘My resignation relates to the company's prime broker suit.’ That's Overstock's suit alleging that prime brokers are somehow involved in a naked shorting conspiracy,” Greenberg reports.

[But is it more than the Overstock's lawsuit against prime brokers? Read more after the jump.]

Are you a CEO (who found his/her way over here from SuperMogul)? If so, drop the blow, dead hooker and, for those of you driving, the bottle of Jack. Your shareholders may try and use these things against you! CNBC reports that—in addition to Forbes.com employees, research analysts, and Kamikaze pilots—turnover among chief execs is high, especially the compulsory, by vote of the board kind. In a study by Booz Allen, it was found that from 1995-2006, the annual turnover of CEOs grew 59%; the number of CEOs who left their companies as a result of conflicts with the board increased from 2 to 11% during that period. In ’95, only one in eight CEOs were forced to leave office, versus last year’s one in three.

And, to add insult to injury: while in ’95 underperforming CEOs were permitted to stay in office just as long as their high(er)-performing colleagues, last year, the guy with above average returns was “nearly twice as likely as one delivering below-average returns to remain CEO for more than seven years. In 1995, underperforming CEOs stayed in office as long as their high-performing colleagues.” Those fascist shareholders want moral and performance accountability? What’s next, mandatory monthly drug tests and a bible in the nightstand? This is unconstitutional.

CEO Turnover Remains High As Boards Get Tougher, Survey Says [CNBC.com]

Eddie Lampert may be betting that former US Treasury Secretary Robert Rubin is poised to take over as chief of Citigroup, according to a former colleague of both Lampert and Rubin. Earlier this week, Lampert’s ESL Investments disclosed that it had accumulated a 0.3% stake in Citi, setting off speculation about Lampert’s intentions. Speculation ranged from notion that Lampert might view Citigroup as cheap relative to it’s banking peers—this came from an unnamed banker who happens to work at Citigroup—to the idea that he might be poised to take an “activist investor” stance and agitate for change. Shares of Citigroup role 4% following the disclosure of ESL’s position.

“Lampert is tight with Rubin. He loves the man. Idolizes him. He may think that Rubin’s about to become a lot more involved at Citigroup, maybe even to take over for Prince,” the source said, referring to Citigroup chief executive Chuck Prince.

Rubin rose to Wall Street at Goldman Sachs before being appointed to the Treasury position by Bill Clinton. He is now the chairman of Citigroup’s executive committee. Early in his career Lampert worked under Rubin when he was an arbitrage trader at Goldman Sachs. This morning’s Wall Street Journal described Rubin as one of Lampert’s “leading role models.”

Yesterday CNBC’s Charlie Gasparino said that there was pressure for Rubin to take a more active role in the management of Citigroup. His position at the head of the executive committee brings him a hefty paycheck—reportedly $17 million—but some have said he doesn’t exercise much responsibility for the management of the bank. At least one banker employed at an investment bank described Rubin as “a relationship guy” whose job mainly involved using the connections he has made during his long career in finance and government to win business for the bank.

Prince’s tenure at the top of Citigroup has not been a happy one. The bank has been under-pressure from investors to change its management and some have even suggested that it spin off some of its constituent businesses. Prince is widely seen as unwilling to fundamentally change the structure of Citigroup.

Will Chorus Grow at Citi? [Wall Street Journal]