Archive for October, 2009

Posted by Admin | October 31, 2009

U.S. pay czar: Will soon decide how to use clawback

Kenneth Feinberg said he is still reluctant to use those powers, which let him recoup salary and bonuses already paid out to employees at companies that currently hold or have paid back funds from the U.S. government’s Troubled Asset Relief Program (TARP).

“I think that exercise of discretion should be very, very narrow,” Mr. Feinberg said during a conference on executive compensation organized by the University of Maryland.

He said he could start negotiating with specific companies about clawbacks after he has finished his next task: setting compensation structures at seven firms that have received “exceptional” TARP funds.

Mr. Feinberg said he will complete that task near the end of this month or in early December. The compensation structures will apply to the 26th to 100th highest-paid workers at the seven firms, and those people “will likely receive less compensation” after his rulings, Mr. Feinberg said.

Last month, Mr. Feinberg slashed compensation for the top 25 earners at the seven companies for the final two months of the year, when bonuses are typically paid.

The seven companies are American International Group Inc., Bank of America Corp., Citigroup Inc., General Motors Co., Chrysler, GMAC and Chrysler Financial.

He generally did not claw back pay as part of those rulings, but Mr. Feinberg did determine that retiring Bank of America Chief Executive Ken Lewis should receive no more pay for 2009 and will have more than $1 million of his prior pay clawed back.

Mr.

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Posted by Admin | October 27, 2009

House unveils $894 billion health care bill

Weeks of tough, closed-door negotiations to merge three pending House health care bills produced a 1,990-page measure that would cost an estimated $894 billion over 10 years—below President Barack Obama’s target of $900 billion—and reduce the deficit by $30 billion over the same period.

“Today we are about to deliver on the promise of making affordable, quality health care available for all Americans,” House Speaker Nancy Pelosi, D-Calif., said in a ceremony on the steps of the U.S. Capitol.

But the measure faced unanimous opposition from Republicans, as well as grumbling from Democratic liberals who wanted a stronger public insurance option and party moderates seeking assurances that federal funds would not pay for abortions under the bill.

The measure could be on the House floor for debate as early as next week.

The unveiling of the House legislation was another step forward in President Obama’s drive for a health care bill that would rein in costs, reform the insurance industry and expand coverage to uninsured people.

President Obama praised House Democratic leaders for including insurance industry reforms and said he was pleased the bill featured a public insurance option and was fiscally responsible.

“The House bill clearly meets two of the fundamental criteria I have set out: it is fully paid for and will reduce the deficit in the long term,” President Obama said in a statement.

House Democrats said their bill would meet President Obama’s criteria for his top domestic priority. Rep

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Posted by Admin | October 23, 2009

AIG to disburse $12M in delayed exec payments

In a regulatory filing, AIG said Chief Financial Officer David Herzog was paid $1 million, and Kristian Moor, chief executive of AIG’s property/casualty division, Chartis, received $1.6 million.

Jay Wintrob, CEO of AIG’s domestic life and retirement services, was another executive to receive a payment.

AIG did not disclose the identities of any other recipients. It had voluntarily delayed making the executive payments, promised in 2008, to give Mr. Feinberg more time to comb over employee contracts.

The Obama administration appointed Mr. Feinberg in June to scrutinize the pay practices of the seven companies that received the largest federal aid.

In a letter to AIG, the U.S. Treasury said it decided the three named executives should be paid the retention awards to keep them. However, it would consider the awards when determining “an appropriate reduction in proposed 2009 cash salaries for these employees,” the letter also stated.

The payments were promised in 2008 to get key employees to stay with AIG, even as it teetered on the brink of financial ruin from losses on subprime mortgage bets.

AIG CEO Robert Benmosche, who took over the insurer’s leadership on Aug. 10, is receiving a salary of $7 million in cash and stock.

On Wednesday, Mr. Benmosche sent a memo to assure employees that Mr. Feinberg’s jurisdiction was confined to the company’s top executives, and that the majority of the company’s 116,000 worldwide employees would not be affected.

But in the filing with the U.S.

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Posted by Admin | October 19, 2009

Government to order pay cuts at AIG, other firms: Report

The New York Times and the Wall Street Journal, citing people familiar with the administration’s plans, reported Wednesday that the move stems from the growing furor over executive pay at companies that have received federal bailouts.

Under the plan, which is expected to be announced in the next few days by the Treasury Department, the seven companies—including AIG—that received the most federal assistance will have to reduce the cash payouts to their 25 highest-paid executives by an average of about 90% from last year.

For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately, the paper reported. Total compensation for the executives, including bonuses, will drop on average by about 50%, according to the reports.

The reports also said executives at AIG’s financial products unit will receive no more than $200,000 in total compensation, and no other compensation such as stocks or stock options. The administration also will warn AIG that it must fulfill a commitment it made to significantly reduce the $198 million in bonuses promised to employees in the unit, according to the reports.

An AIG spokesman had no comment.

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Posted by Admin | October 07, 2009

Lack of medical records favors workers compensation claim: Court

Thursday’s decision by the 3rd Judicial Department of Appellate Division of New York Supreme Court in Deana Curtis vs. Xerox et al. stemmed from a claim filed by a data entry employee who, after 33 years at Xerox, stopped working in 2005 because of severe pain and swelling in her hands, fingers and wrists.

During hearings in 2006, Ms. Curtis testified she visited her employer’s “plant medical department” and a workers compensation judge ordered Xerox to produce medical records from the visit. Xerox did not produce the records, but the judge ruled later that she had not established that her injuries were occupation-related.

In 2007, the New York State Workers’ Compensation Board rescinded that decision and ordered Xerox to produce the records. But Xerox then alleged the records did not exist, court records state.

A series of hearings ensued and the board found that Ms. Curtis was entitled to an “inference” that the medical records exist and they show a diagnosis favorable to her.

The employer appealed and the appellate court ruled Thursday that even without the inference, substantial evidence existed to find that the claimant “sustained a work-related occupation disease.”

The court also ruled that despite repeated direction to produce the medical records, the employer failed to do so. Therefore, it was appropriate to draw an inference in favor of the employee, the court ruled.

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Posted by Admin | October 03, 2009

It’s automatic for 1 in 3 DC plans worldwide, Mercer says

In the survey of 1,500 employers representing $440 billion in DC plan assets, 33% said they offered automatic enrollment in their DC plans, 33% offered automatic escalation, and about 20% offered automatic rebalancing.

Among employers offering a default investment option, 67% use lifecycle funds, the survey found. Also, 90% of employers considering adding or changing a default option are looking at lifecycle funds.

Seventy-two percent of employers surveyed have 15 or fewer investment options in their DC plans.

Only one-third of employers plan to change their fund lineups over the next two years. Of those, most plan to increase their options or introduce a lifecycle fund.

Also, while 74% of employers have a targeted employee participation rate of 80% to 100%, only half of them have achieved that goal.

The survey was conducted in June.

Jeff Nash is a reporter for Pensions & Investments, sister publication of Business Insurance.

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