Mitt Romney clinches nomination with Texas win; Ron Paul strikes out in home state

Mitt Romney in Las Vegas (AP Photo/Mary Altaffer)

All Mitt Romney needed to do in the Texas GOP primary Tuesday was win at least 38 percent of the vote to gather enough delegates to officially clinch the nomination for President.

He pulled down 69 percent, picked up 97 of the proportionally awarded delegates and cleared the 1,144 total hurdle with numbers.

The Republican National Committee and Associated Press count shows Romney with 1,183 delegates.

“It’s over. Romney is the nominee,” GOP political strategist Jonathan Dalton told Capitol Hill Blue Tuesday night.  “Ron Paul’s faithful followers can pack the remaining state conventions and caucuses until the cows come home and it won’t make a bit of difference. Republicans have made their choice and that choice is Mitt Romney.”

Romney, attending a Las Vegas fundraiser Tuesday night, acknowledged the nomination:

This was a big day by the way – 1,144. We finally got there. It’s an honor and a privilege, an honor and a privilege, and a great responsibility. And I know the road to 1,144 was long and hard, but I also know that the road to 11/06, November 6, is also going to be long, it’s going to be hard and it’s going to be worth it because we’re going to take back the White House and get America right again.

Texas Congressman Paul, the last hanger-on in the Republican race, couldn’t score even a respectable showing in his home state.  Paul finished the night with 11.9 percent of the vote and 10 delegates.

Paul finished just four percentage points ahead of former Pennsylvania Rick Santorum, with withdrew from the race long ago and pulled in fewer votes than the combined totals of non-candidates Santorum and former House Speaker Newt Gingrich, who collected 4.7 percent.

Romney didn’t campaign actively in Texas. Paul suspended his “active campaigning” earlier this month to concentrate on the few remaining caucus states but his die-hard fans flooded the Internet with predictions that he would still win Texas.

“Ron Paul will take Texas in a landslide,” posted  a supporter under the name Libxist on  “This will build momentum for him causing supporters from the remaining states to flock to the voting booths, ensuring a brokered convention in Tampa.”

Didn’t quite turn out that way.

Romney’s nomination clinch is expected to bring new calls for Paul to officially end his campaign.

Writes Heartland Institute vice president Eli Lehrer in The Huffington Post:

In recent weeks, Ron Paul has emerged as the greatest threat to the Republican Party’s future. If the Texas Congressman and one-time Libertarian Party presidential nominee actually wants to see President Obama defeated in November, he should bow out of the Republican nomination process quickly, accept whatever offer the Romney camp offers him for a speaking slot during the convention, and endorse the inevitable nominee. His continued efforts to pursue delegates (even after saying that he wouldn’t contest future primaries) make the possibility that the GOP convention could become a party-damaging circus rather than the coronation-style infomercial that’s needed to unify the party.

Copyright © 2012 Capitol Hill Blue

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Anti-war sentiment runs rampant among Iraq and Afghan war veterans

Veterans join the NATO protests in Chicago (AP Photo/Nam Y. Huh)

During the Vietnam war, many who served in that controversial conflict became anti-war activists and some turned in their medals or tossed them over the fence at the White House.

It’s happening again.

Irag and Afghan war vets joined in the protests at last week’s NATO summit in Chicago.  At one point, a group of more than three dozen veterans of both conflicts lined up and threw their medals over a fence.

Said former naval officer Leah Bolger:

We’re standing up to the illegal wars of both NATO and America.  The atrocities have to stop.  We have to to make America and the world aware.

A recent Pew Research Center poll found 33 percent of veterans who have served since the terrorist attacks of Sept. 11, 2001 oppose the wars in Iraq and Afghanistan, saying neither war was worth the cost.

Retired Army Co. Ann Wright resigned from the State Department in 2003 to protest the U.S. invasion of Iraq.   The 29-year-military veteran told The Christian Science Monitor:

Military personnel know America will always have a military, but there is growing concern over the way it is being used.  These concerns include the use of torture, illegal detentions, and both soldiers and the public being lied to about the actual reasons for going into combat.

Copyright © 2012 Capitol Hill Blue

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Romney can ignore Trump’s zany ideas in exchange for support

Donald Trump: The Mouth That Bored

Mitt Romney doesn’t care if off-the-wall billionaire Donald Trump is a “birther” who supports the discredited movement that questions President Barack Obama’s citizenship.

The presumptive GOP Presidential nominee wants Trump’s support and is willing to overlook the real estate mogul’s support of crackpot ideas to get it.

Says Romney:

You know I don’t agree with all the people who support me and my guess is that they don’t agree with everything I believe in.  But i need to get 50.1 percent ore more and I’m appreciative to have the help of a lot of good people.

In other words, bring on the fruitcakes and the crazies.  If they have money and a follower or two, Mitt Romney will embrace them…if not their wild and crazy ideas.

This has some shaking their heads, including conservative columnist George Will, who Sunday called Trump a “bloviating ignoramus.”

Said Will on ABC’s “This Week:”

I do not understand the cost benefit here. The costs are clear. The benefit – what voter is gonna vote for him (Romney) because he is seen with Donald Trump? The cost of appearing with this bloviating ignoramus is obvious it seems to me.

Donald Trump is redundant evidence that if your net worth is high enough, your IQ can be very low and you can still intrude into American politics. Again, I don’t understand the benefit. What is Romney seeking?

Copyright © 2012 Capitol Hill Blue

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Wall Street dumps Obama, showers Romney with campaign cash

Wall Street, fed up with a barrage of attacks from President Barack Obama, is abandoning the incumbent President and throwing is considerable weight and wealth behind presumptive GOP nominee Mitt Romney.

“They have basically ditched Obama,” Center for Public Integrity managing editor John Dunbar told CNN. “Romney is just a much friendlier candidate if you are a banker.”

And Romney’s new-found friends have money to burn.  Wall Street execs wrote checks for $8.5 million to Romney through the end of April, compared to $3 million for Obama.

That’s a sharp turnaround from 2008 when Obama raked in $16 million while GOP contender John McCain had to make do with a paltry $9 million.

And who leads the list of financial fatcats taking out their checkbooks for Mitt?  Gold Sachs, Bank of America, JP Morgan Chase, Morgan Stanley, Credit Suisse and Citigroup top the list.

Says Vivica Novak of the Center for Responsive Politics:

Wall Street has taken some of the blame for the financial crisis. The result of that has been increased oversight and regulation — two things that are never popular.

At least not popular with Wall Street.

Copyright © 2012 Capitol Hill Blue

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Obama steps up attacks on Romney, looks for ways to capture missing campaign energy

President Barack Obama, center, greets a young supporter during a campaign rally at the Paul R. Knapp Animal learning center, Thursday, May 24, 2012 in Des Moines, Iowa. (AP Photo/Pablo Martinez Monsivais)

President Barack Obama delivered his harshest rebuttal yet to rival Mitt Romney on Thursday, dismissing his challenger’s claims as “a cowpie of distortions” while seeking to rekindle the all-but-faded Iowa magic that launched him in 2008. Escalating his criticism of Romney’s background as a venture capitalist, Obama said it wasn’t adequate preparation for the presidency.

“There may be value for that kind of experience, but it’s not in the White House,” Obama said.

The speech, to a cheering Iowa crowd of about 2,500 at the Iowa State Fairgrounds, represented a new intensity for Obama’s campaign as Romney begins to hit his stride carrying the Republican standard. It came as Iowa, soured by the direction of the nation and its economy, has drifted away from Obama since his 2008 caucus victory over Hillary Rodham Clinton made him the Democratic front-runner.

While Obama carried the state in the general election by a comfortable margin that year, polls this year have shown voters narrowly preferring Romney, who plans to wage his own major effort in Iowa.

Trying to cast Romney as out of touch with working-class voters, Obama declared that hard work hasn’t led to higher incomes. “Higher profits haven’t led to better jobs,” he said. “And you can’t solve that problem if you can’t even see that it’s a problem.”

Obama pointedly chose the same turf where Romney, the presumptive Republican nominee, once declared that corporations are people. Obama said Romney would roll back regulations and return to policies that he said helped create the recession and would increase government deficits.

Reacting to Romney’s charge last week that Obama had created “a prairie fire of debt,” the president countered that Romney’s tax plan is “like trying to put out a prairie fire with some gasoline.”

In a statement issued after the speech, Romney spokesman Ryan Williams said: “A president who broke his promise to cut the deficit in half by the end of his first term has no standing when it comes to fiscal responsibility.”

Earlier, in blue-collar Newton, Iowa, once the prosperous headquarters of Maytag appliances, Obama visited a wind-turbine plant to push his alternative energy agenda and delivered a message that could as well have applied to all of Iowa. “Yeah, we’re facing tough times, but we’re getting through them, we’re getting though them together,” he said.

While offering only six of the 270 electoral votes needed to win the presidency, how Iowa voters ultimately judge Obama is expected to be an important factor in the race.

“Last time it was a lot more exciting. It was a new thing,” said Nancy Bobo, a Des Moines Obama volunteer and one of his earliest Iowa backers in 2008. “Today, we’re all just very serious.”

Romney, a former Massachusetts governor, has made the struggling economy the centerpiece of his campaign. But Obama can point to comparatively low 5.1 percent unemployment in Iowa, where stable financial services and strong agriculture sectors buoyed the economy while manufacturing has struggled to rebound.

Romney had made the comment about corporations as he argued against raising taxes as a way of shoring up Social Security and Medicare. Members of the audience interrupted, calling for increased taxes on corporations, and Romney responded: “Corporations are people, my friend. … Everything corporations earn ultimately goes to people.”

The comment has been used by opponents to characterize Romney, a former private equity firm executive, as more comfortable in the boardroom than the shop floor.

Obama’s campaign has emphasized episodes in which Romney’s former firm closed plants and laid off workers, and has aired a stinging TV ad on the subject in Iowa, Colorado, Ohio, Pennsylvania and Virginia.

In his fairgrounds’ speech Thursday, Obama said private-equity firms can sometimes create jobs. “But when maximizing short-term gains for your investors rather than building companies that last is your goal,” he added, “then sometimes it goes the other way. Workers get laid off. Benefits disappear. Pensions are cut. Factories go dark.”

Obama himself has struggled to attract blue-collar voters, keys to winning struggling swing working-class regions such as southeast Ohio, western Pennsylvania and rural Iowa. Newton is the seat of Jasper County, Iowa, where unemployment was 7.1 percent in April, higher than Iowa’s average but down sharply from last winter.

While Iowa is known for its first-in-the-nation caucuses, it also is a coveted general election state, despite its small electoral total. Democrat Al Gore carried the state by less than a percentage point in 2000, followed by Republican George W. Bush’s 2-point victory in 2004.

Obama has already spent more than $2.6 million on advertising, a pace as aggressive as in any other battleground state. He’s been a regular visitor, and was making his second trip in a month.

Yet the president’s approval rating here has been stuck below 50 percent for over two years, softened in part by criticism from Republicans campaigning for Iowa’s leadoff caucuses.

Polls show Iowans also have become increasingly bothered by federal spending, an issue Romney stoked in Des Moines last week in a visit where he promised to shrink the deficit.

Iowans, many of whom met Obama in the 2008 campaign, also are disappointed by what they hoped would be a transcendent presidency, said J. Ann Selzer, the longtime director of The Des Moines Register’s Iowa Poll.

“You hear disaffection. You hear them say, ‘This isn’t what I paid for,'” Selzer said. “The guy they sent there to recast things wasn’t able to do it.”

Privately updating Senate Democrats on Thursday, Obama campaign manager Jim Messina said the president has several possible paths to collecting the 270 electoral votes he needs for victory in November. But he noted that Romney, the Republican Party and allied super PACs are likely to have a great deal of money to spend. Obama vastly outspent Republican John McCain in winning the White House four years ago, an advantage that Democrats appear unlikely to command in 2012.

Romney senses the opening. He too has cultivated an Iowa network. Indeed, he campaigned aggressively for the 2008 caucuses during his narrowly losing bid for the state’s delegates. Romney and the Republican National Committee have hired state directors and are hiring staff to run a dozen or more offices planned for Iowa.

And his campaign has begun running television ads in Iowa.


AP Special Correspondent David Espo in Washington contributed to this report.

Copyright © 2012 The Associated Press

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Romney mangles the facts on Obama’s record with unions

Mitt Romney speaks at a school in Philadelphia. When Romney decried Barack Obama as beholden to the nation’s teachers’ unions and unable to stand up for reform, he glossed over four years of a relationship that has been anything but cozy. (AP Photo/Mary Altaffer)
When Republican presidential candidate Mitt Romney decried President Barack Obama as beholden to the nation’s teachers’ unions and unable to stand up for reform, he glossed over four years of a relationship that has been anything but cozy.

Obama has promoted initiatives that encourage districts to tie teacher evaluations to student performance and to expand the number of charter schools — actions the teacher unions have long been against, and which Romney himself promoted Wednesday in a speech in Washington outlining his education platform.

He also painted a bleak picture of a country where millions of kids are getting a “third-world education” and whose international standing has fallen far behind, an assertion frequently used by politicians and debated by academics, though the most recent tests show that U.S. student scores haven’t changed significantly and remain about average.

Here are some of Romney’s statements on education, and how they line up with the facts:

ROMNEY: “President Obama has been unable to stand up to union bosses — and unwilling to stand up for kids.”

THE FACTS: Several of the core tenets of the Obama administration’s signature education initiative, the Race to the Top competition, are policies first heralded by Republicans and are in opposition to the steadfast positions of teacher unions on topics like school choice and merit pay for teachers.

In order to qualify for a slice of the $4 billion allotted for the first two rounds of the grant competition, more than a dozen states changed laws to link teacher evaluations to how well students perform on tests. The Department of Education also rewarded states that had lifted caps on the number of charter schools and created performance pay plans to award teachers whose students have made the most progress.

When a board of trustees in Central Falls, R.I., voted to fire all the teachers at one of the state’s worst-performing schools in early 2010, Obama said the dismissals were an example of why accountability is needed at the nation’s most troubled schools, causing a furor among union advocates.

At its annual meeting last year, the National Education Association, the country’s largest teachers union, sent a message to Obama that it was “appalled” with Education Secretary Arne Duncan’s practice of focusing heavily on charter schools, supporting decisions to fire all staff and using high-stakes standardized test scores for teacher evaluations, along with 10 other policies mentioned.

“Obama has taken on teachers unions unlike any previous Democratic president,” said Tom Loveless of the Brookings Institution. “Because of that his support among union members, although it is still there, is rather tepid.”


ROMNEY: “The two major teachers unions take in $600 million each year. That’s more revenue than both of the political parties combined. In 2008, the National Education Association spent more money on campaigns than any other organization in the country.”

THE FACTS: Romney is correct that the NEA and the American Federation of Teachers pull in a lot of cash. The NEA took in more than $399 million in 2011, according to its annual report filed with the U.S. Department of Labor. A similar report from the AFT shows it took in more than $211 million last year.

But neither was at the top of the political spending list four years ago. In 2008, the NEA doled out $29 million to federal, state and local political efforts, federal data show. That ranked them a distant third in political spending by labor unions that year. The Service Employees International Union was first, with $67 million, and the American Federation of State, County and Municipal Employees was second with $63 million.


ROMNEY: “More than 150 years ago, our nation pioneered public education. We’ve now fallen way behind.”

THE FACTS: Romney backed this assertion with figures from the most recent Program for International Student Assessment (PISA) results, which tests 15-year-olds around the world in math, reading and science. The United States ranked 14th in reading, 17th in science and 25th in math out of 34 developed countries. Those figures have been frequently cited by the Obama administration as well.

The test has only been administered since 2000, and shows U.S. students consistently hovering right around the average, at about the same achievement levels in math and reading as countries like Sweden, the United Kingdom and France. Overall, the U.S. scores are about the same as they were a decade ago, while some countries have improved.

“A better way for him to state it is to say American achievement is mediocre,” Loveless said. “It’s been mediocre for 50 years.”

Romney also asserted that millions of students are getting a “third-world education.” Looking again at the PISA test, students in schools where more than 75 percent of children were eligible for free and reduced-price lunch — a key indicator of poverty — scored an average of 446 points in reading. That’s at about the same level as Chile and Serbia. Meanwhile, those in the wealthiest U.S. schools score nearly as high as the top performer, the Shanghai region of China.


ROMNEY: Students participating in the Washington, D.C., Opportunity Scholarship program made gains and “after three months, students could already read at levels 19 months ahead of their public-school peers.”

THE FACTS: Romney’s description of the success of the school voucher program, which helps low-income children in the nation’s capital attend private elementary, middle and high schools, doesn’t match up with Department of Education evaluations.

A congressionally mandated review of the program released in 2009 found that after three years — not three months — only some students saw those gains. About one-fourth of children who used the scholarship read 19 months ahead of their peers after three years. In general, however, students’ gains were more modest. After three years in the program, students read at about four months ahead of their public-school peers.

A 2010 evaluation of the program found that on average, after four years, reading and math test scores of opportunity scholarship students were statistically similar to those not offered scholarships.

The program did, however, significantly improve students’ chances of graduating from high school.


Associated Press writers Sam Hananel, Jack Gillum and Jessica Gresko in Washington contributed to this report.

Copyright © 2012 The Associated Press

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Profits, CEO paychecks up big time at U.S. companies

Les Moonves, president and CEO of CBS Corporation, greets a member of the media at the Sun Valley Inn for the 2011 Allen and Co. Sun Valley Conference in Sun Valley, Idaho. Moonves is one of the top 10 highest paid CEOs at publicly held companies in America last year, according to calculations by Equilar, an executive compensation data firm, and The Associated Press. The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. (AP Photo/Julie Jacobson, File)

Profits at big U.S. companies broke records last year, and so did pay for CEOs.

The head of a typical public company made $9.6 million in 2011, according to an analysis by The Associated Press using data from Equilar, an executive pay research firm.

That was up more than 6 percent from the previous year, and is the second year in a row of increases. The figure is also the highest since the AP began tracking executive compensation in 2006.

Companies trimmed cash bonuses but handed out more in stock awards. For shareholder activists who have long decried CEO pay as exorbitant, that was a victory of sorts.

That’s because the stock awards are being tied more often to company performance. In those instances, CEOs can’t cash in the shares right away: They have to meet goals first, like boosting profit to a certain level.

The idea is to motivate CEOs to make sure a company does well and to tie their fortunes to the company’s for the long term. For too long, activists say, CEOs have been richly rewarded no matter how a company has fared — “pay for pulse,” as some critics call it.

To be sure, the companies’ motives are pragmatic. The corporate world is under a brighter, more uncomfortable spotlight than it was a few years ago, before the financial crisis struck in the fall of 2008.

Last year, a law gave shareholders the right to vote on whether they approve of the CEO’s pay. The vote is nonbinding, but companies are keen to avoid an embarrassing “no.”

“I think the boards were more easily shamed than we thought they were,” says Stephen Davis, a shareholder expert at Yale University, referring to boards of directors, which set executive pay.

In the past year, he says, “Shareholders found their voice.”

The typical CEO got stock awards worth $3.6 million in 2011, up 11 percent from the year before. Cash bonuses fell about 7 percent, to $2 million.

The value of stock options, as determined by the company, climbed 6 percent to a median $1.7 million. Options usually give the CEO the right to buy shares in the future at the price they’re trading at when the options are granted, so they’re worth something only if the shares go up.

Profit at companies in the Standard & Poor’s 500 stock index rose 16 percent last year, remarkable in an economy that grew more slowly than expected.

CEOs managed to sell more, and squeeze more profit from each sale, despite problems ranging from a downgrade of the U.S. credit rating to an economic slowdown in China and Europe’s neverending debt crisis.

Still, there wasn’t much immediate benefit for the shareholders. The S&P 500 ended the year unchanged from where it started. Including dividends, the index returned a slender 2 percent.

Shareholder activists, while glad that companies are moving a bigger portion of CEO pay into stock awards, caution that the rearranging isn’t a cure-all.

For one thing, companies don’t have to tie stock awards to performance. Instead, they can make the awards automatically payable on a certain date — meaning all the CEO has to do is stick around.

Other companies do tie stock awards to performance but set easy goals. Sometimes, “they set the bar so low, it would be difficult for an executive not to trip over it,” says Patrick McGurn, special counsel at Institutional Shareholder Services, which advises pension funds and other big investors on how to vote.

And for many shareholders, their main concern — that pay is just too much, no matter what the form — has yet to be addressed.

“It’s just that total (compensation) is going up, and that’s where the problem lies,” says Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

The typical American worker would have to labor for 244 years to make what the typical boss of a big public company makes in one. The median pay for U.S. workers was about $39,300 last year. That was up 1 percent from the year before, not enough to keep pace with inflation.

Since the AP began tracking CEO pay five years ago, the numbers have seesawed. Pay climbed in 2007, fell during the recession in 2008 and 2009 and then jumped again in 2010.

To determine 2011 pay packages, the AP used Equilar data to look at the 322 companies in the S&P 500 that had filed statements with federal regulators through April 30. To make comparisons fair, the sample includes only CEOs in place for at least two years.

Among the AP’s other findings:

— David Simon, CEO of Simon Property, which operates malls around the country, is on track to be the highest-paid in the AP survey, at $137 million. That was almost entirely in stock awards that could eventually be worth $132 million. The company said it wanted to make sure Simon wasn’t lured to another company. He has been CEO since 1995; his father and uncle are Simon Property’s co-founders.

This month, Simon Property’s shareholders rejected Simon’s pay package by a large margin: 73 percent of the votes cast for or against were against.

But the company doesn’t appear likely to change the 2011 package. After the shareholder vote, it released a statement saying that “we value our stockholders’ input” and would “take their views into consideration as (the board) reviews compensation plans for our management team.” But it also said that Simon’s performance had been stellar and it needed to pay him enough to keep him in the job.

Simon’s paycheck looks paltry compared with that of Apple CEO Tim Cook, whose pay package was valued at $378 million when he became CEO in August. That was almost entirely in stock awards, some of which won’t be redeemable until 2021, so the value could change dramatically. Cook wasn’t included in the AP study because he is new to the job.

— Of the five highest-paid CEOs, three were also in the top five the year before. All three are in the TV business: Leslie Moonves of CBS ($68 million); David Zaslav of Discovery Communications, parent of Animal Planet, TLC and other channels ($52 million); and Philippe Dauman of Viacom, which owns MTV and other channels ($43 million).

— About two in three CEOs got raises. For 16 CEOs in the sample, pay more than doubled from a year earlier, including Bank of America’s Brian Moynihan (from $1.3 million to $7.5 million), Marathon Oil’s Clarence Cazalot Jr. (from $8.8 million to $29.9 million) and Motorola Mobility’s Sanjay Jha (from $13 million to $47.2 million).

— CEOs running health-care companies made the most ($10.8 million). Those running utilities made the least ($7 million).

— Perks and other personal benefits, such as hired drivers or personal use of company airplanes, rose only slightly, and some companies cut back, saying they wanted to align their pay structure with “best practices.”

Military contractor General Dynamics stopped paying for country club memberships for top executives, though it gave them payments equivalent to three years of club fees to ease “transition issues” caused by the change.

The typical pay of $9.6 million that Equilar calculated is the median value, or the midpoint, of the companies used in the AP analysis. In other words, half the CEOs made more and half less.

To value stock awards and stock options, the AP used numbers supplied by the companies. Those figures are based on formulas the companies use to estimate what the stock and options will eventually be worth when a CEO receives the stock or cashes in the options.

Stock awards are generally valued based on the stock’s current price. Stock options are valued using company estimates that take into account the stock’s current price, how long until the CEO can cash the options in, how the stock price is expected to move before then, and expected dividends. Estimates don’t generally take inflation into account.

The shift to stock awards is at least partly rooted in what is known as the Dodd-Frank law, passed in the wake of the financial crisis, which overhauled how banks and other public companies are regulated.

Beginning last year, Dodd-Frank required public companies to let shareholders vote on whether they approve of the top executives’ pay packages. The votes are advisory, so companies don’t have to take back even a penny if shareholders give them the thumbs-down. But shame has proved a powerful motivator.

It got Hewlett-Packard to change its ways. After an embarrassing “no” vote last year on the 2010 pay packages, including nearly $24 million for ousted CEO Mark Hurd, the company huddled with more than 200 investment firms and major shareholders, then threw out its old pay formula. New CEO Meg Whitman is getting $1 a year in salary and no guaranteed bonus for 2011. Nearly all her pay is in stock options that could be worth $16 million, but only if the share price goes up.

Other companies took notice, too. Last year, shareholders rejected the CEO pay packages at Janus Capital, homebuilder Beazer Homes and construction company Jacobs Engineering Group. All won approval this year after the companies made the packages more palatable to shareholders.

To be sure, shareholders aren’t voting en masse against executive pay. Instead, they seem to be saving “no” votes for the executives they deem most egregious.

Of more than 3,000 U.S. companies that held votes in 2011, only 43 got rejections, according to ISS. But the mere presence of the “say on pay” vote is triggering change, shareholder activists say.

“Companies that have gone through that trial by fire don’t want to go through it again,” says McGurn, the ISS special counsel.

Even Chesapeake Energy, a company perennially in the cross-hairs of corporate-governance activists, is bowing to pressure. The company has drawn fire for showering CEO Aubrey McClendon with assorted goodies. In addition to handing him big pay packages — $17.9 million for 2011 — Chesapeake in recent years has spent millions sponsoring the NBA’s Oklahoma City Thunder, which he partially owns, paying him for his collection of antique maps and letting him buy stakes in company wells.

Last year, shareholders of the natural gas producer passed the proposed 2010 pay package but by a low margin, 58 percent. This year, with shareholder pressure mounting, the board has ended some of McClendon’s perks and stripped him of his title as chairman. A lawsuit settlement is forcing him to buy back his $12 million worth of maps.

After losing the chairman job, McClendon issued a statement saying the demotion “reflects our determination to uphold strong corporate governance standards.” Chesapeake will seek shareholder approval for McClendon’s 2011 pay at its annual meeting in June.

So far, Citigroup is the highest-profile company to have its pay package rejected this year. The bank planned to pay CEO Vikram Pandit about $15 million for his work last year, noting that he had returned the company to profitability in 2010 and worked for $1 that year. Shareholders, who watched the stock price plunge 44 percent in 2011 (after adjusting for a reverse stock split) weren’t so forgiving.

It’s usually around January that boards decide how much to pay a CEO for the previous year. Then they inform shareholders and ask for their vote in the spring — usually after the cash portion has already been handed out. For Pandit, that meant he had already received $7 million in salary and cash bonus by the time shareholders voted against his pay.

In a statement, Citi said it took the vote seriously and planned to “carefully consider” the input of major shareholders. It hasn’t given more specifics. Richard Parsons, who retired as Citi’s chairman after the April annual meeting, as previously planned, said after the vote that the board should have done a better job explaining to shareholders how it determined CEO pay.

Another big change is that more companies are giving themselves the right to take back a top executive’s pay from previous years if they determine that the executive acted inappropriately to inflate the company’s financial results.

The Dodd-Frank overhaul will eventually require public companies to include such broad “claw back” provisions, which will expand on narrowly written rules from a decade ago. But companies aren’t waiting. In a separate study, Equilar found that 84 percent of Fortune 100 companies now include claw backs in their executive pay packages, up from 18 percent in 2006.

Last year, the former CEO of Beazer Homes agreed with regulators, who cited the older claw back rules, to turn over $6.5 million he had earned when profits were inflated. In February, UBS took back half of the previous year’s bonuses awarded to many investment bankers because of subsequent losses in the unit.

Picking the right mix of incentives is partly just guesswork, and sometimes the results are simply a force of serendipity. Stocks can get swept up in rising or falling markets, so the fortunes of CEOs with well-designed pay packages can reflect luck — good or bad — not just managerial skills.

In February 2009, James Rohr, the head of PNC Financial Services, was granted options that allowed him to buy shares in the future at the then-current price, which had fallen 62 percent in five months on its way to a 17-year low the next month.

The stock has since doubled, and the options, mostly based on hitting certain profit and cost-cutting goals, are worth more than $20 million in paper profit, according to research by GMI Rating, a corporate governance watchdog. If investors had bought PNC stock just before the financial crisis in 2008, they would still be down more than a fifth.

Luck, of course, can cut both ways. Rohr is still waiting to cash in options granted in 2007, valued then at $2.5 million, when the stock was 18 percent higher than it is today.

Some shareholder groups doubt that ever-higher CEO pay, ingrained as it is in the corporate psyche, will ever be refashioned dramatically enough to satisfy shareholders and consumer groups who see the paychecks as too big, too disconnected from performance, and set by wealthy directors who are oblivious to the way that most of their shareholders live.

“I hope we have seen the last of this,” says Rosanna Weaver of the CtW Investment Group, which works on shareholder issues with union-sponsored pension funds and has lobbied against CEO pay packages at a number of companies. “But I would be very surprised, just given what I know of human nature, let alone what I know of the financial markets.”

Still, she’s encouraged by the change that has already been stirred.

“It’s a very big task,” Weaver says. “I still believe it is worth trying.”

Copyright © 2012 The Associated Press

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Romney says schools are failing under Obama’s watch

Mitt Romney (REUTERS/Larry Downing)

Republican presidential candidate Mitt Romney opened a new front on Wednesday in his fight against President Barack Obama, accusing him of presiding over a failing U.S. education system in the grip of union bosses who refuse to accept reforms.

In a rare diversion from his campaign focus on the weak economy, Romney laid out an education plan in a speech that represented his most overt appeal to date to Hispanic voters who have largely sided with the Democratic incumbent.

Although he trails Obama by a huge margin among Hispanics, Romney’s address to a Hispanic business group avoided mentioning a top priority for them: how to overhaul the country’s immigration system.

Romney said millions of American children are getting a “third-world education” and offered proposals that he said would reward teachers for their results instead of their seniority. And he would give parents greater choice of where to send their children to school and take other steps to reduce the influence of powerful teachers’ unions.

“I believe the president must be troubled by the lack of progress since he took office. Most likely, he would have liked to do more. But the teachers unions are one of the Democrats’ biggest donors – and one of the president’s biggest campaign supporters. So, President Obama has been unable to stand up to union bosses – and unwilling to stand up for kids,” Romney said.

Meanwhile, at a series of fundraisers , Obama kept hitting at his opponent’s record as a job-cutting private equity executive – a prime target for his re-election campaign – and touted his own economic plans to “move the country forward.”

“I think he has learned the wrong lessons,” Obama told 550 supporters in a hotel ballroom in Denver, taking aim at what he called Romney’s bad ideas for the U.S. economy while anti-Obama protesters outside held signs reading “Out of Hope, Ready for Change” and “Bye Bye on November 6th.”

“His working assumption is: if CEOs and wealthy investors like him get rich, the rest of us automatically will too,” he said, later presenting a similar message to 1,100 supporters in Redwood City, California, near the tech hub Palo Alto.

“We believe in the free market, we believe in risk-taking and innovation. This whole area is built on risk-taking and innovation. But we also understand that it doesn’t happen in a vacuum,” Obama told the event which featured singer Ben Harper.

“It happens because of outstanding schools and universities, it happens because of a well-regulated financial market, it happens because we have extraordinary infrastructure. It happens for a whole host of reasons. Governor Romney doesn’t seem to understand that.”


Romney, a former Massachusetts governor, is neck-and-neck with Obama in polls, a prelude to what could be a close vote for the White House in November.

His pivot to education comes during a battle in Washington over student loan programs, with Obama’s Democrats pushing for extending low interest rates for federal loans and Republicans calling for careful spending at a time of high deficits.

Wednesday’s speech also let him challenge a key pillar of the Obama re-election campaign: that the president is more tuned into middle class concerns, like education, than Romney is.

Focusing on school quality could also resonate well with Hispanic voters who are expected to be critical in the November election, especially in swing states like New Mexico, Florida, Colorado, Virginia and North Carolina.

A Wall Street Journal/NBC/Telemundo poll shows Obama leading Romney with Hispanic voters 61 percent to 27 percent, a possible hangover from the Republican primary battle when Romney and other candidates adopted hard-line immigration positions.

Hispanic Republican strategists said Romney was wise to keep his focus on education and the economy on Wednesday, noting that in several polls, Hispanic voters rate those issues well ahead of immigration as the themes they care about most.

“Clearly, it appears that Governor Romney has chosen to focus on what the vast majority of U.S. Hispanics and Latinos feel is of highest priority,” said Daniel Garza, from The Libre Initiative non-profit group.

Standing before a banner that read “A Chance for Every Child,” Romney laid out an education plan that relies heavily on bolstering and improving the No Child Left Behind education law engineered by Obama’s Republican predecessor, George W. Bush.

Romney made more money and more access to charter schools the centerpiece of his platform, but he launched a strong attack on teachers’ unions. “The teachers’ unions are the clearest example of a group that has lost its way,” Romney said.


On the first day of his Wednesday-Thursday swing through Colorado, California and Iowa, Obama stressed his efforts to improve education and enhance ties between community colleges and businesses.

He told the Denver fundraiser his goal was that “by the end of this decade more of our citizens hold a college degree than any other nation on Earth.” At a private home in Atherton, California, where guests paid $35,800 each to dine with Obama in a Hawaiian-themed tent with a clear roof, he said he “could not be prouder” of his administration’s education reform record.

“A lot of it has to do with making sure that higher education is not a luxury,” Obama said. “We need more engineers, we need more scientists, we need more Stanford grads, but we also need folks who are going to community colleges and are able to get the skills and the training that they need in order to compete for jobs in the 21st century.”

Wednesday’s education speech was a welcome break for Romney, who has faced a barrage of accusations from Democrats that he killed blue-collar jobs when he headed Bain Capital, a firm that bought and restructured companies.

But Romney says the company more than made up for job losses by helping to establish companies that became big employers, like the office supplies store Staples. He told Time magazine business experience gave him savvy to fix the economy and he welcomed scrutiny of his record.

“The fact is that I spent 25 years in the private sector. And that obviously teaches you something that you don’t learn if you haven’t spent any time in the private sector,” he said.

While Romney often polls ahead of Obama on the economy, the president’s foreign policy credentials weigh in his favor compared to the ex-governor, who has little foreign experience.

Former U.S. Secretary of State Colin Powell criticized Romney for taking advice from foreign policy advisers who are “quite far to the right,” in a sign of lingering strains from his tenure under President George W. Bush.

He also took exception to a recent comment by Romney that Russia is the top U.S. geopolitical threat. “Come on Mitt, think! That isn’t the case,” Powell said.

(Additional reporting by Matt Spetalnick in Washington; Writing by Steve Holland; Editing by Philip Barbara, Xavier Briand, Tim Pearce)

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