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Monthly Archives: May 2012

Pure Gold: Herbalife’s (HLF) CEO Highest Paid In 2011

Americas’ obesity epidemic and continuous struggle to shed pounds has been a boon to some weight-loss outfits, not to mention NBC’s “The Biggest Loser.” The biggest beneficiary is arguably Michael Johnson, CEO of the nutrition company Herbalife (HLF), who was paid $89.4 million in 2011, making him the highest-paid CEO, according to a report from research firm GMI Ratings.

Last year was the second year of double-digit pay increases, according to GMI. On average, pay to CEOs of companies in the Russell 3000 went up by more than 15% in 2011.

The top 10 highest-paid CEOs thus far in 2011 earned about 77% of their total realized compensation through stock option exercises and vested equity. A not-so-close second behind Johnson in terms of total 2011 compensation are some familiar names: IBM’s (IBM) Sam Palmisano ($63.2 million); Tyco International’s (TYC) Edward Breen ($63.1 million); Honeywell’s (HON) David Cote ($58.2 million). Compensation includes base salary, bonuses and profits on vesting their stock options. Walt Disney’s (DIS) Robert Iger had the highest base salary, of $2 million, with a $15.5 million bonus and nearly $1 million in perks.

Most of the CEOs who made the top 10 are there largely because of their companies’ very generous stock option grant policies. Johnson exercised 1.8 million options for a profit of almost $77 million last year. GMI reported that most of the options that were exercised in 2011 were awarded between 2003 and 2005, when Herbalife’s shares traded below $10. Since then, the stock price has done well: The stock is up by 179.1% over the last five years, and 401.6% over the last three years. During 2011, it was mostly trading in the $50-plus range.

Interesting timing for Herbalife given that the stock has stumbled this week, falling over 25% since Monday after hedge fund manager David Einhorn questioned its disclosure policy on the company’s conference call. On Thursday Herbalife said it would purchase $427.9 million of its common shares. This week Herbalife reported net income of $108.2 million, compared to $88.7 million compared with a year ago.

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Facebook Aims For $80B Valuation

NEW YORK (AP) — Facebook has set a price range of $28 to $35 for its initial public offering of stock.

At the high end, this could raise as much as $11.8 billion. If the underwriters sell the extra stock reserved for overallotments, the IPO will value Facebook at $79.3 billion at the high end of the price range.

That’s much higher than any other Internet IPO in the past, even Google Inc. in 2004.

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Issa Lays Out Case For Holding Eric Holder In Contempt

Republican Rep. Darrell Issa has circulated a lengthy pair of documents making the case for holding Attorney General Eric Holder in contempt of Congress over his “refusal” to cooperate in an investigation of the ill-fated Fast and Furious operation.

Issa, chairman of the House Oversight and Government Reform Committee, on Thursday sent to every member of his committee a 64-page draft contempt order against Holder, as well as a 17-page memo outlining the history of the scandal.

“Operation Fast and Furious’ outrageous tactics, the Justice Department’s refusal to fully cooperate with the investigation and efforts to smear and retaliate against whistleblowers have tainted the institutional integrity of the Justice Department,” Issa wrote.

The committee is not citing Holder or holding the attorney general in contempt at this point. However, the documents lay out the case for contempt should members be called to vote.

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Spirit Airline’s CEO Playing With Fire

The boss of Spirit Airlines isn’t about to cave in to a dying former Marine, and he doesn’t lose sleep knowing his company leads the industry when it comes to customer complaints, he told FoxNews.com.

“That’s an irrelevant statistic,” Spirit CEO Ben Baldanza said when told his airline generates gripes at two-and-a-half times the rate of the next most complained about carrier.

Spirit racked up 8.27 complaints per 100,000 passengers in January, while United finished a distant second-worst, registering 3.5 complaints per 100,000 fliers, according to U.S. Department of Transportation statistics. By comparison, Southwest notched just 0.2 complaints per 100,000 fliers.

Spirit is generating complaints at a much faster clip on Facebook, where a “Boycott Spirit Airlines” page has seen its number of “likes” soar to more than 21,000 from about 700 since the carrier denied a $197 refund to Jerry Meekins. The 76-year-old Vietnam veteran and former Marine tried to get his $197 back after learning his esophageal cancer is terminal and being told by his doctor not to fly from Florida to Atlantic City. Airline officials told him to forget it, and Baldanza reaffirmed the company’s hardline in an exclusive FoxNews.com interview.

“A lot of our customers buy that insurance and what Mr. Meekins asked us to do was essentially give him the benefit of that insurance when he didn’t purchase the insurance,” Baldanza said. “Had we done that, I think it really would’ve been cheating all the people who actually bought the insurance … and I think that’s fundamentally unfair.”

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Jubak: China’s Banking Problems

What country does this describe?

The country’s banks are short of capital and will have to go to the financial markets to raise more this year — and in 2013.

Bank balance sheets have ballooned as a result of lending to real-estate developers.

Everyone believes that banks’ official accounts seriously understate the number of bad loans on their books.

And, finally, it’s just about impossible in this country to separate bank and government finances.

Spain or Italy? Of course. And you can work your way around Europe adding other names to the same list of guesses.

But the country I had in mind was China.

China’s banking problem isn’t as far along as those in Europe. Notice that I’m calling it a “problem” rather than a “crisis.” But China’s banking sector is headed toward a crisis — and the government’s efforts to head off that escalation will be a major driver in China’s economic and monetary policy this year and next.

Want to understand how much stimulus Beijing will pour on its economy — and therefore whether you should be putting money into Chinese stocks or taking it out (and when)? Take a long look at China’s banks.

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April Retail Sales Worst Since 2009

NEW YORK (AP) – Americans’ spending – much like the economy – continues to yo-yo.

Major retailers such as Costco and Macy’s reported on Thursday that April revenue rose less that 1 percent in the worst performance since 2009 when the U.S. economy was just coming out of a bad recession.

The disappointing results follow two consecutive months of strong sales that were boosted by positive economic news about the job and housing markets.

“The economy is growing in fits and starts, and we are seeing sales shoot up and down,” said Michael P. Niemira, chief economist at International Council of Shopping Centers. “We’re in a choppy period.”

A small group of merchants representing roughly 13 percent of the $2.4 trillion U.S. retail industry report monthly revenue at stores open at least a year, a key measure since it excludes results from locations that open and close during the year. Still, the figures offer a snapshot of consumer spending, which accounts for more than 70 percent of economic activity. And recently, it’s shown that Americans’ spending sways with the wave of economic news.

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Meredith Whitney Opines as to Whether U.S. Banks Can Escape Europe’s Debt Problems

“The financial sector was the best performing index out of the S&P 500 during the first quarter.  That was when investors were decoupling from the woes of Europe.  With European bank shares falling now that European nations are back front and center, the obvious fear is that the big US banks are going to get pulled down much further as their brethren get pummeled overseas…”

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ISM Non Manufacturing May Spell Further Slowdown

“Service industries in the U.S. expanded at a slower pace than projected in April, a sign the largest part of the economy may struggle to accelerate in the absence of faster job growth.

The Institute for Supply Management’s non-manufacturing index fell to a four-month low of 53.5 from 56 in March, the Tempe, Arizona-based group’s data showed. The median forecast of 74 economists surveyed by Bloomberg News called for a decrease to 55.3. Readings above 50 signal expansion.

Limited job and wage gains, combined with depressed property values, may make it difficult for Americans to step up their spending after purchases rose in the first quarter by the most in a year. Increased demand for services, which make up about 90 percent of the economy, would help broaden the almost three-year-old expansion beyond manufacturing.
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What to Expect and What You Need to Know About Tomorrow’s Job Report

“It’s that day of the month again: jobs day!

Tomorrow, the BLS will release the Non-Farm Payrolls report for April.

The current consensus is that there will be a gain of 160K jobs, which is up from the 120K created in March.

Private payrolls are expected to come in at 165K, implying another 5K reduction in public sector workers.

The stakes are pretty big. At just 160K, this is already in the low-end of what Bernanke considers acceptable levels of job creation.

Thus a bad number has big implications for the question of whether there will be QE3. The current thinking is that QE3 is unlikely, but… it’s certainly not totally off the table if things get bad….”
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Market Update

Markets are down between 0.4% and 1% . Oil is getting the homo hammer which is good for consumers.

Full look

1:00 pm : The major equity averages are in the red with varied losses after a lack of leadership left stocks to slide shortly after the open.

Ahead of the open market participants were given the good news that the latest weekly initial jobless claims tally of 365,000 is down from the prior week and less than what had been widely expected. A 2.0% increase in first quarter unit labor costs and a 0.5% decline in first quarter productivity received less attention.

Stocks opened the session on a relatively flat note, but a disappointing ISM Non-Manufacturing Index reading of 53.5 for April invited some selling. The effort gained participation, but stocks attempted to rebound. The effort, however, lost momentum, leaving stocks to roll over so that they remain in the red.

Energy stocks are weighing on action for the second straight session. On the heels of the sector’s 1.6% drop in the prior session, Energy is down another 1.1% today. Of course, a 2.5% drop in oil prices to $102.60 per barrel hasn’t helped the sector’s prospects.

Tech, which represents the largest sector by market weight, is also in weak shape. Its 0.8% loss is matched by the Materials sector; only Energy is in worse shape.

Even strong earnings reports have failed to help win favor for many stocks. Visa (V 117.90, -4.29) is down well in excess of 3%, despite its upside surprise. General Motors (GM 22.48, -0.45) is also under pronounced pressure, while shares of Prudential (PRU 54.79, -1.15) have fallen precipitously. In contrast, Allstate (ALL 34.50, +1.59) has climbed almost 5% following the release of its latest quarterly results. DJ30 -42.87 NASDAQ -28.00 SP500 -6.73 NASDAQ Adv/Vol/Dec 710/910 mln/1750 NYSE Adv/Vol/Dec 1080/340 mln/1815

12:30 pm : Stocks have been unable to recover from their recent retreat. That has left the major equity averages to remain in the red with varied losses.

Among the headline indices, the Nasdaq is in the worst shape as large-cap Tech issue Intel (INTC 28.58, -0.39) has a decidedly negative impact on the Index. Akamai (AKAM 33.00, -1.09) is in especially weak shape as it contends with a loss on the order of 3%. Green Mountain Coffee Roasters (GMCR 25.84, -23.68) remains the worst performer in the Nasdaq, however. DJ30 -36.93 NASDAQ -26.4 SP500 -6.39 NASDAQ Adv/Vol/Dec 670/830 mln/1785 NYSE Adv/Vol/Dec 1030/315 mln/1870

12:00 pm : A recent flurry of selling forced stocks lower, such that the S&P 500 is back at the depths it set this morning while the Nasdaq is now at a new session low. The Dow is also down, but not yet back to its worst level of the day.

Energy stocks continue to trade with weakness. The sector is down 1.0% as oilfield services stocks come under stiff pressure. Integrated players like Exxon Mobil (XOM 85.83, -0.37) and Chevron (CVX 106.18, -0.85) are also in the red by their losses are less severe.”

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