Depressed Pay for Sporns, Obscene Pay for Elites! Ingredient for REVOLT?

[makapaaa]

<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Meleetocracy @ Work?


Published May 12, 2009

</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Bosses' pockets weather the storm
STI companies took a hammering in 2008 - but their CEOs' pay remained largely intact

By CHEW XIANG
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right> </TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right> </TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right> </TD><TD>Feedback</TD></TR></TBODY></TABLE>(SINGAPORE) With their stock prices getting battered and their total shareholder returns plummeting, listed companies found last year something of a nightmare. But it wasn't such a gloomy year for your average boss of a Straits Times Index (STI) company, who saw his pay even edge up slightly in 2008.

<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD> </TD></TR><TR class=caption><TD></TD></TR></TBODY></TABLE>A BT analysis of publicly available records and Bloomberg data found that the 14 chief executive officers whose companies operate on a January-to-December financial year took home an average pay increase of 1.4 per cent.
That is despite the fourteen companies on average lagging the STI benchmark by almost four percentage points, while total shareholder returns including dividends were almost minus 50 per cent; each dollar invested in the STI in January would have shrunk to 54 cents in December, including dividends. For the companies in the sample, net profits fell, on average, about 3.7 per cent from 2007.
The highest paid boss was Keppel Corp's Lim Chee Onn, who was given between $10 million and $10.25 million, up from between $8.75 million and $9 million in 2007. Keppel Corp, which began the year at $12.42 a share, had plummeted to $4.33 by Dec 31, for a total shareholder return of minus 61.4 per cent, underperforming the STI by over 15 percentage points. Net profit for the year was down 2.9 per cent from 2007.
Mr Lim's pay increase, at a minimum of 14 per cent, closely tracks the 15 per cent increase in the company's calculated economic value-add, which is used to determine Keppel executives' compensation.
Of course, the crisis did not leave all bosses untouched as the median salary of the 14 CEOs fell to $5 million, down from $6 million in 2007, even as the average pay rose.
CapitaLand CEO Liew Mun Leong's massive $21.7 million salary for 2007 meant he was the biggest loser in 2008, when he was awarded a mere $4.2 million, 80 per cent less. Yet the fact that his company did relatively well, underperforming the index by just 2 percentage points, arguably makes Mr Liew the most value-for-money CEO in the survey.
Another claimant for the title is Wilmar CEO Kuok Khoon Hong. Although his salary doubled from between $1.5 million and 1.75 million to between $3.25 million and $3.5 million, the company's net profit went up over 160 per cent in 2008, while the stock largely matched the benchmark. Yet Mr Kuok - who, unlike Mr Liew, holds a considerable personal stake in his company - is likely to be worse off on the whole.
At the other end of the value scale is Sembcorp Industries' Tang Kin Fei, whose pay went up 30 per cent to $8.9 million, even though Sembcorp lost almost 60 per cent in value over the year, significantly under the index, while net profit also slipped 3.6 per cent. The company pays out its share-based incentive plan based on 'wealth added and total shareholder return' over three years, according to its annual report, while key executives' bonuses are partly tied to economic value added. EVA attributable to shareholders fell slightly to $336 million from $340 million in 2007.
ST Engineering's Tan Pheng Hock got the fattest raise - he was awarded almost $4 million for 2008, up 36 per cent from $2.9 million the previous year. His company outperformed the index by 14 percentage points, although net profit slipped slightly to just over $470 million.
A number of companies - such as Cosco, Neptune Orient Lines and DBS - were excluded from the sample because their CEOs were replaced during the year. Others such as Singapore Exchange, Singapore Press Holdings and SingTel do not have a Jan-Dec financial year. The sample does include Keppel Land and Yanlord, which were removed from the index this year, as well as ComfortDelGro, which joined only in March.
A recent Associated Press analysis of Standard & Poor's 500 companies showed the median pay package fell 7 per cent to US$7.6 million in 2008 but found that some companies were changing bonus qualification rules or taking advantage of depressed share values to dole out more stock options that could mean fatter paychecks in the future.
These practices were by and large absent from the blue-chip companies in the survey. Many have moved to grants of restricted stock and usually dispense these on a fixed date every year.
However, a BT study last December found that over 20 mostly small companies were taking advantage of low share prices that quarter to issue millions of options to top management. In a number of cases, the grants of options were disclosed late, contrary to listing rules and raising speculation that the options could have been backdated.
The perennial issue - that of disclosing exact pay rather than in bands - has not gone away this year. Just four companies in the survey (CapitaLand, Semb- corp, Sembcorp Marine and ST Engineering) did so, out of 17 companies.

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[makapaaa]

<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published May 12, 2009

</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Should CEOs suffer like their shareholders?

By CHEW XIANG
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right> </TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right> </TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right> </TD><TD>Feedback</TD></TR></TBODY></TABLE>IS, SAY, $40,000 a year a good salary for an engineer? What about a teacher? A journalist?

Whatever the case, an answer is possible and can be defended with reference to fairly intuitive judgments, even if each profession is diverse and heavily stratified. That's why $600,000 a year for the boss of a charity is a headline in itself.
But our intuitions don't apply to the outliers: the Atlases holding the corporate world up on their shoulders. A million a year for a CEO used to be vaguely troubling. What's the benchmark for shock now? Ten million? A hundred million?
Is there a smell test for CEO pay? Given the astronomical sums involved, clearly not - because once you go over a certain sum, every CEO's pay just looks large.
That's why the appropriate mantra now is 'pay for performance', and companies peg executive pay to plausible standards such as economic value added, net profit, total shareholder returns and the like. Because performance can - however inexpertly - be measured, it can provide a reassuring context no matter how extravagant an individual's pay might seem at first glance.
The problem is that none of these measures, on its own, gives a good explanation of why the 2008 pay of some of Singapore's top executives went up or down from 2007, as a BT report today shows.
Keppel Corp's former chairman Lim Chee Onn (the highest paid in the sample of Straits Times Index companies) earned between $10 million and $10.25 million for 2008 - up at least 14 per cent from 2007, when he was paid between $8.75 million and $9 million. Yet the company's net profit fell about 3 per cent, and total shareholder return (what you get from buying the stock in January and holding it until December) was down over 60 per cent, underperforming the STI benchmark by 15 percentage points. The increase did, however, correlate almost one-to-one with the increase in the company's economic value added (EVA) - roughly, net operating profit minus cost of capital - which went up 14.6 per cent from $604 million in 2007 to $692 million in 2008.
EVA also explains CapitaLand CEO Liew Mun Leong's drastic salary drop in 2008 to $4.18 million from $21.7 million the year before. That's an 80 per cent fall; the company's EVA fell 71 per cent.
But EVA doesn't work for other companies, even those that use it to determine bonuses. ST Engineering boss Tan Pheng Hock saw his pay jump 30 per cent in 2008 to $3.94 million, from $2.88 million; EVA, however, fell over 5 per cent, as did net profit. Sembcorp Industries' Tang Kin Fei got a 30 per cent raise - EVA rose 22 per cent, so that's a good fit. But Tan Kwi Kin, in charge of Semb- corp unit Sembcorp Marine, was paid 12 per cent more in 2008, even though EVA more than doubled, including a gain from 'unusual items' in 2007. It also doesn't explain why Mr Liew, whose company achieved economic value-added of $660.6 million (just $32 million less than Keppel) got paid 40 per cent of what Mr Lim got. No CEO in the sample - save Mr Liew, it must be said - saw his pay go down by anything approaching the loss suffered by shareholders.
There are no doubt innocent, legal and completely moral explanations for these supposed aberrations. In some cases, reported pay is reward for performance over a period of years. Mostly, they arise because different companies use different measurements of performance, add that to peer group benchmarks, then leaven the results with a substantial dose of discretion. That includes factors such as: correcting incentive effects of the performance metrics; size of the company; perhaps even the likelihood of shareholder anger multiplied by the possibility of an embarrassing fuss in the media or the annual general meeting.
So how can we tell which CEO is a good deal for the company, and which one isn't earning his keep? Some critics focus on excess shareholder returns over a period of time; others use a combination of metrics. For still others, the key issue is that pay is still not sensitive enough to performance - whichever measure is used of it. And the use of peer benchmarks is routinely criticised for the Lake Wobegon effect, which is said to occur because no firm wants to have a CEO who is below average, and so no firm will allow its CEO's pay package to lag the average, causing an inexorable upward shift over time.
The amount of discretion involved, plus the multitude of possible performance benchmarks, makes it very difficult to tell the good from the duff - almost as if they didn't want you to know.
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[tonychat]

Ingredient for revolt is having balls. Sinkies dun have any.

 

[annexa]

How many of them is ex-scholar "promoted" to CEO?

How many of them is last time SAF one?

 

[Einfield]

How many of them is ex-scholar "promoted" to CEO?

How many of them is last time SAF one?

Time to revolt? I don't think so, not just yet but PAP is adding in all the necessary ingredient for it, one day, it will blow up.

It's not between race, nor religion.

It will be between Elite and the rest of us, lesser mortals.

 

[Watchman]

Bank Fees Exploit the Poor
U.S. Banks have an obligation to provide alternatives to checking account fees and minimum-balance requirements, which exploit low-income Americans who live paycheck to paycheck. Pro or con?
Pro: Have Mercy on the Poor and Weak

by Jonathan Morduch, Russell Sage Foundation

We’ll be arguing for years about who and what drove today’s banking crisis, but we won’t be arguing about who’s paying the bill: the American taxpayer.

With the U.S. government mopping up the economic mess made by so many of them, U.S. banks ought to be open to changing their relationships with poor communities.

Banks can be better public institutions by offering products that don’t exclude major population groups. About 40 million Americans have no bank accounts. Banks’ high fees and exclusionary rules are a big part of the reason. It’s hard enough for low-income families to save—high balance requirements make it even harder.

When researchers asked low-income families why they don’t have a savings account, only 37% said it was because they couldn’t save, according to the 2006 Detroit Area Household Financial Services study conducted by the University of Michigan. Nearly 29% said that lower fees would encourage them to open a bank account.

By offering accounts with tangles of strings and fees, banks push families toward predatory financial institutions, where they pay about 12% of their checks’ value straight to check cashers.

Banks should think about services to poor communities as as investment in customers, which could pay handsome dividends in the future as these customers’ families turn to trusted sources for future financial services.

As banks work to get back on solid ground, they ought to keep the help they received from the American people in mind and accept the moral obligation to lower barriers to economic prosperity for the nation’s most vulnerable communities.
Con: Quit Regulating Banks to Death

by Thomas DiLorenzo, Ludwig von Mises Institute

Banks are not “obligated” to provide free checking account services to low-income people any more than McDonald’s (MCD), Starbucks (SBUX), and Toyota (TM) are obligated to give them free burgers, coffee, and cars. Those who advocate such a thing are perfectly free to pick up the bank fees of as many low-income people as they can. I would be the last person in the world to stand in their way. The problem is not bank fees; the problem is low income. Forcing banks to give away some of their services for free will not improve the income-earning ability of low-income earners.

If an expansion of the welfare state in this way is desired, one wonders why it should be funded in such a discriminatory manner by an implicit tax on banks and not through general tax revenues—especially at a time when many banks are, well, verging on bankruptcy.

Moreover, if such a thing becomes acceptable, there inevitably will be calls for government to force other corporations to give more freebies to “the poor.” Why, someone in government may even get the harebrained idea of forcing mortgage lenders to ignore traditional ability-to-pay requirements for mortgage loans to low-income people, known as “subprime” loans. (Oops, I forgot; this has been the policy of HUD, the Fed, and other arms of the federal government for some 30 years now and a contributing cause of the current economic crisis).

This is nothing more than backdoor welfare statism. Like welfare statism in general, it creates the moral hazard of weakening work incentives, creating even more poverty.

 

[Einfield]

By then those assholes lesser mortal like you will be phase out by new elite FT......... he he he......

They know, that if things remain unchanged, their threat and lies will be less effective to the local sinkies.

FT policies is not purely economic, there's a more sinister political motive behind that they only discuss behind close door.