Thursday, February 26, 2009

How to "Retain" Senior Executives

We've all read or heard about lavish corporate outings like the AIG retreats in San Diego last year. Today comes this ABC News account of how the CEO of Bank of America, Ken Lewis, knew about the payout of $3.6 billion in bonuses to Merrill Lynch employees and executives at the end of 2008. That's eight percent of the $45 billion bailout money the giant bank got from the Feds. Lewis claimed while under oath before Congress that he had "no authority" over the bonuses, but corporate merger documents between B of A and Merrill state that the bonuses would be awarded "in consultation" with B of A. Uh, that means Lewis had authority, in case you were wondering. All this while Merrill lost $25 billion last year after receiving $50 billion in the sale to B of A. That means that it would have lost $75 billion without the sale.

Embedded in the story, however, was a little tidbit about how Lewis flew to New York to meet with Attorney General Andrew Cuomo (the story incorrectly refers to him as Anthony Cuomo) in a $50 million private jet, one of nine corporate jets owned by the bank. Funny, the bank's spokesperson justified the excess by claiming that "timing and efficiency" dictated the use of the corporate jet, which probably runs $50,000 a pop. (As if Lewis couldn't have rode his limo to the Charlotte airport and flown coach for about 1/100th the cost, and made conversation with the nice lady with the moustache on his left while they sipped Diet Sprites.)

With the bank's stock down to $5.50 a share, you would think that they would try at least to create the impression that they were concerned about the money they were spending.

Well, at least they say they're going to sell three of their jets now.

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