Opinion

The Great Debate

from Breakingviews:

Rob Cox: GE should put itself up for sale

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

General Electric should sell itself. If that sounds like an April Fools’ Day joke, think again. It’s a real proposal on the ballot at the industrial group’s annual meeting. Setting aside the absence of any obvious buyer for the $260 billion company, the proposition illustrates the kind of shareholder democracy gone wild that many boards, and even some regulators, would like to squelch. They have half a point.

The proposal is one of about six that investors put forward and will be up for a vote at GE’s April 23 annual meeting in Chicago. Not all are quite so extreme. One calls for senior executives to hold options for life. Another would end stock awards and bonuses. Naturally, management is opposed to each of them.

But stockholder Robert Fredrich’s proposal that GE “hire an investment bank to explore the sale of the company” is the most financially illogical. For starters, there is no buyer capable of taking such a big gulp, unless Apple, Google or Exxon Mobil suddenly decides to change strategic course.

Moreover, Fredrich offers no evidence for his view that a sale would “release significantly more value.” A breakup of the finance-engines-turbines-refrigerators conglomerate might be worth considering, but not when the market cap of the company is greater than the sum of its parts, as GE contends is the case today.

Worry about bank capital, not bonuses

jamessaft1–James Saft is a Reuters columnist. The opinions expressed are his own.–

The effort to rein in banking bonuses, outrageous as they may be, is akin to banning glue sniffing because you are worried about the effects of intoxication.

There are, as the kids in the alley behind the high school can tell you, other ways of getting high.

How the bailout feeds bloated banker pay

jamessaft1– James Saft is a Reuters columnist. The opinions expressed are his own –

Rising pay in the finance sector in the wake of the global financial crisis is no surprise and is driven partly by the government’s bailout itself and the underwriting of banks that are too big to fail.

News that some financial firms benefitting from government largesse actually increased the share of revenue they pay their employees sparked a lot of outrage but more heat than light.

Executive bonuses: heads you lose, tails I gain

Professor Tamar Frankel– Tamar Frankel, a professor at Boston University School of Law, is author of “Trust and Honesty, America’s Business Culture at a Crossroad.” The views expressed are her own. –

The debate over corporate executive bonus payments should be put in perspective.  Some say that the executives did not earn these bonuses and don’t deserve the millions in parting payments that they received.  But if parting payments were specified in the executives’ contracts they must be paid.  A binding contract is binding.

But what if the payments were made at the discretion of a board of directors, as bonuses usually are?  Can such bonus payments be retrieved from the executives?  Probably not.  Unless the executives failed to give the board accurate information, or illegally caused the payments, they are entitled to retain them.

Goodbye bonuses, hello hedge funds

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

The argument about bank bonus payments is as sterile as it is backward looking; compensation at government insured institutions is going nowhere but down.

The real action will be at those places like hedge funds, private equity houses and boutiques, which will try and trade less insurance for more autonomy and which will capture more market share, take on more risk and offer more reward. The question is how will they be regulated, how will they fund themselves and how will the rest of us be protected from the systemic risk they could easily represent.

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