The GMI Blog

WOB News: Rankings in France, Quota Support from OTPP, Upcoming EU Vote

Lots of news in the realm of women on boards this week…

EU 40% Quota – November Vote Expected

In followup to Viviane Reding’s push for an EU-wide 40% quota last year, two European Parliament committees ratified the draft law on Tuesday, supporting and rejecting various amendments. If parliament passes the draft (vote expected in November), the EU member states would then need to  ratify it, with opposition expected from countries core to last year’s debate, including the UK and Germany. For the full press release, click here.

 

OTPP Supporting Quota Approach in Canada

Ontario Teachers’ Pension Plan submitted a letter to the Ontario Securities Commission in support of an “at least 3” quota for women on boards in Canada by 2020, citing lack of sufficient progress in many nations that adopted only comply or explain disclosure requirements. Among other studies, OTPP cited GMI Ratings’ WOB study that had shown 0% increase in board gender diversity Canada last year. OTPP also supported consequences, including TSE delisting, for non-compliance. For full letter, click here.

 

Bloomberg: Companies Ranked on Gender Diversity in France

The Ministry of Women’s Rights in France is now ranking the 120 publicly traded companies of the Société des Bourses Françaises on the basis of how well they’re addressing gender diversity. The rankings were based on not just the makeup of their board, but also women on the executive committee, and whether managers’ pay hinged on equality metrics. The Ministry is also pushing for consequences for those firms that fail to comply with the country’s quota standard – including fines, or banning such companies from public contract bids. Read the full article here.

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GMI Ratings Governance Issue | Verizon Communications Inc.

Verizon Communications Inc.’s financial statements continue to raise questions about the quality of the New York-based company’s reported earnings, but the chance that unexpected events will impact the telecommunications firm has decreased in recent months.

Verizon’s AGR score is a 52, indicating higher accounting and governance risk than 48% of comparable companies. The AGR has improved from a 17 in December.

Verizon entered into an agreement in December 2011 to pay $3.6 billion to a joint venture between the cable providers Comcast Corporation, Time Warner Cable, and Bright House Networks in exchange for 122 Advanced Wireless Services spectrum licenses. The Federal Communications Commission approved that deal Thursday.

Verizon’s balance sheet had already teemed with more than $79 billion in intangible assets such as brands, patents or licenses as of March 31, 2012, or nearly 36% of its total assets versus the industry median of nearly 15%. Lacking physical substance, intangible assets can be difficult to value and thus expose investors to error-related risks.

Verizon's estimates don't always coincide with those of others. For example, the company has some discretion in setting the rate at which it thinks the value of money will change by the time it has to pay out pension benefits to its workers, and even a small increase in this discount rate can result in a large reduction of the company’s net pension liability. Verizon assumed a discount rate of 5.75 as of March 31 versus the industry median of 5.305.

While Verizon’s accounting continues to show red flags, it has made mistakes in the past. The Securities and Exchange Commission said on September 7, 2011 that Verizon’s compensation of its then-chairman and CEO Ivan Seidenberg had been improperly reported. The company is now under new management since making Lowell C. McAdam its chairman and CEO at the close of business on December 31, 2011, but he does not represent any significant cultural shift as he has been with Verizon since 2000.

Verizon is rated “D” on its corporate governance overall.

That said, Verizon’s AGR score has improved in recent months, in part due to its current pace of merger and acquisition activity versus the industry mean. Verizon's deals in 2011 included acquiring the Miami IT infrastructure services company Terremark Worldwide Inc. that April. An acquisitive nature in no way means that a company is fraudulent, but it can reflect an inherently risky approach to business strategy.

In another sign of lower risk than in the past, the negative impact of litigation on Verizon's AGR score subsided in the quarter ended this March, although the company continues to grapple with court battles. For example, the Federal Trade Commission is opposing Verizon’s tentative settlement of a class action lawsuit alleging that it allowed the cramming of unauthorized charges onto its customers’ phone bills, according to the regulator’s press release August 20. The FTC noted issues such as the consumers likely not having any idea that they had been wrongfully billed and that they now have the right to a refund. This development did not impact Verizon's AGR during recent months.

What happens to the AGR score in the quarters ahead remains to be seen.

 

 

Region: North America

Country: United States

Sector: Telecommunications Services

Industry: Integrated Telecommunications Services

Market Cap:  $  126,708.6 mm (Large Cap)

ESG Rating: D

AGR Rating: Average (52)

 

Small Print

By Paul Hodgson – Chief Research Analyst

Just Showing Off

Events Team Leader Mark Magee found this piece of envy provocation in a July 30 8-K from Mattson Technology.

Mattson Technology, Inc. (Nasdaq: MTSN), a leading supplier of advanced process equipment used to manufacture semiconductors, today announced that Hans Betz has retired as chairman of the board and a director of the Company.  Mr. Betz stated, “I have found that, with my retirement to my home in Italy, I cannot put in the time that I want for Mattson Technology. I wish the Company all the best in the future.”

My retirement home in Italy! TMI.

Big Apple

And Mark also found this in a NYMagazine post.

Apple hit a new milestone that, while not all that relevant in the market, is still pretty damn impressive: The Cupertino giant's $620 billion market value surpassed the previous record set by Microsoft in 1999, making it the most valuable company ever traded.

In addition to its statistical significance, Apple's breaking of Microsoft's old record is a nice bit of posthumous poetic justice for Steve Jobs, who struggled for years to compete, both in the courts and on the bottom line, with Microsoft's massive share of the software market.

No comment necessary there.

Meanwhile at Facebook... or We Told You So Part II

And Mark also found this on August 20 in the NYTimes

Once hailed as the most valuable technology company to hit Wall Street, Facebook is now worth just over half what it was three months ago, with shares closing at $20.01 Monday. Wall Street analysts are openly wondering whether its chief executive, Mark Zuckerberg, has the business skills to deliver on his promises.

Swings and roundabouts, but, as we keep saying, business skills and business success come with good governance and good governance is not what you have at Facebook.

Making Joly Jolly

And Mark also found this on August 22 in the Wall Street Journal (good job he’s going on holiday next week, he’s going to need the rest).

Best Buy awarded new Chief Executive Hubert Joly a pay package valued at as much as $32 million over three years to lure him to the slumping consumer-electronics chain.

Much of the pay package—which is 2½ times more than the retailer earned in its most recent quarter—is intended to compensate Mr. Joly for money he was set to earn as CEO of hospitality chain Carlson Cos., a job he resigned from last week to take the helm at Best Buy.

Of course, I’ve blogged about this myself yesterday, and, since I already said “I’ve said it before and I’ll say it again” I will say it again: Such buyouts are to compensate executives for compensation they leave on the table if they are recruited, yet the compensation that is relinquished is intended to reward the executive over the long-term as well as have a retentive effect. If the executive leaves, then it fails at both these, thus it should and does lapse. When a hiring company makes an executive whole for such a legitimate loss it undermines the purpose of such long-term compensation both at the company that is hiring and the company the executive has left. Matters are not improved by the fact that less than a fifth of the award is tied to performance in any way.

Best Buy CEO not a best buy

Region: North America

Sector: Cyclical Consumer Goods / Services

Industry: Retail – Computers/Electronic

Market Cap:$6,529.5mm (Large Cap)

ESG Rating: D

By Paul Hodgson – Chief Research Analyst

Best Buy’s new CEO has been offered a contract that is summarized in an 8-K filing from August 19. In many ways there are no surprises here: a $20 million buyout to extricate Hubert Joly from his position as CEO of Carlson. No surprises, except that such “golden hellos” still lack any justification. Such buyouts are to compensate executives for compensation they leave on the table if they are recruited, yet the compensation that is relinquished is intended to reward the executive over the long-term as well as have a retentive effect. I’ve said it before and I’ll say it again: If the executive leaves, then it fails at both these, thus it should and does lapse. When a hiring company makes an executive whole for such a legitimate loss it undermines the purpose of such long-term compensation both at the company that is hiring and the company the executive has left. Matters are not improved by the fact that less than a fifth of the award is tied to performance in any way.

While the golden hello does not surprise, this does:

Work Authorization. In the event Mr. Joly’s petition for U.S. work authorization is not approved permitting him to commence his employment by September 30, 2012, either the registrant or Mr. Joly may terminate the Agreement. In such event, and only if Mr. Joly’s employment with his prior employer has been terminated and he had incurred a forfeiture of compensation as a result of such termination, Mr. Joly is entitled to receive a payment of $6.25 million from the registrant.

In other words, if Mr. Joly does not take the job, but he’s lost his job with Carlson, Best Buy will pay him $6.25 million.

I have never seen anything like this before in my 19 years of research in executive pay.

Golden hellos, golden handcuffs, golden goodbyes, golden parachutes, but never a golden green card™. The board should have made this employment offer contingent on getting a work authorization. In other words, you get work authorization and we’ll sign a contract, not the other way round. And this kind of potential expenditure is barely responsible in a company that only made $12 million in profit last quarter.

On the other hand, the availability of cash does not seem to concern this board, since it also bought back $122 million worth of shares in the last quarter. It is difficult to imagine how such a purchase was financed.

GMI Ratings Governance Issue | Scientific Games Corp.

Scientific Games Corp. has been borrowing money again, although numerous warning signs suggest that the New York lottery service provider's management might not spend responsibly. The company’s financial statements reflected an AGR score of 9 in June, indicating higher accounting and governance risk than 91% of comparable companies.

The subsidiary Scientific Games International, Inc. said it is planning to raise $250 million in debt that comes due in 2020 in a private offering targeted to investors such as institutional buyers.  The company wants money to buy back or pay off debt due in 2016 and for general corporate purposes such as funding acquisitions, according to a press release August 15. On the same day Scientific Games filed a different press release with the Securities and Exchange Commission in which it said it had already priced $300 million of debt due 2020.

Obtaining some extra time to pay off debt can certainly be a positive move. Nonetheless, Scientific Games remains a company that depends greatly on funding from outside sources. Its total debt as of March 31 amounted to more than $1.387 billion, or nearly three times the amount it had in total equity. In contrast, the median debt burden for the industry amounted to nearly 79% of equity.

What kind of management has decided to pile up so much debt? As we pointed out in May, the billionaire Ron Perelman effectively controls Scientific Games, as he owns roughly a third of it through MacAndrews & Forbes, the holding company of which he is the sole stockholder. Other board members designated by MacAndrews & Forbes include the company’s executive vice chairman and chief administrative officer Barry F. Schwartz and its senior vice president of worldwide government, legal and business affairs Frances F. Townsend. Meanwhile, Scientific Games’ chairman and CEO A. Lorne Weil and its Asia-Pacific CEO Michael R. Chambrello work for the company, so that most directors on the 11-person board are blatantly dependent on Perelman.

With few checks and balances in place to ensure that management acts in the best interest of investors, Scientific Games has been spending in ways that suggest possibly problematic boosting of earnings. After the company purchased the U.K.–based fixed odds betting terminal supplier Global Draw Limited in 2006, it estimated that it had paid $633.7 million more for its acquisitions than they were worth on the books, or around 36% of total assets. This proportion was the same as of March 31, 2012, although companies typically have goodwill amounting to less than 20% of their assets. Scientific Games has had more than $600 million of goodwill on its balance sheet for around six years, raising questions as to what extent the company’s assets consist of estimations that might need updating. The company said in its filing for the year ended December 31, 2011 that it evaluates its goodwill at least annually.

Other warning signs exist. For example, Scientific Games this June filed an amendment to its annual report for the year ended December 31, 2011, but its note of explanation must be read in conjunction with other documents, so it is unclear and does not add to the company’s credibility.

In another red flag, Scientific Games has recently experienced turnover in senior management. On September 30, 2011 the company said its general counsel Ira H. Raphaelson would be replaced by Grier C. Raclin effective that October 1. And on March 5, 2012, J. Robert Kerrey advised Scientific Games that he resigned as a member of the board on that date “in order to focus on other professional opportunities,” according to a regulatory filing. On March 20 the board elected Paul Meister director effective immediately at the designation of MacAndrews & Forbes.

Meister isn’t the ideal replacement. As the chairman and CEO of the consulting services firm inVentive Health, Meister does not seem likely to have much free time to devote to his responsibilities at Scientific Games. Moreover, he did not manage to save GenTek Inc. from filing for bankruptcy in 2002 when he served on the telecommunications and other industrial product maker’s board. He’s not the only manager with such credentials at Scientific Games, either; the company’s audit committee chair Michael J. Regan served in the same role at Citadel Broadcasting Corp. when the radio station owner filed for Chapter 11 in December 2009.

Hopefully these managers will do better with Scientific Games.

Region: North America

Sector: Cyclical Consumer Goods / Services

Industry: Casinos / Gaming

Market Cap: $ 646.0mm (Small Cap)

ESG Rating: F

AGR: Very Aggressive (9)

GMI Ratings Governance Issue | Hanwha Corp.

On August 16, 2012, Kim Seung-youn, chairman of Hanwha Group, South Korea’s tenth largest conglomerate, was sentenced to four years in jail and fined KRW5.1B ($4.5M)  at a Seoul district court for KRW 288B ($254M) in damages as a result of his embezzlement.

This was a bit of a shock. In the world’s 11th largest economy, a tycoon, however serious his crime, rarely goes to jail. Just as with many chairmen of chaebols, the country’s family-owned conglomerates, in the past or currently awaiting trial, Mr. Kim embezzled large amounts of funds from his conglomerate’s strong units to prop up its weaker affiliates. However, other tycoons engaged in similar transgressions have had their jail terms usually waived upon being sentenced. Instead, Mr. Kim now finds himself in jail.

Asked by reporters about the sentence before leaving the courthouse, Mr. Kim quipped, “I have a tough fate.”

Mr. Kim, who had the reputation of being a talented businessman, was only 29 years old in 1981 when he took the helm of Hanwha after the death of his father, who founded the group. In the past three decades, he has transformed Hanwha into a conglomerate of 55 chemical and financial services affiliates from an explosive maker with a few subsidiaries.

Hanwha is a typical chaebol. Mr. Kim is a product of the chaebol system of South Korea where top-down corporate governance, buttressed by cozy business-government ties, has helped spearhead rapid industrialization. South Korea is now an economic powerhouse, but its governance regime is still dominated by the legacy of the development era.

Mr. Kim has a 25% stake in Hanwha Corporation, which is central to the conglomerate’s cross-shareholdings. The de facto holding company controls a significant 37.9% stake in Hanwha Chemical. Hanwha Chemical controls 100% of Hanwha L&C. Hanwha L&C controls 15.4% of Hanwha Securities. Hanwha Securities controls 76% of Hanwha Venture Capital, and a 17.1 % stake in Hanwha Venture Capital shares is controlled by Hanwha Chemical. Hanwha Corporation in turn has a 30% stake in Hanwha Chemical, rounding out the web of cross-shareholdings.

At chaebols, managerial control is now in the hands of a few patriarchs who often use complex cross shareholdings and political influence to skate the law and skirt shareholders’ rights. A fervent and rapid drive to expand business is given as a justification for their control of conglomerates, which in turn provides a misguided rationalization for their overt – and often illegal – attempts at staying in control of their conglomerates.

Because they control large numbers of corporations with far less than core shareholdings, chaebol tycoons often craft public images approaching that of an infallible sage. For example, an internal memo seized by the prosecution said that Mr. Kim, who has achieved the status of “deity” is the object of absolute obedience.

In the past three decades under Mr. Kim, Hanwha’s rush for growth has unfolded against a backdrop of Mr. Kim’s business practice irregularities and corruption. In 1993, he misappropriated $4.7M from an offshore account of Hanwha and bought a mansion once owned by Hollywood star Sylvester Stallone. In 2003-04, he paid KRW1B in bribes to a lawmaker. In 2005, the government unearthed KRW8.7B, parts of larger slush funds which Mr. Kim had raised to buy a securities brokerage, now Hanwha Securities.

In 2007, Mr. Kim even committed a violent felony. Apparently flanked by cleaver-wielding gangsters, he abducted and beat a bar bouncer with a steel pipe because the bouncer had had a brawl with Mr. Kim’s son in the bar. Despite all these run-ins with the law, Mr. Kim was jailed only twice for less than two months in total. All other sentences were commuted or waived.

The August 16 jail sentence and fines against Mr. Kim signal that South Korean society has begun to question the efficacy and need for the traditional top-down governance regime. The chaebol-centered governance regime alienates outside shareholders and hampers entrepreneurship inside and outside the chaebol. This is no longer a domestic issue, given the fact that South Korea’s stock market, now bigger than Italy’s or Spain’s by capitalization, is 28% controlled by international investors.

Now that the relevancy of the current governance regime is in question, South Korea still appears to be at a loss for clear direction. Mr. Kim’s four-year jail term is about half the nine years demanded by the prosecution. Indeed, this was the latest of a series of half measures. On the late afternoon of Friday February 3, 2012, when he was convicted, the Korea Exchange announced it would comply with its own regulations and suspend Hanwha Corporation from trading, where Mr. Kim is Representative Director and Chairman. On Monday, February 5, 2012, the exchange retracted its first-of-its-kind decision against a chaebol chairman and his de facto holding company.

Meanwhile, on August 17, 2012, a day after Mr. Kim’s sentence, all major Hanwha shares went up. For investors, Mr. Kim was the quintessential risk, and now he is gone. However, the risk has not yet vanished completely. Mr. Kim appealed the sentence although he had admitted wrongdoing. As of August 20, 2012, Mr. Kim has not resigned from any post at Hanwha. Local news reports said that he is now considering managing the group from the prison cell.

Region: All Other

Sector: Industrials

Industry: Industrial Conglomerates

Market Cap: KRW 2,068,861.1mm (Mid Cap)

ESG Rating: D

AGR: N/A

 

GMI Ratings Governance Issue | Caterpillar Inc.

Last week, Zach.com noted that China had cut its 2012 growth target to an eight-year low of 7.5%, and the "detrimental effect" that the decreased spending on infrastructure and construction would have on Caterpillar. Indeed, first among the company's stated Risk Factors is a high sensitivity to global economic conditions. The company stands to be heavily impacted by prolonged downturns in the energy, mining, housing, and commercial construction industries.

 

The pessimistic interview from Caterpillar's CEO Douglas Oberhelman comes on the heels of a contentious employee strike. The three and a half month strike ended Friday when the company approved a one-time ratification bonus of $3,100 per worker after initially proposing $1,000 per worker. The worker strike came about as Caterpillar sought to freeze the pay of veteran workers and shift an increased burden of the health-care cost to employees despite the posting of record setting sales and revenues. The increased bonus was about the only concession the hard negotiating company was willing to make on the six-year contract, as salaries will remain frozen with the company receiving nearly all of the concessions it sought to achieve.

 

The company asked employees to make concessions on pay, healthcare, and pensions even as pay for its CEO rose 42 percent in 2011. In addition to a 32 percent rise in base salary, Mr. Oberhelman's $16.9 million in total summary compensation included more than $8 million in stock options, half of which are time-vesting, a cash bonus of almost $5 million, and shareholder sponsored corporate aircraft and home security costs. Five other named executive officers were awarded discretionary cash bonuses "to reward significant efforts that may not be reflected in the performance objectives". Recently, Caterpillar's former CEO James W. Owens received one of the highest severance packages of all companies we've covered in the past few years when he retired in July 2010. After six years as CEO, he received almost $52 million in total realized compensation.

 

The board of Caterpillar Inc. is not only large, with 16 current members, but also well paid. Non-employee directors earned between $266,089 and $313,218 in total compensation for service on the company's board last year. Of 16 board members just one is female, seven have served for at least a decade, and there are certain relationships on the board that skirt the SEC rules for independence, but signal camaraderie among board members. For instance, two directors serve together on the board of Abbott Laboratories and two more serve together on the board of The Boeing Company. In fact, Caterpillar's board is a virtual who's who of blue-chip directors.

 

Currently, half of Caterpillar's board sits on at least three boards we rate. The board members include Miles White, the Chairman and CEO of Abbot Laboratories, who also sits on the board and two committees at McDonald's Corporation. David Goode, who chairs the compensation committee, has served on the board for 19 years, as has fellow compensation committee member Joshua Smith. The most recently elected board member to join the compensation committee is David Calhoun, whose full time job is as CEO of Nielsen Holdings N.V. and who also serves on the boards of Medtronic, Inc. and The Boeing Company.

 

Caterpillar Inc. is also rated Very Aggressive in terms of Accounting & Governance Risk (AGR). With an overall AGR score in the 4^th percentile, Caterpillar's financial statements indicate accounting and governance risk higher than 96% of the company's we cover. We have flagged the company on 10 metrics pertaining to Revenue Recognition, Expense Recognition, and Asset-Liability Valuation. The company has scored "Aggressive" or "Very Aggressive" in its AGR for the past three years while industry peers typically scored as "Average" over the same time period.

 

Employees at Caterpillar chose to accept a pay freeze and decreased benefits against the recommendation of their local union, and on terms that greatly favored the company even as it made profits. However, the CEO has unexpectedly warned that the company could face lean times in the face of a global economic downturn. It's too early to tell whether the statement was made to ease the public sentiment over a controversial employee strike settlement or if it's the foreshadowing of a real threat to investor confidence.

 

Region:  North America

Sector: Industrials

Industry: Construction/Agricultural Machinery

Market Cap: $56,219.4mm (Unknown Cap)

ESG Rating:  D

AGR:   Very Aggressive (4)

 

 

 

GMI Ratings Governance Issue | Pharmaceutical Companies

The pharmaceutical industry has grown notorious after collectively paying out multi-billions amid allegations of fraud. But many among those to receive fines stand out from the others, and continue to expose their investors to possible losses related to regulatory problems.

When the government announced a health care fraud prevention and enforcement action initiative in May 2009, Attorney General Eric Holder said that tens of billions in Medicare and Medicaid funds were lost to fraud every year. Since then, regulators have recovered more than $10.2 billion related to such matters. While warning that the government would be “turning up the heat on perpetrators who steal from the taxpayers and threaten the future of Medicare and Medicaid,” Health and Human Services Secretary Kathleen Sebelius had added the caveat that most "providers are doing the right thing and providing care with integrity."

Indeed, most North American and Western European companies in the diversified and biotech sector exhibit typical characteristics. Around 60% of those we monitor are rated “C” on their corporate governance overall and half have financial statements reflecting AGR scores that indicate average accounting and governance risk.

In contrast, several companies that have experienced scandals in recent years are also among those with lower ratings. In September 2009 regulators announced that Pfizer Inc. and its subsidiary Pharmacia & Upjohn Company Inc. agreed to a $2.3 billion settlement of fraudulent marketing charges; the New York-based global giant is rated “F” and its AGR score is 1, suggesting it has higher accounting and governance risk than 99% of comparable companies. In another example, the U.S. Department of Justice said May 7 that Abbott Laboratories Inc., which is rated “F” and has an AGR of 22, agreed to pay $1.5 billion to resolve allegations that it illegally promoted the drug Depakote.  Johnson & Johnson has developed an impressive record of run-ins with regulators, including its tentative $2.2 billion settlement with the Department of Justice over its promotion of Risperdal, according to the Wall Street Journal and a regulatory filing on August 1. The New Jersey company is rated “F” and has an AGR score of 26. Amgen Inc. recorded a $780 million hit to its earnings during the three months ended September 30, 2011 that was tied to investigations into its marketing practices, and the Thousand Oaks, Calif.-based company is rated “D” and has an AGR of 17.

To be sure, some of those to receive fines have average ratings. For example, GlaxoSmithKline plc had to pay $3 billion after allegations that the U.K. manufacturer marketed the drugs Paxil and Wellbutrin for uses not approved by the U.S. Food and Drug Administration, including the treatment of children for depression and of other patients for ailments ranging from obesity to anxiety. Unlike others that have experienced such large penalties, Glaxo is rated “C.” Its AGR score of 52, which indicates higher risk than 48% of comparable companies, has improved from a 28 as of June 2010.

As regulators call out pharmaceutical companies for misconduct, it seems logical that the people affected will take steps to avoid having such problems again in the future. Which ones will succeed in the coming years remains an open question. In the meantime, the few to experience scandals in recent years have not helped the industry’s reputation.

Small Print

By Paul Hodgson – Chief Research Analyst

Looooooooooooooooong term disability

Compensation Analyst Team Leader Scott Patterson is responsible for the first three Small Print entries. This first from Acadia Healthcare Company’s 2012 proxy statement.

If a Named Executive Officer that is party to an employment agreement dies or becomes disabled, such executive is entitled to the applicable Termination Payments (other than the severance payment contemplated under clause (vii) of the definition thereof). In the event that an executive becomes disabled not due to death, such executive shall be entitled to receive continued installment payments of such executive’s base salary as in effect on the termination date for a specified period of time.

Death as a form of disablement? What is that? Life challenged?

Miscellaneous compensation and company devotion

In a two-parter from Synergy Resources Corp’s 2012 proxy statement, this first takes the definition of all other compensation to its limits.

(5)          All other compensation received that the Company could not properly report in any other column of the table.

Yes, but what the heck is it for?

And in Synergy Part 2, gone are the (8 hour) days….

On June 1, 2010, the Company entered into new employment agreements with Mr. Holloway and Mr. Scaff.  The new employment agreements, which expire on May 31, 2013, provide that the Company will pay Mr. Holloway and Mr. Scaff each a monthly salary of $25,000 and require both Mr. Holloway and Mr. Scaff to devote approximately 80% of their time to the Company’s business.

As Scott says: “Nineteen hours a day devoted to business. That is dedication. However Mr. Jennings has it a little tougher.”

The employment agreement provides that the Company will pay Mr. Jennings a monthly salary of $15,000…. The employment agreement expires on March 7, 2014 and requires Mr. Jennings to devote all of his time to the Company’s business.

Twenty-four hours a day to the company? And for less money? That’s too much to ask.

Defrocking Brother Rupert

And from an August 15 Reuters report, Events Team Leader Mark Magee found this piece of
excommunication.

Last week, the Church of England sold all its shares in News Corp, citing ethical grounds. The Church, which has three national investing bodies, sold the shares -- worth 1.9 million pounds ($2.97 million) -- after its Ethical Investment Advisory Group (EIAG) was not satisfied with the level of corporate governance reform at Murdoch's conglomerate following a year of dialogue.

That’ll show him, then.

Sharing the wealth

Events Analyst Dovid Muyderman collected this from an FX Alliance 8-K on August 13.

FX Alliance Inc. (“FXall”) (NYSE: FX) today announced that BofA Merrill Lynch and Goldman, Sachs & Co., the joint book-running managers in FXall’s recent initial public offering, have agreed to waive all lock-up restrictions with respect to 20,000 shares of common stock of FXall held by Philip Weisberg, FXall’s chairman and chief executive officer and 10,000 shares of common stock of FXall held by John Cooley, FXall’s chief financial officer. In connection with FXall’s previously announced entry into a definitive agreement with Thomson Reuters and certain of its subsidiaries for a subsidiary of Thomson Reuters to acquire 100% of the outstanding shares of common stock of FXall, Mr. Weisberg and Mr. Cooley entered into tender and support agreements under which they are permitted to donate a portion of the shares of common stock they hold to charities of their choice. In order to permit these charitable transfers, the waivers will take effect on August 15, 2012, and will thereafter permit Mr. Weisberg and Mr. Cooley to donate up to 20,000 shares and 10,000 shares, respectively, to the charities they select.

It’s a bit much when you have to work this hard to be allowed to donate your own shares to charity.

Angry

Compensation Analyst Ashley Kotzur spotted this filing from First Financial Northwest that would seem to indicate that a certain shareholder is not a little put out by the company’s behavior.

The upcoming annual meeting is a referendum on our Company’s future.

Despite the current board having led our Bank into a cumulative loss of $90 million, they seem unwilling and unable to accept either individual or collective responsibility for their failures. Worse, their multi-million dollar awards to the failed CEO, Victor Karpiak, illustrate they don’t grasp what it means to steward our capital. Further, their consideration of using our Bank’s remaining excess capital to buy another bank (or two) shows they remain unchastened by their own failures.

In this election, if you think our Bank should consider buying another bank (or banks), vote for management’s slate;

• If you want to give Victor Karpiak another chance to remain CEO, vote for management’s slate;
• If you want to maintain a ‘director emeritus’ program, paying the retired directors who led our Bank into its losses, and if you want to keep their pictures hanging on the walls, vote for management’s slate;
• If you want the board members to be given Apple’s latest i-gizmo for free so that they ‘can communicate better’, or if you want to rent theatres to hold annual meetings in a venue that ‘more experienced directors’ believe to be suitable, vote for management’s slate; and
• If you believe that management compensation should consist of salary, cash bonuses, stock options, restricted stock, matching contributions for 401(k) plans, ESOP participation, executive supplemental retirement pension (payable at age 60), ‘evergreen’ employment and severance agreements, club dues, and a car allowance—then please vote for management’s slate.

However, if you favor accountability for management and for the board, vote for our nominee. We think Victor should be fired.

If you oppose the riot of compensation programs and the sense of entitlement the board has when spending our money, vote for our nominee. We favor corporate frugality at every turn.

If you want our Bank to be sold to the highest bidder, vote for our nominee. We’ll take your mandate and push to get the best price in a sale as quickly as possible.

We have substantial experience in maximizing shareholder value at underperforming financial institutions. Vote the GREEN proxy card so that the board knows you favor maximizing shareholder value.

Don’t pull any punches.