China's new weapon: Low executive pay

Don't look for our CEO's to step up to the battle...

June 4, 2007, Will globalization someday stick it to the man?

Excessive executive pay has been a hot-button issue in American politics for years, but worldwide factors could one day make it a liability on the balance sheet. As companies in countries like China and India move away from performing behind-the-scenes functions, they're selling products and services under their own brand names directly against U.S. and European counterparts. Since high-level executives and other white collar professionals in Asian companies typically make less than their Western equivalents, these companies potentially will have a cost advantage.

How or even whether the differences in executive salary will impact the market remains unclear: multinational companies are hiring their own executives in these regions, too, after all. Nonetheless, the numbers are tough to ignore: engineers aren't the only "talent" that costs less in developing markets. Executives cost a lot less, too. Shanghai's SunTech Holdings, for instance, has moved from being a bit player in solar panels to becoming one of the largest manufacturers in the world. Most of the company's panels end up overseas, and it can produce those panels more cheaply than American competitors for various reasons. Among them: the company isn't lavishing huge compensation packages on its executives.

"There aren't 10 executives in the company that make more than $200,000," said Steve Chan, vice president of business development at SunTech Power Holdings. U.S. execs make far more. In a survey conducted by Forbes last year, the magazine found that the average big company CEO made $3.3 million in salary and bonuses. It trickles down from there. Chinese engineers make about one-third to one-half the salary of their U.S. counterparts, said one executive who runs Asian operations for a U.S. high tech firm. Marketing execs can make about half as much as their stateside colleagues. "If you have one (marketing manager) that makes about $100,000 in the U.S, you can hire one here for $50,000," he said.

MORE

[waltky]

The Chinese empire is beginning...

China's Influence Spreads Around World
Sep. 1, 2007 - China's Influence Now Extends From Australian Desert To Sahara To Amazonian Jungle And Beyond

For nearly three decades, Chinese peasants have left their villages for crowded dormitories and sweaty assembly lines, churning out goods for world markets. Now, China is turning the tables. Here in the Australian Outback, Shane Padley toils in the scorching heat, 2,000 miles from his home, to build an extension to a liquefied natural gas plant that feeds China's ravenous hunger for energy.

At night, the 34-year-old carpenter sleeps in a tin dwelling known as a "donga," the size of a shipping container and divided into four rooms, each barely big enough for a bed. There are few other places for Padley to live in this boomtown. Duct-taped to the wall is a snapshot of the blonde girlfriend he left behind and worries he may lose. But, he says, "I can make nearly double what I'd be making back home in the Sydney area."

The reason: China. For years, China's booming economy touched daily life in the West most visibly through the "made-in-China" label on everything from clothes to computers. But now, economic growth is giving rise to something more that can't be measured just by widgets and gadgets _ a shift in China's balance of power with the rest of the world.

China's reach now extends from the Australian desert through the Sahara to the Amazonian jungle _ and it's those regions supplying goods for China, not just the other way around. China has stepped up its political and diplomatic presence, most notably in Africa, where it is funneling billions of dollars in aid. And it is increasingly shaping the lifestyle of people around the world, as the United States did before it, right down to the Mandarin-language courses being taught in schools from Argentina to Virginia.

MORE

[waltky]

Salary size set for white-collar jobs in China
November 05, 2007: So how much do you think someone has to make to be categorized a white-collar employee? Depends on where he or she lives; and the difference can be substantial.

It could be as high as 18,500 yuan (2,481 U.S. dollars) per month in Hong Kong or a mere 900 yuan (120 dollars) in Lhasa, capital of the Tibet Autonomous Region, with about 5,000 yuan (670 dollars) making the cut in Beijing. The Chinese Academy of Social Sciences (CASS) released its findings over the weekend in the 2007 White-collar Workers Salary Standard in Major Chinese Cities - the first of its kind.

The benchmarks in some major cities at the upper end are: 8,900 yuan (1,194 dollars) in Macao, 5,350 yuan (717 dollars) in Shanghai, 5,280 yuan (708 dollars) in Shenzhen of Guangdong Province, 4,980 yuan (668 dollars) in Hangzhou of Zhejiang Province and 4,750 yuan (637 dollars) in Guangzhou of Guangdong Province. At the lower end are: 1,300 yuan (174 dollars) in Nanning of the Guangxi Zhuang Autonomous Region, 1,100 yuan (148 dollars) in Yinchuan of the Ningxia Hui Autonomous Region and Xining of Qinghai Province.

The report was based on a comprehensive calculation of many local factors including commodity prices, living expenses, transportation costs and urbanization level. But for some people, the income levels are only an academic exercise. "The 5,000-yuan standard is vastly different for people who have to pay monthly mortgages and for those who don't," said Liu Meiyu, a 28-year-old architect who works for Beijing Design and Research Institute and bought a two-bedroom apartment a few months ago with bank loans. "A monthly salary of 10,000 yuan (1,341 dollars) might be just right for a white-collar benchmark," she told China Daily.

More Salary size set for white-collar jobs in China - People's Daily Online

[waltky]

A Sino-American New World Order?

Economist: U.S., China should join hands to reform world financial system
November 25, 2007 - The United States and China should join hands in an effort to reform the world financial system, which has currently entered the most deadly crisis in recent centuries, a renowned U.S. economist said Saturday.

"The end of the present world monetary-financial system is inevitable, unless the system is replaced by a new world system during a relatively brief, remaining time available," said Lyndon La Rouche at a luncheon at the Forum on U.S.-China Relations and China's Peaceful Reunification. La Rouche, also a famous political activist, said the present international financial crisis could only be brought under control when major countries like the U.S. and China cooperate.

"Whenever a powerful combination of national governments can arrive at a suitable agreement to change a failed financial-monetary system, a solution for any modern financial crisis can be found," he said. He said that the United States should propose to form an initial sponsoring group made up of the governments of the U.S., China, Russia and India, therefore to rally a majority of nations in order to stabilize the world system.

LaRouche lamented that all evidence has confirmed the current crisis, notably the recent collapse of the U.S. dollar' exchange rates against other major currencies, but nothing visible had been done so far by any government to change the world financial system to solve the problem. The forum, jointly organized by several local Chinese-American, gathered nearly 100 government officials, scholars and activists form the U.S. and China, who were expected to discuss issues on U.S.-China relations and their implications on the Taiwan issue during the two-day event.

MORE

[waltky]

No wonder China's beating our socks off...

Goldman's Blankfein collects $68M bonus
December 21 2007: Payday in restricted stock, options and cash marks biggest ever for Wall Street CEO.

Goldman Sachs Chairman and CEO Lloyd Blankfein will take home nearly $68 million in restricted stock, options and cash, making it the largest bonus ever given to a Wall Street CEO. Blankfein was awarded $26.8 million in cash and $41.1 million in restricted stock and stock options, according to a company filing with the Securities and Exchange Commission issued Friday.

With this year's bonus, Blankfein shatters the record he set a year ago, when he was awarded $54 million. News reports had originally projected that Blankfein will take home as much as $70 million, after helping to lead the company through this summer's market meltdown and the ongoing credit crisis.

Unlike some of its rivals, which have witnessed billions of dollars evaporate from their balance sheets, Goldman Sachs has proved unshakable. Just this week, the company reported better-than-expected fourth-quarter earnings, while peers like Morgan Stanley and Bear Stearns recorded steep losses.

MORE

[waltky]

Is China Losing Its Edge?...

Is China Losing Its Competitive Edge?
Feb. 22, 2008 - Rising Costs Squeeze Chinese Factories; Some Companies Look to Cheaper Markets

The teddy bears selling for $1.40 in Shanghai's IKEA store may be just about the cheapest in town, but they're not made in China they're stitched and stuffed in Indonesia. The fluffy brown toys reflect a new challenge for China: Its huge economy, which has long offered some of the world's lowest manufacturing costs, is losing its claim on cheapness as factories get squeezed by rising prices for energy, materials and labor.

Those expenses, plus higher taxes and stricter enforcement of labor and environmental standards, are causing some manufacturers to leave for lower-cost markets such as Vietnam, Indonesia and India. Costs have climbed so much that three-quarters of businesses surveyed by the American Chamber of Commerce in Shanghai believe China is losing its competitive edge. The higher costs mean Western consumers are bound to face steeper prices for iPods, TVs, tank tops and many other imported products made by small Chinese subcontractors.

"Americans continue to want to buy at lower prices," said Kevin Burke, president and CEO of the American Apparel and Footwear Association. "They are used to going to the store during Christmas and getting something cheaper than a year ago." That's no longer a sure thing. For instance, American toy makers, who rely heavily on Chinese factories, expect prices to increase 5 to 10 percent for the 2008 holiday season, largely because of rising manufacturing costs.

MORE

See also:

Congress to grill Mozilo, O'Neal, Prince over pay
February 22 2008: High-profile execs head to Capitol Hill next week after initial postponement to defend pay packages amid mortgage crisis.

Two high-profile former Wall Street CEOs and the head of the nation's largest home lender will testify next week before a congressional committee examining the link between executive pay and the mortgage crisis. A total of 10 witnesses are due to appear before the House Committee on Oversight and Government Reform on Thursday including Countrywide Financial's (CFC, Fortune 500) founder and CEO Angelo Mozilo, former Merrill Lynch (MER, Fortune 500) Chairman and CEO Stanley O'Neal and ex-Citigroup (C, Fortune 500) chief Charles Prince.

All three executives made headlines last year for their companies' bad bets on the U.S. housing market - and for their own lofty compensation. Their pay is drawing scrutiny from lawmakers at a time when homeowners across the country are at risk of losing their homes and as the country teeters on the brink of recession. Upon his departure from Citigroup in November, Prince left with approximately $68 million, while O'Neal collected about $161 million after he stepped down in October.

Citigroup and Merrill Lynch lost billions of dollars on risky investment in mortgage-backed securities. Countrywide's Mozilo reportedly stood to collect a windfall of $115 million dollars after his firm agreed in January to a $4 billion sale to Bank of America (BAC, Fortune 500). But after facing heavy criticism from lawmakers, Mozilo said he would forfeit $37.5 million in payments tied to the deal.

MORE

[waltky]

Exec's not making bonuses...

US CEO pay hit by rough market
March 29, 2008 - CHIEF executives of large US companies got lower total bonus pay overall last year, a reflection of tumultuous business conditions, according to a study of 178 corporations that have reported 2007 pay data.

In total, the aggregate value of bonuses awarded to the CEOs covered by the study fell 4.7 per cent to a combined $US375.1 million ($407.5 million) last year, down from $US393.5 million in 2006. The payouts include all kinds of cash bonuses, such as discretionary, annual and multi-year performance bonuses, but do not include other things such as stock option grants or restricted stock.

The study, released overnight, was conducted by Equilar Inc, a US executive compensation research firm. With many more US companies yet to file the annual shareholder proxies containing yearly pay reports, the data provides a preliminary snapshot of 2007 executive compensation trends. "It's the first time in several years that we are seeing declines in CEO bonus payouts," said Alexander Cwirko-Godycki, research manager at Redwood Shores, California-based Equilar. "Those declines are being led by a pretty steep drop in annual performance-based bonuses."

The median value of annual performance-based bonuses awarded to CEOs covered by the report fell 18.6 per cent in 2007. These awards were given based on an executive's performance in the year based on various measures set by the company's board. Fewer companies gave out such payments last year, as some executives either did not qualify for the awards or they voluntarily passed them up. The report found 70.4 per cent of the companies gave annual performance-based bonuses in 2007, down from 77.5 per cent in 2006.

More US CEO pay hit by rough market | NEWS.com.au Business

[waltky]

Mozilo an' Sambol gonna make even more money...

Countrywide execs to get millions
March 29,`08 -- Countrywide Financial Corp.'s top executives will get hefty payments in the company's merger with Bank of America, filings with US regulators indicate.

Chief Executive Angelo Mozilo and President David Sambol, who built Countrywide into the largest mortgage lender in the United States before it collapsed with the housing bubble, are to receive stock next week worth $19 million, the Los Angeles Times reported.

Mozilo, who plans to retire, will trade restricted Countrywide stock for unrestricted shares in Bank of America, worth more than $11 million. Mozilo will also receive millions of dollars in deferred compensation and pension benefits as well as continued health insurance coverage. Bank of America said in a filing late Thursday it has agreed to pay Sambol $28 million to stay with the company.

"This company was driven to the brink of bankruptcy and the individuals responsible are getting millions," said Daniel Pedrotty, director of the office of investment at the AFL-CIO. "Just when you think the situation couldn't get any worse, this company demonstrates again that they have no regard for how shareholder assets are spent."

Source

[waltky]

No wonder China whuppin' up on us...

Hedge fund manager rakes in $3.7B
April 16, 2008: John Paulson tops Alpha Magazine's list of most highly paid hedge fund managers.

Hedge fund manager John Paulson of Paulson & Co. took home $3.7 billion last year, making him the biggest earner in the industry, according to Alpha Magazine. Alpha's annual survey of hedge fund pay found that the top five fund managers - Paulson, George Soros of Soros Fund Management, James Simons of Renaissance Technologies Corp., Philip Falcone of Harbinger Capital Partners and Kenneth Griffin of Citadel Investment Group - each made more than $1.2 billion. That's about the price JPMorgan Chase paid to acquire troubled Wall Street firm Bear Stearns.

Alpha's survey took into account each manager's share of their firm's performance and management fees, as well as personal capital gains, and did not include any benefit from the sale of a firm or an initial stock offering.

Fund managers are enjoying massive paydays at a time when financial markets are in turmoil and millions of homeowners face foreclosure. As a result, hedge funds are likely to draw the ire of Congress and face more regulation in the future, the magazine said.

Source

[waltky]

Granny says, "Serves `em right"...

CEOs See Pay Falter in Tough Economy
May 15, 2008 - Study Finds That Compensation for Chief Executives Dropped Sharply Last Year

CEO compensation at the biggest U.S. corporations dropped sharply last year, reflecting in part the rough business conditions at top-tier banks and other large financial firms, a study has found. The study, released Thursday by consulting firm Mercer, a unit of Marsh & McLennan Cos Inc , is one of the most comprehensive reports to date analyzing chief executive pay data for companies' most recently completed fiscal year.

The study looked at pay data in annual proxy filings for 350 companies of varying sizes and industries in the Fortune 1000. CEO pay is always a contentious topic, but it has received increased attention from shareholders amid the subprime mortgage meltdown and has been discussed on the U.S. presidential campaign trail, with Democrats Barack Obama and Hillary Clinton and Republican John McCain all taking aim at well-paid CEOs.

The study found that the CEOs of 50 large U.S. companies -- companies with median annual revenue of $66.2 billion -- took the sharpest cut in total direct compensation in the last fiscal year on a percentage basis, down 15.8 percent from the previous year. This group of companies includes many big financial firms such as American International Group , Citigroup and Merrill Lynch & Co Inc that have been hurt by woes in the mortgage and credit markets.

More ABC News: CEOs See Pay Falter in Tough Economy