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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Executive compensation
March 18, 2013 at 10:29 AM

‘In our face’ capitalism

The newest hire in the mail room of Boeing’s headquarters could have done as good a job as Jim McNerney last year, as the radical outsourcing he oversaw and encouraged led to the grounding of the 787 Dreamliner. Even so, Boeing’s lapdog board gave McNerney a 20 percent raise, to $27.5 million. At least Jamie Dimon, CEO of JPMorgan Chase had his pay cut in half, to a pauperish $11.5 million for the “London Whale” trading debacle. But a new Senate report shows how Dimon, supposedly America’s smartest and most prudent banker — the guy who bought Washington Mutual for chump change — is presiding over a financial system every bit as dangerous as the one that brought on the Great Recession.

Gretchen Morgenson of the New York Times writes:

Its pages of e-mails, testimony, telephone transcripts and analysis show that traders in the bank’s chief investment office hid money-losing derivatives positions, if only temporarily; that risk limits created by the bank to protect itself were exceeded routinely; that risk models were changed to minimize losses; that bank executives misled investors and the public; and that regulations are only as good as the regulators enforcing them.

Why do Dimon or McNerney still have jobs? Because the cult of the imperial CEO is alive and well, despite the executive malpractice and outright fraud that brought on the 2000 recession (Enron, HealthSouth, Tyco, etc. etc.) as well as the financial crash of 2008. They do whatever they want. Politicians quail before their contribution-bearing lobbyists. Boards are worthless. The message to average Americans who lost jobs, net worth and economic mobility: In your face.


Comments | More in Aerospace/Boeing, Banking, Corporate crime, Corporate governance, Executive compensation, JPMorgan Chase, Washington Mutual

January 10, 2012 at 9:40 AM

Did Apple change its core values?

Apple’s new CEO, Tim Cook, has been awarded compensation of nearly $378 million. This is 376 million times the amount made by the late Steve Jobs, who famously worked for $1 a year. To be fair, Cook will take home a $900,000 salary. The remainder is in a one-time award of stock, half of which vests in 2016 and the remainder in 2021. And Jobs held a large amount of Apple stock from the 1990s.

Still, it’s the largest stock award given by the company in a decade and Cook is no Steve Jobs. The latter showed the best in a chief executive, which involved presiding over a fast-moving, innovative, accountable company that kept beating its rivals and expanding market share and value. And make no mistake, this was a culture and list of accomplishments set from the top. Cook will have to work very hard not to become just another American CEO looting the corporate treasury.

Shareholders don’t seem to mind so far; the stock was up in today’s rally. In theory, the compensation is an incentive for Cook to keep lifting the value of the company. But even if he doesn’t, Cook ends up with a tidy paycheck.


Comments | More in Corporate governance, Executive compensation, Tech economy