Median Pay For Top Executives

The final figures show that the median pay for top executives at 200 big companies last year was $10.8 million. That works out to a 23 percent gain from 2009. The earlier study had put the median pay at a none-too-shabby $9.6 million, up 12 percent.

Total C.E.O. pay hasn’t quite returned to its heady, prerecession levels — but it certainly seems headed there. Despite the soft economy, weak home prices and persistently high unemployment, some top executives are already making more than they were before the economy soured.

Pay skyrocketed last year because many companies brought back cash bonuses, says Aaron Boyd, head of research at Equilar. Cash bonuses, as opposed to those awarded in stock options, jumped by an astounding 38 percent, the final numbers show.

Granted, many American corporations did well last year. Profits were up substantially. As a result, many companies are sharing the wealth, at least with their executives. “We’re seeing a lot of that reflected in the pay,” Mr. Boyd says.

And at a time of so much tumult in the media business, it might be surprising that some executives in media and communications were among the most richly rewarded last year.

New Ways to Visit Cuba — Legally

Posted by Oksana Grebenjuk in Budget on Июль 7th, 2011

Thanks to policy changes by President Obama earlier this year designed to encourage more contact between Americans and citizens of the Communist-ruled island, the Treasury Department is once again granting so-called “people-to-people” licenses, which greatly expand travel opportunities for Cuba-bound visitors.

The licenses, created under President Bill Clinton in 1999, stopped being issued in 2003 under travel restrictions imposed by President George W. Bush. Subsequently, the number of travelers from the United States visiting Cuba legally dropped from more than 200,000 in 2003 to less than 50,000 in 2004, according to estimates by Bob Guild, vice president of Marazul Charters in North Bergen, N.J., among the largest United States organizers of trips to Cuba. The new changes, which come on top of loosened restrictions for Cubans and Cuban-Americans visiting relatives in Cuba, are expected to push the number of travelers visiting Cuba this year to 450,000 this year. “We estimate 375,000 to 400,000 Cuban Americans will visit this year and another 50,000 in other categories of legal travel,” said Mr. Guild of Marazul.

To be clear, it is still illegal for ordinary American vacationers to hop on a plane bound for Cuba, which has been under a United States economic embargo for nearly 50 years. True, plenty have dodged the restrictions — and continue to do so — by flying there from another country like Mexico or Canada (for Americans, traveling to Cuba is technically not illegal, but it might as well be since the United States prohibits its citizens from spending money in Cuba, with exceptions for students, journalists, Cuban-Americans and others with legal reasons to travel there). And while Washington has also expanded licensing for educational groups traveling to Cuba by loosening requirements, travelers joining an educational trip must still receive credit toward a degree. Read the rest of this entry »

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Western Union Is Said to Be Nearing $1 Billion Purchase of Travelex Unit

Posted by Oksana Grebenjuk in Business on Июль 5th, 2011

Western Union Co. (WU), the world’s largest money-transfer firm, is in talks to buy a division of Apax Partners LLP’s Travelex foreign-exchange business for about $1 billion, according to people with knowledge of the matter.

Western Union, based in Englewood, Colorado, may announce an agreement to acquire Travelex’s global business-payments unit as early as next week, said the people, who didn’t wish to be named because the talks are private.

A deal would help Western Union Chief Executive Officer Hikmet Ersek, 50, add revenue from corporate transactions overseas. Consumer-to-consumer services provided 84 percent of the firm’s $1.28 billion revenue in the first quarter, according to the company’s financial report. Travelex describes its business-payments unit as the world’s largest non-bank provider of foreign exchange and risk solutions.

“This business does have good margin characteristics,” said James Friedman, an analyst at Susquehanna Financial Group in New York who has a “positive” rating on Western Union shares. “It certainly has the potential to be more lucrative than the consumer. The fee per transaction is really huge.”

Susquehanna facilitates trading in Western Union shares, which gained 21 cents, or 1.1 percent, to $20.24 at 4:15 p.m. in New York Stock Exchange composite trading. Read the rest of this entry »

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Standardizing AAA

Posted by Oksana Grebenjuk in Investing on Июль 1st, 2011

For many years, a AA-rated municipal bond did not have the same risk of default as a AA-rated corporate bond. In fact, the corporate bond was about 6 times more likely to default.

Over the last two years, credit rating agencies have standardized the municipal and corporate rating scales. This was a substantial change for the municipal bond market and had the effect of raising the credit rating of thousands of municipal issues. Many don’t understand why this large structural change was made, so I thought it would be helpful to share the history.

Many professionals within muniland have said that a substantial amount of “granularity” was lost in the municipal rating scale when it was equalized with the corporate bond scale. A municipal bond previously rated A2 was likely moved four notches up the rating scale to Aa1. This has the effect of “bunching” municipal ratings into a tighter band than they had previously been in, and it obscured the prior “granularity” that the muni scale had.

In May 2009 Congressman Michael Capuano, a Democrat representing the Eighth Congressional District of Massachusetts, introduced H.R. 2549 the Municipal Bond Fairness Act. Prior to joining Congress, Mr. Capuano served as mayor and alderman of Somerville, Massachusetts. Read the rest of this entry »

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«Probably inevitable» a country will exit euro: Soros

Posted by Oksana Grebenjuk in Currency on Июнь 30th, 2011

Billionaire investor George Soros thinks a country will eventually exit the euro zone and urged policymakers on Sunday to come up with a «plan B» that could rescue the European Union from looming economic collapse.

Soros, famous for making $1 billion by betting against the British pound in 1992, did not name any country he thought might exit the currency, but speculation is mounting about the fate of Greece as its politicians struggle to agree more austerity measures demanded by international lenders as the price for staving off bankruptcy.

Soros reiterated his view in a panel discussion in Vienna that the euro had a basic flaw from the start in that the currency was not backed by political union or a joint treasury.

«The euro had no provision for correction. There was no arrangement for any country leaving the euro, which in the current circumstances is probably inevitable,» he said.

While he called survival of the European Union a «vital interest to all,» he said the EU needed structural changes to halt a process of disintegration. Read the rest of this entry »

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Wall St higher as investors bet on Greece plan

Posted by Oksana Grebenjuk in Fund Markets on Июнь 27th, 2011

Stocks rebounded from three days of losses on Monday as investors bet there would be a near-term resolution to some of the uncertainty over Greece’s fiscal crisis, but the absence of a firm plan could limit the market’s upside.

The Greek parliament will begin to debate a deeply unpopular austerity program that must be approved in order to get the next bailout payment. A Greek minister warned of «catastrophe» if the measure is not passed in a vote later this week.

French President Nicolas Sarkozy said his government had an agreement with French banks on rolling over Greek debt into new 30-year bonds, which helped ease tensions around the region.

Traders see a Greek sovereign default as unlikely, and the S&P 500 holding its 200-day moving average was viewed as a sign of technical support following two months of heavy selling that brought the index down about 7 percent.

«There’s still a lot of fear out there, but the absence of bad news over the past few days, coupled with the selloff late Friday, is creating a bounce now,» said Mitch Rubin, chief investment officer at RiverPark Advisors in New York. Read the rest of this entry »

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Medicare’s Soviet Label

Posted by Oksana Grebenjuk in Insurance on Июнь 10th, 2011

Joseph Antos, the widely respected Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute, agrees with the Soviet label. “Medicare ignores the market, setting prices for physician services based on an academic theory with its roots in the Soviet Union,” he wrote in his “Confessions of a Price Controller.”

Dr. Antos writes with authority on this issue. As he acknowledges in the piece, he oversaw both the academic study leading to this pricing system for physicians and its subsequent implementation.

I find it hard to disagree with Dr. Antos. Medicare fees are administered prices, set by a central government for the entire country. And that is Soviet economics.

So naturally one is led to ask: Who imported this fiendish Soviet pricing theory to the United States and imposed it on Medicare?

It was the administration of President Ronald Reagan, with the concurrence of a Congress controlled by the Democrats.

The Reagan administration acted after it became alarmed at the inflationary force inherent in a payment mechanism adopted by Medicare at its inception, at the behest of the hospital industry: retrospective, full-cost reimbursement of each hospital for its reported costs. Read the rest of this entry »

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NBC Wins TV Rights to 4 Olympics for $4.38 Billion

Posted by Oksana Grebenjuk in Business on Июнь 8th, 2011

NBC extended its Olympic reign until 2020 as Comcast, its parent company, agreed Tuesday to acquire the rights to the 2014 Winter Games in Sochi, Russia; the 2016 Summer Games in Rio de Janeiro; and the next two Olympics, in unspecified cities. NBC bid $4.38 billion for United States broadcast rights for the four Olympics.

It was NBC’s first Olympic deal since 1988 without Dick Ebersol, the head of NBC Sports, who resigned last month after helping to engineer eight winning bids. The victory was a sign that Comcast saw the value of continuing the relationship with the Olympics, with its powerful impact in prime time.

ESPN bid $1.4 billion for the 2014 and 2016 Games; Fox put in bids for two Olympics and for four Olympics.

The auction took place at International Olympic Committee headquarters in Lausanne, Switzerland, generally following the same procedure it did eight years ago. At the time, NBC agreed to pay $2 billion to carry last year’s Winter Games in Vancouver and next year’s Summer Games in London. Fox bid $1.3 billion and ESPN offered to share revenues with the I.O.C. but never specified a dollar figure. NBC won easily, and General Electric, then the network’s parent company, added $200 million for a global Olympic sponsorship. Read the rest of this entry »

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G.M. Is Still Hopeful for Payback to Government

Posted by Oksana Grebenjuk in Business on Июнь 7th, 2011

The chief executive of General Motors said on Tuesday that he hoped the federal government would be able to sell its stake in the automaker soon, and expressed concern about the country’s economic recovery.

The executive, Daniel F. Akerson, said that G.M. was working to maximize its payback to taxpayers, but that the government did not make a bad investment even if it did not recover the full amount given to the company.

“At some level, the government’s got to decide: are they an investor or were they trying to save the industry?” Mr. Akerson told reporters ahead of G.M.’s first annual stockholder meeting since its 2009 government-financed bankruptcy.

A report last week by the White House National Economic Council concluded that the government would probably have to write off about $14 billion of the $80 billion spent rescuing the auto industry by the Bush and Obama administrations.

Mr. Akerson said that a G.M. liquidation would have saddled taxpayers with more than $17 billion in pension liabilities. G.M. has cut its pension shortfall in half since 2009, he said, adding that he wanted the plan to be fully financed during his tenure as chief executive. Read the rest of this entry »

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Apple’s Jobs introduces iCloud

Posted by Oksana Grebenjuk in Trading Markets on Июнь 6th, 2011

Apple is hosting an event in San Francisco, where CEO Steve Jobs is expected to deliver details on the company’s upcoming iCloud service, the next iteration of its Mac OS X software («Lion») and iOS 5, the latest operating software for Apple’s mobile gadgets.

The company last week said Jobs, who is out on medical leave, would deliver the keynote address at WWDC, Apple’s Worldwide Developers Conference. What else is on tap? USA TODAY is filing updates from Apple’s event as they happen:

2:32 p.m.: Other iOS5 features include AirPlay Mirroring (which is nice), Wi-Fi sync to iTunes so now when charging at night it will find iTunes via Wi-Fi, also
nice. I’m surprised Apple didn’t mention this one as one of the top ten new features.

Developers get SDK seed today. And iOS 5 will ship to customers this fall.

Steve Jobs is back (finally) to talk iCloud.

«Do you like everything so far? I’ll try not to blow it.» Jobs says. Read the rest of this entry »

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Why a Greek Default Would be Worse Than Lehman Brothers’ Collapse

Posted by Oksana Grebenjuk in Investing on Июнь 3rd, 2011

If Greece defaults on its debt, the direct secondary effects on financial institutions could be much worse than what we saw after the collapse of Lehman Brothers.

The collapse of Lehman Brothers sent shockwaves through the global financial system—in part because it revealed that the United States government was willing to let a large, interconnected, complex financial company go bankrupt. Panic erupted, threatening the financial stability of other companies.

But the actual direct effects were few. Lehman had some 600,000 derivatives contracts and hundreds of billions in outstanding bonds, but Lehman’s institutional creditors were generally required to reserve some capital against Lehman’s collapse. This greatly diminished the direct knock-on effects of Lehman’s bankruptcy. Capital cushions actually cushioned.

There is roughly 270 billion Euros in outstanding Greek sovereign debt. Banks—mostly European banks—hold around 100 billion Euros of Greek bonds. Insurance companies, pensions funds and central banks hold most of the other 170 billion. For the most part, these holders of Greek debt have not had to reserve any capital against losses. This means that most of the holders of Greek debt will feel the full brunt of the losses, which raises the question of whether they are adequately capitalized to take the loss.

European bank capital regulations treat Eurozone sovereign debt as riskless. This was, in effect, a subsidy to the riskier Eurozone governments—allowing them to borrow at far lower costs than they other would have faced. The spread between German and Greek debt fell to 20 basis points in 2004, thanks largely to this subsidy. Read the rest of this entry »

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