May 24, 2013

JPMorgan Investors on Edge Over Vote on Dimon


Read the original article at DailyFinance.com

Filed under: , ,

JPMorgan Chase Chairman CEO Jamie Dimon
J. Scott Applewhite/APJPMorgan Chase & Co. Chairman and CEO Jamie Dimon.

By David Henry

TAMPA, Fla. — As final ballots come in on a proposal to strip JPMorgan Chairman and Chief Executive Jamie Dimon of his chairman title, some worry about what will happen if shareholders win what will likely be a close vote.

JPMorgan Chase & Co.’s (JPM) annual meeting Tuesday will bring to head a months-long and bitter shareholder campaign demanding more oversight of Dimon, who has suggested that he may eventually leave the bank if he loses the vote.

Investors say that while Dimon, 57, may need more oversight after the bank posted $6.2 billion in losses from failed derivative trades last year, they do not want him to quit.

Among big bank CEOs, Dimon ranks first for stock returns and has been praised for leading the bank through the financial crisis with no quarterly losses and a strong balance sheet.

If Dimon were to leave, the bank’s shares could fall as much as 10 percent and erase about $20 billion of market value, according to Mike Mayo, a bank analyst with brokerage CLSA.

Sponsored Links

JPMorgan also has no ready replacement for Dimon, Mayo wrote in a research note, adding that the two lieutenants best positioned to succeed him — Matt Zames, 42, and Mike Cavanagh, 47 — seem to be about three years short of being ready for the job.

Zames became sole chief operating officer of the largest U.S. bank in April. Last year, Cavanagh became co-CEO of the company’s reconstituted corporate and investment banking segment following a stint as head of treasury and securities services and several years as chief financial officer.

JPMorgan wasn’t immediately available for comment.

“Take a winning football team. One could always ask the question whether the team would have been as effective without the quarterback,” said Benjamin Ram, a co-manager of the $1.6 billion Oppenheimer Main Street Select fund.

“The team gets part of the credit, but Jamie Dimon as the leader also gets the credit,” Ram added.

Ram’s fund has 6.4 percent of its assets in JPMorgan shares, more than any other diversified fund, according to Lipper, a Thomson Reuters company.

The shareholder proposal is non-binding, meaning the bank’s board doesn’t have to follow through with the recommendation even if the measure gets majority shareholder support. Still, a defeat would be an unpleasant rebuke for Dimon.

A similar shareholder proposal last year won 40 percent of the vote, before most of the trading losses from the so-called “London Whale” imbroglio came to light.

Obliged to Make Changes?

JPMorgan’s board has recommended that shareholders vote against the proposal and the bank has been lobbying hard against the measure, with tensions rising in the run-up to the meeting.

Proponents of the independent chair proposal said that if the measure gets 40 percent or more of the vote for a second consecutive year that the board should feel obligated to make at least some changes to increase its oversight of management.

Last week, the company that collects votes from investors, Broadridge Financial Solutions Inc, stopped telling shareholders how votes had been cast so far for this and other measures. Investors use this information to determine how to tailor their campaigns.

JPMorgan decided to release the results to shareholders after the New York Attorney General’s office intervened over the weekend, a source familiar with the situation said Monday.

“We were cut off from the tallies during the crucial week leading up to the meeting,” said Dieter Waizenegger, executive director of the CtW Investment Group, which advises pensions that were voting against the bank in a separate measure regarding the reelection of directors.

Waizenegger said receiving the information at this late stage was of limited use.

The vote comes amid a growing trend in U.S. corporate governance to have an independent chairman lead the board. Many investors believe that doing so ensures that the chief executive does not have too much sway over the board and leads to better outcomes for shareholders overall. The debate, however, is far from settled.

Even if Dimon wins the vote, some shareholders plan to keep the pressure on the bank’s board. Two major JPMorgan investors have told Reuters that they will continue to press directors behind the scenes to increase their oversight over management.

One investor said that they will likely encourage the bank to give more authority to its lead independent director, former ExxonMobil (XOM) Chief Executive Lee Raymond.

%Gallery-185227%

 

Permalink | Email this | Linking Blogs | Comments

Read the original article at DailyFinance.com

$600 Million Powerball: 1 Winning Ticket Sold in Fla.


Read the original article at DailyFinance.com

Filed under: People, SpendingNati Harnik/APSheila Sutton updates the Powerball prize money sign at the Super C convenience store in Lincoln, Neb., Friday, May 17, 2013. Powerball officials say the jackpot has climbed to an estimated $600 million, makin…

Read the original article at DailyFinance.com

The Wit and Wisdom of Warren Buffett


Read the original article at DailyFinance.com

Filed under: Warren Buffett, People, Investing
By JOSH FUNK

OMAHA, Neb. (AP) – Billionaire Warren Buffett dispensed plenty of advice on investing and life during this weekend’s Berkshire Hathaway shareholders meeting.

The wisdom Buffett and his inves…

Read the original article at DailyFinance.com

Senate Passes Bill to End Air Traffic Control Furloughs


Read the original article at DailyFinance.com

Filed under: , , ,

senate flight delays air traffic control
J. Scott Applewhite/APSen. Susan Collins, R-Maine, center, an author of legislation, passed by the Senate late Thursday, that ends air traffic controller furloughs, which have resulted in flight delays.

By Richard Cowan and Doug Palmer

WASHINGTON — The U.S. Senate moved quickly late on Thursday to end air traffic controller furloughs that were causing widespread airline flight delays related to last month’s automatic federal spending cuts.

Without any debate, the Senate unanimously passed legislation giving the Department of Transportation flexibility to use unspent funds to cover the costs of air traffic controllers and other essential employees at the Federal Aviation Administration.

The House of Representatives, which is expected to approve the measure, could take it up on Friday, capping a feverish effort by Congress to end the flight delays that were snarling traffic at major U.S. airports and angering travelers.

Some Senate aides said the measure would also give the FAA flexibility to keep open nearly 150 “contract towers” at smaller airports that are staffed by non-FAA employees who help control takeoffs and landings.

Explicit language to keep open those towers wasn’t included in the measure, however, according to the aides, and it wasn’t clear how the agency would handle the matter.

“I’m delighted that the Senate has just passed a bipartisan bill to resolve a serious problem confronting the American traveling public and our economy,” said Republican Sen. Susan Collins of Maine, one of a handful of senators who wrote the legislation.

The bill moved with lightning speed in the Senate where legislation often bogs down for weeks or months. It was passed after a day of furious negotiations between lawmakers and the Obama administration.

The bill, if passed by the House, would close another chapter in a series of Washington battles over budget and taxes that have been waged since 2011.

The cause of the air traffic controller furloughs was the controversial “sequestration” that took effect on March 1, requiring across-the-board spending cuts among most federal agencies. With those cuts starting to bite, a public backlash prompted Congress to reconsider, and fully fund high-profile FAA operations.

Lawmakers are eager to fix the air travel problem before they head out of town for next week’s congressional recess. They are concerned about deepening public resentment over the delays caused by the furloughs of controllers.

Democratic Sen. Jay Rockefeller of West Virginia, who also negotiated the legislation, applauded its quick passage, but added, “It does nothing for other essential government operations and employees that also desperately need relief.”

Angry Travelers

Airline passengers have grown increasingly irritated over the past week with delays at major hubs like Chicago, New York, Los Angeles and Atlanta. Some have reported delays of several hours in takeoff times and planes being put in holding patterns in the air. Many pilots blame furloughs for landing delays.

The National Air Traffic Controllers Association said on Thursday that many of the 1,978 controller trainees were now working full shifts by themselves to help cover staffing shortages.

Airline executives had ratcheted up their complaints. “This is government not working — capital letters, exclamation point — when we’re sitting here holding the traveling public hostage in the midst of sequestration,” JetBlue Airways Corp. (JBLU) Chief Executive Dave Barger said on a conference call on Thursday.

The FAA has said it had no alternative to furloughing controllers this week after Congress failed to come up with a budget deal that would have averted the $85 billion in across-the-board federal spending cuts between March 1 and Sept. 30.

At the same time, the FAA has emphasized that passenger safety isn’t at risk. Airlines for America, the trade organization for U.S. airlines, also said on Thursday the furloughs hadn’t created a safety issue.

While Republicans joined the effort for a quick fix, many were skeptical about whether the White House and FAA were taking advantage of flexibility they already had.

Republicans have accused the Obama administration of maximizing the disruptions to try to shift budget blame on Republicans, an allegation the administration has denied. Republicans have created a Twitter hashtag, #Obamaflightdelays, for people to complain about the delays.

House Oversight Committee Chairman Darrell Issa, a California Republican, and House Transportation Committee Chairman Bill Shuster, a Pennsylvania Republican, sent a letter on Thursday to Transportation Secretary Ray LaHood asking for internal documents discussing budget flexibilities. The Department of Transportation said it was reviewing the request.

But a congressional aide involved in the original automatic spending cut legislation that was enacted in August 2011 told Reuters the administration could not under current law shift money from outside accounts to fund the air traffic controller account.

Sequestration Fallout

Without the legislation, the FAA said it would have to furlough 47,000 employees for up to 11 days through Sept. 30 in order to save $637 million that is required by the sequestration.

Of those 47,000 workers, almost 15,000 are full-time air traffic controllers or trainees.

Sponsored Links

The FAA issued an update that said more than 863 delays in the system on Wednesday were attributable to staffing reductions resulting from the furloughs.

An additional 2,132 delays were attributed to weather and other factors, the FAA said. The agency said it would work with airlines to minimize delays.

Airlines, many of which are reporting earnings this week, have pushed the government to quickly ease the flight delays caused by the furloughs.

Jeff Smisek, chairman and chief executive of United Continental Holdings Inc. (UAL), said his company’s network operations center was working around the clock to minimize the impact of fewer controllers.

“We are disappointed that the FAA chose this path, that maximizes customer disruptions and damage to airlines instead of choosing a less disruptive method to comply with the budget obligations,” Smisek said on a conference call.

The proposal being weighed wouldn’t spare other agencies and federal programs from the across-the-board reductions.

Additional reporting by Thomas Ferraro, David Lawder, Karen Jacobs and Nivedita Bhattacharjee; writing by Karey Van Hall.

%Gallery-184360%

 

Permalink | Email this | Linking Blogs | Comments

Read the original article at DailyFinance.com

Google Pays Founders $1; Four Other Execs Get $124M


Read the original article at DailyFinance.com

Filed under: , , , ,

google founders larry page sergie brin executive pay
Michael Nagle/Getty ImagesGoogle founders Sergey Brin, left, and Larry Page speak at a 2008 press conference in New York.

By MICHAEL LIEDTKE

SAN FRANCISCO — Google CEO Larry Page and his longtime partner Sergey Brin limited their salaries to $1 apiece last year, while four other top executives received combined compensation packages totaling more than $124 million.

The breakdown disclosed in a regulatory filing Wednesday consisted mostly of stock awards that could ultimately be worth more or less money, depending on how Google’s stock price fares in the future. Google Inc. (GOOG) also paid all four of the executives besides Page and Brin their maximum bonuses to reward them for their accomplishments during a year that saw the Internet search leader’s stock price and earnings rise by 10 percent from 2011.

Page and Brin, who co-founded Google in 1998, have capped their salaries to $1 since the company went public in 2004. It’s a symbolic gesture that other top Silicon Valley executives such as Apple Inc.’s (AAPL) late CEO Steve Jobs, and Yahoo Inc. co-founder Jerry Yang have made after amassing fortunes through the stock that they held in their respective companies.

Page, 40, and Brin, 39, are Google’s two biggest stockholders, with stakes that are each currently worth about $20 billion.

Meanwhile, other Google executives are still looking to build their fortunes.

Last year’s biggest windfall went to Nikesh Arora, who oversees the advertising sales that generated most of Google’s $50 billion in revenue last year.

Arora’s compensation package was valued at $46.7 million, including $10.8 million cash bonus to supplement his $650,000 salary. The bonus included an $8 million discretionary payment that was boosted by a decision to cancel some of Arora’s stock awards in exchange for $4.7 million in cash, according to the Google proxy statement inviting shareholders to the company’s June 6 annual meeting at its Mountain View, Calif., headquarters.

Arora’s pay last year more than doubled from $23.2 million in 2011.

Patrick Pichette, Google’s chief financial officer, and David Drummond, the company’s top lawyer, both received hefty raises, too. Pichette’s compensation package was valued at $38.7 million, more than doubling from $18.3 million in the previous year. Drummond’s pay climbed 71 percent to $31.3 million last year.

Sponsored Links

Google Executive Chairman Eric Schmidt’s compensation plunged last year after the company gave him stock valued at nearly $94 million in 2011 in appreciation of his decade-long stint as CEO.

When Page took over as CEO two years ago, Schmidt accepted the company’s offer to raise his salary from $1 to $1.25 million. Including a $6 million bonus and other perquisites, Schmidt’s compensation last year was valued at $7.6 million. That was a 92 percent decline from his $101 million package in 2011.

Schmidt is in the process of selling up to 3.2 million shares of Google stock this year. As of April 8, he owned about 6.9 million shares of Google stock, down from 7.6 million shares at the end of last year. His remaining stake in Google is worth about $5.6 billion, based on Wednesday’s closing price of $813.45 for the company’s stock.

The Associated Press formula calculates an executive’s total compensation by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year.

%Gallery-181469%

 

Permalink | Email this | Linking Blogs | Comments

Read the original article at DailyFinance.com