Times may be tough, but not so much for American’s top bosses. An Associated Press analysis shows that the heads of companies on the Standard & Poor’s 500 Index had a median pay package last year of $8.4 million. That’s a comfortable gain of more than $250,000 over the year before. At the top of AP’s list is John Thain. He’s the chief of Merrill Lynch and had a pay package of $83 million. That includes a signing bonus and other incentives to successfully lure him from the New York Stock Exchange. As a group, the ten highest-paid CEOs in the nation made more than a-half billion dollars last year. At the same time, the profits of their companies were dropping dramatically.
Total pay figures are rounded, and are based on the AP’s compensation formula, which adds up salary, perks, bonuses, above-market interest on pay set aside for later, and company estimates for the value of stock options and stock awards on the day they were granted last year: 1. John Thain, Merrill Lynch, $83.1 million; 2. Leslie Moonves, CBS Corporation, $67.6 million; 3. Richard Adkerson, Freeport-McMoran Copper & Gold, $65.3 million; 4. Bob Simpson, XTO Energy, $56.6 million; 5. Lloyd Blankfein, Goldman Sachs Group, $53.9 million; 6. Kenneth Chenault, American Express, $51.7 million; 7. Eugene Isenberg, Nabors Industries, $44.6 million; 8. John Mack, Morgan Stanley, $41.7 million; 9. Glenn Murphy, Gap, $39.1 million; and 10. Ray Irani, Occidental Petroleum, $34.2 million.
American International Group has named a former Citigroup executive to replace the insurer’s besieged chief executive. Robert Willumstad is immediately taking over from Martin Sullivan. AIG named Willumstad chairman of the board in fall 2006, about a year after Willumstad left his post as president and CEO at Citigroup. Sullivan, who had worked with AIG for 37 years, now joins the long list of CEOs who have been pushed out since the credit crisis started slamming the financial services industry last year. New York-based AIG–the world’s biggest insurer with $1.05 trillion in assets–lost $7.8 billion during the first quarter of the year due to investments and contracts tied to bad loans.
Newspaper publisher McClatchy announced it’s slashing 1,400 jobs in a drive to cut costs as advertising revenues dwindle. McClatchy is the number three U.S. newspaper company with 30 dailies, including the Fort Worth Star-Telegram and the Miami Herald. That adds up to about ten percent of the work force of McClatchy. McClatchy also reported a 15 percent decline in advertising revenues in the first five months of the year as newspapers face more online competition. McClatchy says the job cuts will be made through a combination of voluntary departures, layoffs and attrition. McClatchy has seen the worst declines in advertising in its papers in Florida and California, where the slump in the housing market has been most severe.
Anadarko Petroleum said that natural gas production from a deep-water Gulf of Mexico project has been ramped up to a gross rate of about 900 million cubic feet a day. That’s roughly two percent of U.S. natural gas output. Independence Hub is the world’s deepest production platform, operating in 8,000 feet of water. Production there began last July but was halted April 8th because of a subsea pipeline leak. Limited production started earlier this month after Houston-based pipeline owner Enterprise Products Partners fixed the leak. The massive platform has living quarters for 16 people and is located about 120 miles southeast of Biloxi, Mississippi. Its mooring lines are nearly two and-a-half miles long. The Woodlands-based Anadarko is one of the nation’s largest independent exploration and production companies and operates the semi-submersible platform.
A new Honda zero-emission, hydrogen fuel cell car has rolled off a production line in Japan. The FCX Clarity runs on hydrogen and electricity and emits only water instead of the noxious fumes believed to cause global warming. The company claims it also is twice as energy efficient as a gas-electric hybrid and three times that of a standard gasoline-powered car. Honda expects to lease out a “few dozen” of the cars this year and about 200 within three years. In California, a three-year lease will run $600 a month, which includes maintenance and collision coverage.
Toyota is having a hard time meeting the booming demand for hybrid vehicles. A senior executive says it can’t make the batteries for the fuel-efficient cars fast enough. Production of the new batteries can’t be increased until next year, which means the slowdown is likely to last all year. Hybrids, including Toyota’s top-seller Prius, offer better mileage than comparable regular cars by switching between a gas engine and an electric motor. Rising oil prices have the car in high demand, and Toyota sells more hybrids than any other maker.
Allegheny County’s chief executive is asking Southwest Airlines to expand service at Pittsburgh International Airport. Dan Onorato traveled to Dallas with airport officials to meet with Southwest Airlines CEO Gary Kelly. Onorato asked Southwest to become a major player at the airport in the wake of the shrinking presence of US Airways. Pittsburgh had been a US Airways hub. Now, the airline has 65 flights daily. Southwest began serving Pittsburgh in May 2005 with ten daily flights and has grown to 23 daily flights. Southwest spokeswoman Whitney Eichinger says the meeting will be about possibilities for Pittsburgh, but that no new destinations or additional flights were being announced any time soon. Airlines are dealing with higher fuel costs.
The Supreme Court is nearing the end of its term with 17 cases still on its plate. One big case concerns the $2.5 billion dollars in punitive damages leveled on ExxonMobil for the Exxon Valdez oil spill in Alaska in 1989. Exxon argues that the $3.5 billion it’s already spent is enough.
ExxonMobil has failed to convince the U.S. Supreme Court to halt a human rights lawsuit against it. The justices, without comment, rejected today the Irving-based company’s appeal of a ruling on a 2001 lawsuit. International rights advocates filed that lawsuit on behalf of 11 villagers in Indonesia’s Aceh province. The suit alleges that members of the Indonesian military committed rampant human rights abuses against the villagers while under Exxon’s employ to guard a natural gas facility. The Indonesian government has been accused of brutally repressing separatist efforts in Aceh in the 1990s. Lawyers for ExxonMobil argued in a federal district court that the case should be dismissed because it involves issues of international relations that should be left to the executive branch. Justice Samuel Alito, who owns ExxonMobil stock, did not take part in the decision. The case is ExxonMobil v. John Doe, 07-81.
Dallas billionaire and ex-presidential candidate Ross Perot is starting a Web site to highlight the “economic crisis” in the U.S. due to deficit spending. It’s a play on Perot’s use of economic charts in political advertisements during his 1992 and 1996 independent presidential campaigns. The 77-year-old Perot says the nation’s debt reached $9.4 trillion in April and is rising more than $1 billion per day. The Web site, which Perot said in nonpartisan, includes a video of Perot, a blog and a chart presentation explaining the nation’s economic problems. Perot founded Electronic Data Systems and later Perot Systems. Forbes magazine last year estimated Perot’s personal wealth at $4.4 billion.
Americans with just one or two cars feel the pinch every time gas prices go up. But imagine what the impact would be if you owned 215,000 vehicles. The Postal Service does. Every time the price of gas goes up a penny, it costs the post office $8 million. In 2007, transportation cost the Postal Service $6.5 billion. That’s a half billion more than it cost in 2006. In addition to filling up its own delivery vehicles, the Post Office faces rising costs for fuel from its contract carriers, including airlines and truckers. And it’s hard to keep up–when postal rate increases are legally limited to the rate of inflation. Deputy Postmaster General Patrick Donahoe says, “we are definitely feeling the pressure.”
Rising gas prices have led one West Virginia gas station owner to ban the use of credit cards at the pump, and he may not be the last to do so. Mr. Ed’s Chevron in St. Albans has told customers they can no longer use credit cards to pay for gas, unless they use Chevron or Texaco cards. The reason is surcharges. Credit card companies charge stations fees when customers use plastic, and as gas prices rise, more people are using their cards. That means more fees, and shrinking profits. Manager Roger Randolph said that every time someone puts $50 worth of gas in the tank, the station actually ends up losing about 98 cents on the deal.
A gallon of regular gasoline in San Diego costs an average of $4.61. A few miles south, in Tijuana, Mexico, it’s about $2.54. And the price is even less if you pay in pesos. Gas is cheaper in Mexico because of a government subsidy. Some motorists seem to be willing to cross the border to take advantage of the lower prices. One California man who works in construction in San Diego says he goes to Tijuana every week to refuel his dual-cab Ford pickup. He says he fills it with diesel for $60–and it would cost nearly twice as much in San Diego. But it might not make sense for everyone. The wait to get back into the U.S. at the border in Tijuana can take longer than two hours. And cars can burn about a gallon of gas for every hour they idle.
When the first Segway personal transporter came out in 2001, they appealed mostly to police, mall security crews and airport personnel. But with gas prices going higher and higher, sales of the unique stand-up scooter are climbing, too. One person who owns one says the Segway’s $5,000 price tag is one of the biggest reasons why they haven’t exploded in popularity yet. He adds that the perception that it’s still kind of a geeky thing to ride is another hindrance. But don’t expect a Segway to replace the automobile. You have to charge them up after about 25 miles, and they won’t keep you safe from the elements or let you carry much cargo. They don’t go any faster than 12.5 miles-an-hour, either. On the plus side, a Montana rider who bought a Segway in April figures he’s saved at least $100 on gas. He says his four-mile, round-trip commute costs about four cents.