The corporatocracy continues to marshall its forces in the attempt to gut any restraint that might be put on its greed now that the Democrats are in power. As we have been documenting, ever since the November elections corporations have been hiring scads of new lawyers and pushing the Bush Admin hard for regulation relief as well as doing everything in their power – which is considerable in a Pub govt – to kill the provisions of Sarbanes-Oxley once and for all. They continue to succeed. Equity firms have just joined the assault, banding together to lobby as a group. First, an explanation of just what equity firms do:
Private-equity firms collect large pools of funds from wealthy individuals, pension funds, college endowments and other sources and use the proceeds, along with loans, to buy all or large parts of companies. Hedge funds also amass money from similar sources but engage in usually shorter-term investments in such things as stocks and bonds.
Since corporation-puppet Bush took office and they knew they wouldn’t be called to account, equity firms like Kohlberg Kravis Roberts (home of corporate raider deluxe Henry Kravis) and the Carlyle Group (home of Bush Sr and the Saudi royal family’s private investment counselor) have been involved in some pretty shady deals and raking in $$$Billions$$$. Get this:
The funds have become some of the most active purchasers of U.S. corporations, pooling money from private investors and companies and augmenting those sums with loads of debt. More than 28 percent of the dollar value of acquisitions announced in the United States this year involved private-equity firms, up from 3 percent five years ago, according to Dealogic. (emphasis added)
That’s a 900% increase since Junior took office. Not bad. Unfortunately for them, their machinations have not gone unnoticed.
The decision was precipitated by recognition that they were becoming the target of tough criticism in the United States and in Europe; in Germany, for instance, a state governor referred to private-equity firms as “locusts.”
The decision may have been taken last spring but it’s no co-incidence that they didn’t get around to actually forming their joint lobbying group until after the Congress changed hands. They’re expecting a Democratic Congress to be a lot less friendly and hands-off, potentially passing uncomfortable laws that limit their ability to slake their greed. At the moment there is bloody little regulation of the equity industry.
Both are lightly regulated by the government, and that has caught the attention of lawmakers and senior officials in the executive branch, including those in the Securities and Exchange Commission. Christopher Cox, chairman of the SEC, has been pressing for more oversight of hedge funds, for example, which is now a $1 trillion industry.
Maybe, but it’s hard to take Cox seriously when he turns around and does shit like this:
The Securities and Exchange Commission, in a move announced late on the last business day before Christmas, reversed a decision it had made in July and adopted a rule that would allow many companies to report significantly lower total compensation for top executives.The change in the way grants of stock options are to be explained to investors is a victory for corporations that had opposed the rule when it was issued in July, and a defeat for institutional investors that had backed the S.E.C.’s original rule.
“It was a holiday present to corporate America,” Ann Yerger, the executive director of the Council of Institutional Investors, said yesterday. “It will certainly make the numbers look smaller in 2007 than they would otherwise have looked.”
The highlighted portion should read “significantly lower total compensation for top executives than they actually recieve“. The rule change is about hiding the stratospheric nature of executive pay in order to blunt the criticism that’s been growing for a decade.
As controversy has grown over rising executive pay, it has been hard to even get agreement on the total value of compensation for top executives. The rules passed last summer required companies to disclose more information and to compile it in a summary compensation table that is expected to become the standard by which corporate pay is compared.The new rule changes the way grants of stock options will be measured in that summary table.
Under the old rule, if a company awarded an options grant valued at $15 million to an executive this year, the full amount of $15 million would show up in the summary compensation table.
Under the new rule, which takes effect immediately, the amount reflected in the table would be much smaller, with the remaining part of the $15 million included in later years, as the executive qualifies to exercise the options.
It’s a shell game in which a significant portion of extreme executive compensation simply vanishes from public view. Not surprisingly, the SEC took its decision in the dark when no one was looking –
The commission adopted the new rule in an unusual way, making it take effect immediately even though the commission had not announced that it was considering a change and had not sought public comment.
– which Mr Cox explained away thusly:
Mr. Cox said there was no time to seek comment if the change announced Friday was to take effect in time to affect proxies issued in coming months. He said it would be confusing if companies reported one way in 2007 and then changed in 2008.
I’m sorry? They did it in a rush behind closed doors because giant corporations with teams of accountants might be confused if they had to make a change from one year to the next? Um, isn’t that what they usually do when a law changes?
As excuses go, that one’s on the Lame Excuse Hit Parade.
The corporatocracy sure is lining up its ducks. Everybody’s getting into the act, terrified that the new Congress will pull their snouts out of the trough and put them on a diet. We can only hope their fears are justified.