Wall Street Bailout Could Crimp CEO Pay

Democrats want to rein in rich exit packages and reclaim millions paid to bosses who piled up toxic mortgage assets. But it won’t be easy.
As Congress and the Bush Administration negotiate over the terms of a financial rescue bill, Democrats on Capitol Hill are drafting language designed to rein in executive compensation, in particular controversial severance packages at foundering companies. And for politicians concerned about the growing backlash on Main Street over what many see as a bailout of Wall Street fat cats, executive pay is a ripe target. After all, average total pay for a CEO at one of the 500 biggest companies last year was $12.8 million, double what it was a decade ago.

But compensation attorneys and experts say many of the restrictions could prove tough to enforce.

Executive pay was shaping up as one of a few remaining sticking points as Congress and the Republican Administration hurried to put a deal together amid further stock market declines on Sept. 22. In several areas the players were nearing accord, with Administration officials reportedly accepting some congressional oversight and relief for homeowners struggling to pay their mortgages — key provisions for Democrats.

Legislative language circulating on Capitol Hill on Monday afternoon also included mechanisms that would give the government ownership stakes in companies benefiting from the bailout, to make up for losses the government might incur. Senate Democrats revived a provision that would allow judges to modify the terms of mortgages in bankruptcy proceedings, much as other debts can be adjusted. But the financial-services industry is strongly opposed to the provision and some predicted it would not garner sufficient support in the House.

Vaguely Worded Provisions
Treasury Secretary Henry Paulson was scheduled to appear before the Senate Banking Committee on Tuesday, Sept. 23, with Federal Reserve Chairman Ben Bernanke and Christopher Cox, chairman of the Securities & Exchange Commission. Lawmakers have said they hope to craft a deal by the end of the week, when Congress is slated to adjourn.

Severance Pay Ban
Language in a draft House bill was similar, applying the restrictions for two years following Treasury assistance. But it also imposed additional restrictions on at least some companies, banning severance pay for top executives and requiring the companies to make it easier for substantial shareholders to nominate and elect board members and for shareholders generally to hold advisory votes on executive compensation.

Legal Remedies May Be Required
For one thing, executive compensation is typically governed by multiyear contracts. Forcing companies to change provisions in those contracts could require them to reopen negotiations with the executives who stand to lose benefits. Getting those execs to agree without sweetening the deal in some other way could prove difficult, especially if the executives are on their way out the door or face being ousted. “If I’m being invited to modify the agreement and then being shown the door at the same time, I’m probably not going to be too agreeable,” says Lewis Wiener, head of the financial-services litigation practice at Sutherland Asbill & Brennan.

Constitutional Challenge Possible
“Claw-back” provisions requiring executives to give up pay or severance benefits if corporate results prove to be misstated, for example, might be even trickier. Large companies have increasingly written claw-backs into executive-pay contracts, with triggers ranging from financial restatements to fraud. But where such clauses aren’t already in place, the government’s insistence on adding one could leave it open to a constitutional challenge under the Fifth Amendment, which bars the government from taking private property for public use without just compensation.

http://finance.yahoo.com/banking-budgeting/article/105818/Wall-Street-Bailout-Could-Crimp-CEO-Pay

Most of those azzholes are not deserving of any form of severance pay. They have mismanaged their companies, f*cked over the consumers and employees, and have screwed our nations economy all to hell. I have no sympathy for these bastards and wish they couldn't get a dime of severance pay. Unfortunately the contracts they have will be honored, which just sucks.

Hi

I am in quite a lot of debt, not helped by the fact that I am currently unemployed. I did however take matters into my own hands by contacting all the companies I owed money too and negotiating lower payments, in some cases interest and charges were stopped. There are however a few companies who will not accept my offers of payment and insist I give them an amount I cannot manage. I received a phonecall today from a catalogue I owe money to, they say that if I cannot pay what they want they will pass this debt onto a debt recovery company, will this mean bailiffs or more negotiations of payment. Really don't want bailiffs at my door taking my things many of which my partner and I have saved hard to buy.

They will collect the money on behalf of the catalogue. They send you a letter and if you contact them they will allow you to pay them off in smaller amounts that are affordable to you.
The only time they involve bailiffs is if you ignore the letter and do not contact them.

The only disadvantag of this is you will now have a low credit profile now which can affect you when borrowing.

Has anyone heard if there are a real company or fraud? Trying to go through debt negotiations program, have been in for 3 months now! But still getting calls for creditors. My credit is crap and will be, but am trying to get it straightened out! Have seen sites that say it works and others that say it's a scam. Don't know what's true. And if it is a scam, can anyone recommend a good site for help. Want to get myself out of debit not deeper in it! Thank you for your help! If you ask question, will try to add response to it, as in more info..

Join the forum below.
Many there have gone through what you are going through.
Read and ask questions.
Good Luck!
Bob

1. Profit-sharing/stock ownership plan for UAW Workers, as a pre-condition for bailout package…

Conservatives should like it, because ownership & profit sharing in the company will bring UAW back to RESPONSIBLE negotiations that don't jeopardize the long-term viability of companies and encourages more pay-as-you-go type spending tied to immediate financial condition of the company with creating long term debt/liabilities.

Liberals should like it because it puts workers first, and increases power of UAW in a responsible long-term viable way.

2. A Marshall plan for Russia that is contigient on respect to the sovereignty of existing nations as they are currently drawn, and would be used to encourage non-oil based economy (i.e. manuafacturing & industry).
The idea here is to stabilize a country in economic turmoil due to the sinking price of oil that owns the greatest number of nuclear missiles outside the United States. We cannot afford to let them become destabilized. At the same time we can use economic aid to pressure reform(free speech, free press, freedom of dissent), respect of border integrity, and most importantly move them to an economy that can benefit their people long term—beyond oil usage. Oil is a corrupting influence that encourages power grabs that hurt their people.

Conservatives should like protections against nuclear proliferation, border stability, and reform of tyrannical government.

Liberals should like the addressing of the underlying causes of Russia's tyrannical gov't as well as decreasing oil focus by Russia.

Just some radical out-of-the box thinking for the Last working Friday of the year…..

"Which of these radical ideas might both Conservatives and Liberals rally behind together…?
1. Profit-sharing/stock ownership plan for UAW Workers, as a pre-condition for bailout package…

Conservatives should like it, because ownership & profit sharing in the company will bring UAW back to RESPONSIBLE negotiations"

No, Conservatives shouldnt like it because it involves 1) A government give away of tax dollars 2) Government strong arming a private company into sharing its profits with its employees. IF the company wants to do that, they should do it on their own without anyone forcing them to. And if they dont want to do that, then thats their business.

Have you ever negotiated debt with a credit card company and for what %?

I have for as low as 20%. I find most will go to 50% or less.

Some things to keep in mind: Usually it will save money but not your credit.

Banks will also wait a long time before they give you the best setttlement. Sometimes you just have to "wait it out." They usually won't settle at all unless you are late and as it goes from 30 to 60 to 90 to 120 to 150 days late the offers usually get better. I would try to do everything in writing, if possible. If you have to negotiate on the phone, don't send any money until you get it in writing.

Tax hook: You will usually receive a 1099 tax form for forgiven debt. This is treated as income and you will owe taxes. For example, if you settle $10,000 for $5,000- you will add $5000 to your taxable income. However, there is a way to claim "insolvency" that will let you off the hook for the taxes.

The above answers are assuming this is recent debt still owned by the original creditor (for example you have a Ctibank card and are still dealing with Citibank). If the account has been sold to a collector or debt buyer, things are different. For one, depending on how old it is and who owns it is sometimes better to just ignore it.

If it's more recent and hasn't been "charged off" yet, you can usually get the best settlement right before it's charged off or during a lawsuit negotiation.

I need some good legal resources for being able to handle the substantial debt I've incurred starting up my business. I am in settlement with one, but I owe so many others that I am unable to pay until I finish settling this debt, and then I'll settle the next and so on. I have a few accounts that are in the Law Office of so and so. Do I need to call them back because they don't tell me who they represent on the voicemail. I live in Texas, so would need contacts familiar with small business debt. I tried a debt negotiation company, but those don't work for me and end up costing me more.

Try posting your question in the forum below.
There are quite a few lawyers who frequent the forum, and others have dealt with Texas law on debt.

Hi, I have read a previous post regarding equal pay and law based on age but mine is a bit different – I was part of a team of two running a shop – I was shop sales and there was a manager too. 4 months ago the manager left and I was offered his position – or to put it another way, I either took over running of the shop single handed or close it down and be out of a job as the owner is a builder (it’s a small builders merchants) and has no idea how to run it – unbeleiveble as that sounds, which meant incorporating all managerial duties into my own. I know at the time he was being paid £10.50 per hour and he was working an average of 20-25 hours per week, to quote him “Rob (the owner) says as long as I do what I need to do I can leave when I want” so he did, usually at lunchtime, often earlier – however the shop is open from 8-4.30 everyday, half day on saturday till noon & closed sunday. Long story short he was paid £10.50 per hour for a 35 hour week (verifiable in the company pay accounts) but working 20 – the owner when I took over only offered me £7.80 per hour and I work for the entire duration the shop is open 46.5 hours – as you can see there is a MASSIVE discrepancy in the take home pay at the end of each week – he claims it is irrelevant what Paul was being paid BUT, I am doing all of his previous managerial duties (accounts, stock control, banking – basically everything a shop needs to do to function on a daily basis) as well as the ones he didn’t do, as when we were both in the shop I did the majority of the selling.

I have asked the owner for £10.50 per hour for the hours I work but when he did the calculation and saw it was £488 per week he basically said that it was too much, I reminded him that even at that level he was still saving £7k from the previous combined wage bill to the shop, he said “I don’t care, it’s too much” – and he made it very clear there was no negotiation available. Since I have taken over other issues have arisen such as lunch breaks etc but my main concern is the pay difference.

I am seriously considering applying to acas for a hearing for equality of pay under the “like work, like pay” and using the argument that the position of shop manager has an established pay rate (Paul was paid that rate and did those hours for approx 9 years) which I feel I should get, but I would like a second opinion or third.. as to whether it has any weight – I have read that acas can charge a fee upwards of £500 for hearings if they think it should not have been brought forward.

oh and the material value of employees argument is virtually null as the manager was only at the shop for a year longer than I and I have made just as large a contribution (more some might argue based on sales) to the ongoing trading and value of the business.

Lastly I have thought about calling his bluff and tending my resignation but he has planning permission for the premises to turn them into maisonettes, so even though there are loans and debts against the total value of the business and property – I don’t really have a trump card to play, and to be blunt he has quite a lot of the F* you attitude.

Sorry to make it so long but I wanted to make all the relevant points I thought should be mentioned.

Any answers or suggestions will be read and gratefully received, but please no “just quit” as that is a last resort, now I’m manager I feel I can make it a much more profitable outlet, I’m just hoping arbitration might make him see my value and that its better to keep it running and profitable than shut it.

I do not think that in your case the equal pay regulations are applicable. You are a sole employee and are not doing exactly the same job as another EXISTING employee. Effectively, if you take on the managers job, you are a new hire in that position and the shop owner is under no obligation to pay you at the same rate as the previous manager. You make a lot of the hours the last manager worked but despite what he said to you, it is highly unlikely that the owner realised just what hours he was working.

Now at the moment you are up in arms – and i do not blame you at all, i am on your side – but many many years ago i was in a fairly similar situation than yours but took a different viewpoint. At the moment money is your sole concern, but there are other aspects that you should carefully consider. This particular cloud has a solid silver lining you know.

You obviously have the work ethic, the get up and go and the ability to have the prospects of a management career in the retail sector. THE hardest management job to get is that first one, the first jump from just another worker, no matter how valued, to management. Just how many people you manage is neither here nor there. The important bit is to get the title ‘Manager’ onto your CV. Once you get that, unless you are a total idiot, every job you get from now on will be in management. You will have made the transition that 90% of people never get to make!

In your shoes i would look to the long term gain, not the short term one. Go back to the owner and negotiate – tell him that you will do the Managers job for one year on the salary he has offered you providing – (a) He issues you with a contract of employment that names your job as ‘Store Manager’.
(b) That he agree’s to review your salary 12 months from now when you have had a chance to prove yourself to him.

My guess is he will jump at that – in his book he will have won. Actually in the longer term you will be the winner. Believe me! This is your chance to kickstart yourself onto better things in future.

I am near retiring now, had my first management job at 23 and never looked back. In 11 separate management positions i was never once asked how many people reported directly to me! In my last salaried position in commerce (I am using the last 5 years of my working life doing something totally different to anything i have ever done) i had nearly 400 people reporting to me.

Can your company's accounts be frozen for personal debt?
I've been fighting a judgement lost by default as the attorney was in negotiations with me and was going to settle, then he proceeded to court without my knowledge. He sued me personally, but my company whom I am part of is an llc. They are trying to hold be liable for a contract signed with a vendor 6 months before I was on the project. Now they just froze my company funds. Yet they didn't sue the company and I am not an officer. I am the designer. My husband is CEO and it is just a small operation, with six employees. My children are the other "board members". I am fighting the original judgement and am trying to get it thrown out because of his business ethics. Right now we can't operate because all our funds are frozen. His exwife was my client and I think she couldn't get the money out of the company that did screw up, and figures she could get it out of me.
Okay, the llc was not sued. I have insurance on that. They sued me personally. According to our state statutes, I am not a member. My husband and adult children are. If they had sued the llc, theinsurance would have paid for the attorney and covered my fees. But they sued me even personally, so I am not covered and don't have the resources. They have frozen everything and it wasn't even our company who ripped her off. Her name is on a contract with them six months before we were even hired.

No. As part of an LLC, the LLC is safe. However, the economic benefits you receive from your shares of the LLC can be collected. This means you won't receive any payment of dividends from your shares.

Does anyone on here work for a debt consolidation or credit counseling service? If so, my question is directed to you.

What do the credit counseling service companies say or do with the banks that I can do on my own? What type of offers do they make the bank? Is there a certain % of total debt they start with? Do they make multiple counter offers back and forth or is it just a one-shot chance with the bank? I owe over $30k to American Express and had it down to only $3k about 2 years ago, but life happens and we had to live on the credit card for a short time, and the charges and interest just keep piling up.

Any and all comments on bank negotiations are welcome here.

I work for a credit counseling agency. What you are talking about is a debt management plan. Usually we have pre-existing arrangements and it really depends on the credit card company as to what they have agreed to reduce (payments, interest, or both). I would suggest you talk to one of our counselors. Its free for the counseling session and depending on your state, the fee to set up the DMP would be minimal or less than $50. This is due to maitanence—we are non-profit and partnered with United Way. Call us today. 1800-251-CCCS (2227) or visit us at www.cccsinc.org for more details.

So I am 1 of 2 founders. I own 55 per cent. There is substantial intellectual property in the form of procedures, websites and software. My partner wants out. Buying him out will put me at a cash-flow disadvantage. He doesn’t want the business, nor could he run it himself – although, if he hired someone as smart as me he could. The business is my vision and expertise. He was sales and business operations.

My question relates to the dissolution of the corporation with two scenario’s in mind.

1. If we sell all assets, pay all debts and walk away, can I use any of the documentation to build my new company with the same vision.

2. If he buys me out (we have a shotgun clause), would I have to re-create all these documents from scratch or can I use them in any way?

Are these subject to negotiation?

Thanks
In response to the first answer…

Well yes the intellectual property could have value and be sold to whomever, but not all of it will have value to most people, but would to me.

Consider if we sold the desk, lamp, computers, etc… when dissolving the corp. Who would buy the sales call scripts… Probably no one, but I could sure use them again. Or what about diagrams that document the sales cycle or project development systems?

If you sell the assets to anyone with a grain of sense you will have to include the intellectual property and sign a non-compete agreement which most likely will bar you from competing with the buyer for a five year period.

The corporation — not you — owns the intellectual property and if you sell your stock and then go into competition you will leave yourself open for a lawsuit that in all probability you will lose.

The best thing for you to do, assuming the business is profitable, is either find another investor or arrange for long term financing and buy his stock either as an individual or have the corporation buy it back.

Hope this helps
Jerry-the-bookkeeper