Administration seeks ways to tame corporate pay

By JIM KUHNHENN, Associated Press Writer Jim Kuhnhenn, Associated Press Writer – 2 hrs 30 mins ago

WASHINGTON – Talking tough but stepping gently, the Obama administration rejected direct intervention in corporate pay decisions Wednesday even as officials argued that excessive compensation in the private sector contributed to the nation's financial crisis.

Instead, the administration plans to seek legislation that would try to tame compensation at publicly traded companies through shareholder pressure and less management influence on pay decisions.

At the same time, the administration drew a sharp line between the overall corporate world and those institutions that have tapped the government's $700 billion Troubled Asset Relief Program.

The administration issued new regulations Wednesday that set pay limits on companies that receive TARP assistance, with the toughest restrictions aimed at seven recipients of "exceptional assistance." Those firms are Citigroup Inc., Bank of America corp, General Motors Corp, Chrysler, American International Group Inc., GMAC LLC and Chrysler Financial.

The regulations limit top executives of companies that receive TARP funds to bonuses of no more than one-third of their annual salaries.

But in a significant expansion of authority, the regulations call for a special compensation overseer who will burrow into the pay practices of some of the country's biggest enterprises.

The administration named Kenneth Feinberg, a lawyer who oversaw payments to families of victims of the Sept. 11, 2001, terrorist attacks, as a "special master" with power to reject pay plans he deems excessive at the seven companies with the biggest injections of public money. Feinberg also would have authority to review compensation for the top 100 salaried employees at those firms.

The tempered broader approach to executive pay wasn't immediately embraced on Capitol Hill, where a leading Democrat said he wants to go farther.

In a lengthy statement released after the White House announcement, House Financial Services Committee Chairman Rep. Barney Frank said he wants legislation that would instruct the Securities Exchange Commission to ban company boards from rewarding excessive risk taking.

"It is not the government's business to discourage risk taking," said Frank, D-Mass. "But neither should we allow systems which have existed up until now whereby decision-makers are handsomely rewarded if they take big risks that pay off, but suffer no penalty whatsoever if those risks result in losses to the company."

With one set of policies for taxpayer-assisted firms and a more hands-off approach to the rest of the corporate sector, Obama is straddling what has been an explosive issue with the public and in Congress. Executive pay burst as an issue earlier this year amid disclosures that AIG, the insurance conglomerate, had paid bonuses of $165 million even as it accepted billions from the government.

AIG is among the companies whose pay schemes the government will now oversee. But outside in the broader private sector, the administration chose to use public pressure and the potential for embarrassment, rather than direct pay restrictions.

"We do not believe it's appropriate for the government to set caps in compensation," Treasury Secretary Timothy Geithner said. "We're not going to prescribe detailed prescriptive rules for compensation. All those things would be ineffective, could be counterproductive in some ways."

Geithner said the administration will ask Congress to give shareholders a nonbinding voice on executive pay and to require corporate compensation committees to be independent from company management. That second provision would give the SEC authority to strengthen the independence of panels that set executive pay.

"We'd like to see better transparency and accountability, frankly," of executive pay practices, Geithner said.

Geithner said the administration's legislative proposals would reinforce administration compensation guidelines that encourage corporate boards to adopt pay packages that reward long-term performance rather than short-term gains and to better manage the relationship between risk and incentive. Those guidelines, or principles, are not enforceable but are meant as a message to corporate boards and to shareholders.

With that policy, the administration appeared to be heeding the concerns of the financial sector.

"There is recognition that if you accept government money, you should be subject to restrictions," said Scott Talbott, the senior lobbyist for the Financial Services Roundtable, an industry group. "Our concern is the government should not set specific dollar amounts and should stick to principles and guidelines, which I believe they will."

So-called shareholder "say on pay" legislation cleared the House in April 2007 by a 2-to-1 margin but went nowhere in the Senate. It was opposed by the Bush White House and most Republicans.

Investor advocates, union pension funds and shareholder groups have pushed for the legislation. Critics, such as the Center on Executive Compensation, argue that "say on pay" would trivialize corporate governance and would give shareholders a voice even though they are not privy to information before the board of directors.

As a senator in 2007, President Barack Obama introduced a bill to require companies to allow nonbinding shareholder votes on executive compensation packages, though his proposal wouldn't have limited CEO pay.

During the presidential campaign, Hillary Rodham Clinton also proposed a measure to give shareholders a nonbinding vote on executives' pay packages. In addition, her bill would have required top executives who collect large performance-based pay packages to return the money if financial irregularities are discovered and companies are forced to restate their earnings. It also would have capped the amount that top executives could earn tax-free through deferred compensation.

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AP Economics writers Martin Crutsinger and Marcy Gordon, AP Writer Anne Flaherty in Washington and AP Business Writer Sara Lepro in New York contributed to this report.

source : http://news.yahoo.com/s/ap/20090610/ap_on_bi_ge/us_executive_pay

Controversies involving First Gentleman Jose Miguel Arroyo

MANILA, Philippines - No matter how much he deliberately avoids the limelight, First Gentleman (FG) Jose Miguel “Mike" T. Arroyo has received more than his fair share of controversies.

Just months after his wife became President eight years ago, Mr. Arroyo has unwittingly been the focus of much attention, after being accused of receiving a P50 million bribe over a company’s telecommunications franchise.

And now, with only a year left in his wife’s term, allegations against the First Gentleman have refused to stop.

Mr. Arroyo returned to the spotlight following disclosures by Senator Panfilo Lacson of a World Bank report that allegedly implicated the First Gentleman and some politicians in the irregularities in the bidding of the agency-funded road projects.

From 2001 to 2009, Mr. Arroyo became the subject of various congressional investigations because of corruption allegations.

But the allegations have not been proven.

The following is a GMA News Research compilation of the controversies involving Mr. Arroyo:


* FG alleged to have received bribe to have presidential veto withdrawn

In July 2001, Veronica "Bing" Rodrigo, former correspondence secretary and friend of President Gloria Macapagal-Arroyo, alleged that the First Gentleman received a P50-million bribe for the President to recall her veto of the franchise bills of the Philippine Communication Clearinghouse and APC Wireless Interface Network. Rodrigo retracted her accusations a few days later.

* FG accused of using PCSO funds for campaign of certain senatorial candidates

In October 2001, Robert Rivero, axed consultant of Philippine Charity Sweepstakes Office, alleged that First Gentleman Mike Arroyo used PCSO funds in the campaign of certain senatorial candidates and to bribe the media. He claimed that FG Arroyo paid P20.5 million to Bombo Radyo and Radio Mindanao Network. Even though the PCSO and lotto draw did not air in these stations, some commentators aired pro-administration commentaries. The PCSO publicity department denied Rivero's accusations.

* FG’s designation as OFW envoy

In December 2002, President Arroyo designated Mike Arroyo as an OFW envoy so he could represent her in the countries she could not visit. However, critics assailed Arroyo's announcement when they learned that his activities as OFW envoy could be funded by a proposed overseas workers legal assistance fund. They feared that the Arroyo couple would use the funds for her 2004 campaign. While the President did not recall her husband's designation, the first gentleman voluntarily resigned.

* FG accused of maintaining secret bank accounts in the name of Jose Pidal

In 2003, Sen. Panfilo Lacson accused Arroyo of maintaining secret bank accounts to launder money from campaign contributions for the 1998 vice presidential bid of President Arroyo.

First Gentleman Arroyo denied the allegations. His brother, Ignacio "Iggy" Arroyo took up the cudgels for him and claimed to be "Jose Pidal" before clamming up and invoking his "right to privacy" during a Senate investigation.

* FG’s alleged friend is involved in importation of rotten rice

Indian trader Kishore Hemlani, allegedly a close friend of First Gentleman Arroyo, also figured that year in a contract involving the importation of 600,000 metric tons of rotten rice worth P9.5 million from India.

* FG’s expensive accommodations in a Las Vegas suite

In 2005, First Gentleman Arroyo drew criticism for staying in a $20,000-a-night MGM Grand Villa in Las Vegas, Nevada, during a Manny Pacquiao-Erik Morales boxing match. Arroyo’s camp said the accommodation was complimentary and not paid for by public funds.

* FG’s alleged receipt of jueteng payola

During the same year, witnesses at the Senate hearings on jueteng claimed that First Gentleman Arroyo received protection money for the illegal numbers game. The First Gentleman denied the allegations and left the country momentarily to help "remove distractions and doubts from people’s minds" on President Arroyo's ability to run the government. The Palace, then embattled with both the jueteng and "Hello Garci" controversies, dismissed the accusations against the First Gentleman as mere concoctions by those who wanted to oust the President.

* FG’s involvement in the Hello Garci scandal

Still in 2005, a Marine brigade commander appeared at a Senate Hearing on the Hello Garci controversy and claimed that First Gentleman Arroyo delivered a huge amount of cash to Mindanao shortly before the 2004 elections.

Brig. Gen. Francisco Gudani cited information from an unnamed source that FG Arroyo flew to Mindanao twice in a private helicopter days before the 2004 elections to deliver P500 million in boxes.

Gudani, who was detailed in Lanao during the 2004 elections, told senators that he witnessed vote-buying and other election irregularities in his area.

* FG’s alleged friend is involved in fertilizer fund scam

In 2006, the Senate wrapped up a series of hearings on the fertilizer fund scam and concluded that First Gentleman Arroyo's close friend and fellow Makati Rotarian, agriculture undersecretary Jocelyn “Joc-Joc" Bolante diverted agricultural funds to the 2004 electoral campaign of President Arroyo.

* FG’s alleged multi-million dollar German bank account

Later that year, then opposition Rep. Alan Peter Cayetano claimed that a member of the Arroyo family maintained a bank account in Germany amounting to hundreds of millions of dollars. First Gentleman Arroyo flew to Germany and secured a certification from the bank to disprove Cayetano's claims. Upon his return, he sought Cayetano's expulsion from Congress.

* FG reportedly tells rival to “back off" from national broadband project

The testimonies of Jose de Venecia III and Rodolfo Noel Lozada Jr. during the Senate hearings on the national broadband network project linked First Gentleman Arroyo to another multi-million dollar controversy.

De Venecia III claimed that FG Arroyo told him to "back off" from the project, which eventually went to Chinese firm ZTE Corp. De Venecia III was a majority shareholder of one of the proponents of the NBN project.

Lozada meanwhile claimed that Comelec Chairman Benjamin Abalos phoned "FG" to discuss the NBN project. Lozada also testified that Abalos, de Venecia III, and the First Gentleman met for dinner around the time that the ZTE execs were following up on the project.

* FG’s reported ties with construction firm that was blacklisted by the World Bank

In January 2009, Sen. Panfilo Lacson linked FG Arroyo to a constructor blacklisted by the World Bank.

Citing entries from an appointments book he claimed belonged to FG Arroyo, Sen. Lacson pointed out that the First Gentleman met with Eduardo de Luna of E. C. de Luna Construction Corp. several times. De Luna, who was debarred by World Bank for collusive practice in a national roads project, said in a Senate hearing that he did meet FG Arroyo a few times but denied that he and FG were close. - source