Benefits of the Dodd-Frank Act
I have heard complaints from financial people on Wall Street and many politicians about how difficult it is to comply with the Dodd-Frank Act. As an investor, I am delighted since it has given me the opportunity for some very exciting reading.
Many companies’ annual reports devote 30 to 40 pages explaining executive compensation. Companies state that they offer competitive compensation packages in an effort to maintain talent; some state they have complex businesses to manage; consequently they offer lucrative packages. I have read most of the annual reports we have received and I would like to offer examples of two different compensation programs.
The first company is Annaly Capital Management Inc. They are a real estate investment trust company and for 2011 they did $3 billion. Their chairman and CEO earned a total of $35,000,156 for 2011, which was $11,375,156 more than he earned in 2010. Annaly’s net income for 2011 decreased by $955 million vs. 2010. Total compensation for their top five executives for 2011 was $98,189,980.
This information comes from their notice of annual meeting of Annaly Stockholders to be held May 24, 2012.
The second company is Chevron, the oil and energy company that did $244.4 billion in sales for 2011 and $26.8 billion in profits for an increase of 41.4 percent vs. 2010. Their chairman and CEO had a total compensation package of $24,726,716 for 2011 and their top five executives’ total compensation was $71,719,430. This information comes from the notice of their 2012 annual meeting and 2012 proxy statement.
One question I have is why Annaly, a company doing $3 billion, would pay their top five executives $26,470,550 more than the top five executives with Chevron, doing $244 billion. Indeed Chevron is a more complex business and certainly more profitable.
Ron Fuchs
St. Charles