Business Pundit » Compensation

Texas, ESPN: Money Talks

Drea — Wed, 19 Jan 2011 21:39:07 +0000

Move over, Notre Dame. ESPN just inked a 20-year, $300 million deal for a new 24-hour Longhorn network. ESPN has more about the network, which will feature 3 hours of non-sports broadcasting per day:

ESPN will help develop, launch and operate the network, according to a news release. The deal is worth $300 million over 20 years. The network will launch in September.

Included in the coverage will be at least one exclusive football game, eight men’s basketball games, women’s basketball coverage of games not televised elsewhere, and Olympic sports coverage. There will also be pregame and postgame shows for football and basketball games, coaches’ shows for every sport Texas sponsors and other daily programming.

In addition, there will be university news, coverage of lectures and visiting speakers along with commencement ceremonies, and even high school coverage on an authenticated online/broadband site.

SB Nation’s Spencer Hall adds:

Texas already has overlapping football rights via the Big 12′s television contract, meaning ESPN will shell out something like $15 million a year for one, perhaps two Longhorn football games and make up the rest on basketball and the relatively paltry revenue from other sports. How will this work? That is a very good question, and fortunately for the Longhorns that is not Texas’ problem. They’re the ones who just get to roll in their estimated $137 million athletics budget for the year 2010-2011, which just got fatter at the margins for future years thanks to ESPN’s largesse.

In comparison, the total budget for Big 12 competition Iowa State came to $45 million for the 2008-2009 year. In the arms race of athletic spending in the Big 12, Texas is clearly the United States, and everyone else is just hoping they don’t invade.

Seattle Pi goes into more depth:

Texas was considering the move to the Pac-16 to boost its television revenue. Instead, it stayed in the Big 12 for even more television revenue. While a Pac-16 was attractive, the rivalries of the Big 12 and its contract with ESPN-ABC and Fox, along with the additional revenue of the Texas-only network, are more lucrative.

But the underbelly of this thing is not as pretty.

First, there’s the journalistic question. Nobody pretends ESPN is the most objective news outlet in the land, but how can it report objectively and accurately on an institution with which it has such a cozy financial relationship?

Second, where does this leave every other major university in America? Before this, schools reaped the benefits of major network sports deals and shared the revenue….Now, major programs such as Ohio State, Michigan, USC and most of the SEC will wonder where their ESPN deal is.

That is, except for this 2008 SEC-ESPN deal.

Bottom line: In college football, everyone follows the money. It’s more lucrative for ESPN to carry one popular team with a heavy alumni following than to feature, say, Colorado one week, Nebraska the next, and rotate from there. UT gets serious moola. And that is what the conferences and bowl games are all about.

For-Profit Colleges Are Crooked Business

Drea — Wed, 10 Nov 2010 14:18:12 +0000

For-profit colleges have lower graduation rates and higher student loan default rates than their state or nonprofit counterparts. For-profits also receive the bulk of their revenue from federal financial aid programs. What do for-profit CEOs get for steering this crooked ship? Obscene annual incomes, of course. Bloomberg reports:

Strayer Education Inc., a chain of for-profit colleges that receives three-quarters of its revenue from U.S. taxpayers, paid Chairman and Chief Executive Officer Robert Silberman $41.9 million last year. That’s 26 times the compensation of the highest-paid president of a traditional university.

Top executives at the 15 U.S. publicly traded for-profit colleges, led by Apollo Group Inc. and Education Management Corp., also received $2 billion during the last seven years from the proceeds of selling company stock, Securities and Exchange Commission filings show. At the same time, the industry registered the worst loan-default and four-year-college dropout rates in U.S. higher education. Since 2003, nine for-profit college insiders sold more than $45 million of stock apiece. Peter Sperling, vice chairman of Apollo’s University of Phoenix, the largest for-profit college, collected $574.3 million.

Education corporations, which receive as much as 90 percent of their revenue from federal financial-aid programs, are “private enterprise that’s almost entirely publicly funded,” Henry Levin, director of Columbia University’s National Center for the Study of Privatization in Education, said in a telephone interview. “For-profit colleges are reaching into the public trough to finance luxurious lifestyles at the expense of people who are going to have to pay back loans,” said Levin.

The SEC is investigating insider trading at Apollo, according to Bloomberg.

When you juxtapose the insider trading and high CEO pay mentioned above with the inflation of higher education, this is starting to look mightily like a subprime education crisis.

$90 million Verizon Refund Hits Customer Bills

Drea — Mon, 04 Oct 2010 02:45:20 +0000

Verizon Wireless will refund 15 million customers up to $90 million for erroneous data charges. The credits will appear on customer bills starting this month. From the New York Times:

In the last three years, the F.C.C. has received hundreds of complaints from Verizon Wireless customers who said they were charged for data use or Web access at times when their phones were not in use or when they mistakenly pushed a button that activated the phone’s Web browser.

Verizon said in its statement that the customers would receive credits from $2 to $6 on their October or November bills or, in the case of former customers, refund checks.

The refunds will be paid to customers who did not have data access plans but who were nevertheless assessed one or more charges of $1.99 because of data exchanges initiated by software built into their phones, or because of charges for inadvertently going online on the phones.

The F.C.C. is likely to press Verizon to pay a penalty for failing to notify customers of the problem, which has been occurring since at least 2007, according to people close to the talks.

I guess three years late is better than never.

Mattel’s Fisher Price Recalls 10 Million Toys

Drea — Thu, 30 Sep 2010 15:09:54 +0000

Fisher Price is recalling more than 10 million toys for creating a choking or injury hazard. Here’s the list, from the CPSC:

Fisher Price Trikes and Tough Trikes toddler tricycles
About 7 Million of these are being recalled in the US after 10 reports of children falling “against or on the protruding disc-shaped and D-shaped pretend key.” Translation: The trikes could injure your children in the crotch.

Little People Wheelies Stand ‘n Play Rampway
Fisher Price is recalling 100,000 of these because “the wheels on the purple and the green cars can come off, posing a choking hazard to young children.”

Healthy Care, Easy Clean and Close to Me High Chairs
950,000 of these are being recalled in the US because the pegs on the high chair’s back legs have hurt children who fell on or against them.

Infant Toys with Inflatable Balls
Fisher Prices is recalling 2.8 million of the following products: Baby Playzone Crawl & Cruise Playground, Baby Playzone Crawl & Slide Arcade, Baby Gymtastics Play Wall, Ocean Wonders Kick & Crawl Aquarium (C3068 and H8094), 1-2-3 Tetherball, Bat & Score Goal. “The valve of the inflatable ball on these toys can come off and pose a choking hazard to young children,” according to the CPSC.

For more information, call the CPSC Hotline at (800) 638-2772, or check their website.

Wealth Distribution in the United States

Ryan — Thu, 21 Jan 2010 17:20:39 +0000

Financially speaking, there is a great inequality in the United States. Over the last 30 years, while the rich have been getting richer, the poor have been getting steadily poorer. One reason for the growing disparity between the rich and the poor is the fact that most new jobs that are created pay low wages and often do not offer retirement plans or health coverage. Here is a graphic look at the widening gap between the nation’s rich and poor.

Click to Enlarge

7 Ways to Make Money Without Actually Having a Job

Drea — Tue, 12 Jan 2010 18:38:13 +0000

Job market got you down? If applying to real-person jobs isn’t landing you the position you want, it may be time to try something different. Like offering up your body to medicine. Or selling your opinion for $50/hour. Or, easiest yet, hanging out at someone else’s house.

We’ve come up with seven ways you can make money without actually having a job. See if any of the opportunities below help you think outside the employment box.

1. House Sitting

While petsitting and babysitting generally don’t involve much down time, house sitting is a literal job: You sit in someone else’s house. For money. Sure, you have to water their plants every so often, but the rest of the time, you can relax. Just don’t break or steal anything.

Pros: Get paid to sit around in someone else’s house.
Cons: None, unless you throw a kegger while you’re there.

Pay range: $50+ per day.

2. Medical studies

Can’t sleep? Depressed or anxious? Got bunions? Chances are, someone wants to use you as a guinea pig for their latest product. Craigslist is usually chock full of opportunities in this field.

Pros: Get paid while potentially curing whatever ails you.
Cons: Nobody’s sure what the side effects are. That’s why they’re hiring you.

Pay range: $100+

3. Consumer surveys

A quick, painless way to get pennies in your cup is to fill out customer surveys for marketing research companies. Mind you, it’s going to take a lot of Internet time to turn those pennies into dollars. If time is what you have, surveys might be worth a try.

Pros: Low effort.
Cons: Low pay. Scammers abound in this industry.

Pay range: Usually a few dollars per survey.

4. Homestays

Students around the world come to the US to study and learn English. Many of these students choose to live with American families to get to know the culture better. Those host families, meanwhile, get paid a stipend to accommodate that student.

Pros: Get paid to have a student live with you and talk to them in English.
Cons: You may hate the student.

Pay range: $500+/month

5. Egg/sperm donation

Image: Yale Medicine

Sperm donation doesn’t net you as much as donating eggs does. Then again, giving sperm doesn’t require hormones, weight gain, and surgical harvesting sessions.. Call it hazard pay.

Pros: It’s easy, if you’re a guy.
Cons: It’s hard and painful, if you’re a woman.

Pay range: Sperm: $100—if you’re lucky. Eggs: $1,000-$30,000+

6. Focus groups

Image: Behavior Research

Research departments will pay you hundreds of dollars to sit around for a few hours and discuss topics of their choosing. The pay per hour can be good, if you’re selected.

Pros: High pay for little time.
Cons: You might not get selected. Watch for scammers.

Pay range: $50+/hour

7. Surrogacy

If you’ve successfully carried a child to term once before, why not do it again–for pay? Lots of couples want you to carry their precious bundle, often for close to $10,000.

Pros: Get paid to for living your life–with someone else’s bundle of joy in your stomach.
Cons: It’s someone else’s bundle of joy.

Pay range: $7,000+

ADP Report: US Companies Cut 84,000 Jobs in December

Drea — Wed, 06 Jan 2010 15:33:38 +0000

Image: Gov Gab

Payroll processor ADP has reported that private US companies cut 84,000 jobs in December, the smallest drop in employment since March 2008. Bloomberg has more:

The ADP report is based on data from about 360,000 businesses with about 22 million workers on payrolls. Today’s ADP report showed a decrease of 96,000 workers in goods-producing industries including manufacturers and construction companies. Service providers added 12,000 workers.

Employment in construction fell by 52,000, the 35th straight monthly drop, while financial firms decreased jobs by 12,000, ADP said, the 25th consecutive decline for the industry.

Companies employing more than 499 workers shrank their workforce by 34,000 jobs. Medium-sized businesses, with 50 to 499 employees, eliminated 25,000 jobs and small companies decreased payrolls by 25,000, ADP said.

Another report today showed employers last month announced the fewest job cuts since the recession began in December 2007 as the economic recovery encouraged companies to retain staff. Planned firings fell 73 percent in December to 45,094 from 166,348 during the same month the prior year, Chicago-based placement firm Challenger, Gray & Christmas Inc. said.

The number of jobs lost since the recession began in December 2007 is the biggest in the post-World War II era.

More of the same…with even more people out of a job.

12 Highest Paid People of 2009

David — Mon, 28 Dec 2009 20:22:46 +0000

Share

The year’s work of financial journalism would not be complete without recapping the highest paid people of 2009. From CEOs to athletes to Hollywood actors and actresses, even these recessionary times are brimming with high achievers who left the rest of the earning world in their dust this year. In fact, for some of these individuals, 2009 proved to be their personal income peak! Today we profile the 12 highest paid people of the year and discuss what led to their exalted earnings.

Stephan Schwarzman: $702,440,573

Image Source

Taking home top pay honors is Stephan Schwarzman, co-founder of the Blackstone Group private-equity firm. Just two years after being named on Time Magazine’s 100 Most Influential People in the World list, Schwarzman took home an eye-popping $702,440,573 in total compensation (including salary, equity and bonuses) according to CNN Money. Since taking Blackstone public in 2007, Schwarzman’s net worth now stands at a towering $7.8 billion.

Larry Ellison: $556,976,600

Image Source

Coming in at a close second is Oracle CEO Larry Ellison. It wasn’t easy wrestling away the title of highest-paid tech CEO from Steve Jobs, but Ellison has joined the ranks of truly astonishing executive compensation in a year when executive pay, on average, fell 11%. Despite earning the type of salary ($556,976,600) that makes politicians and fellow executives envious, Ellison recently pledged to take a pay cut. According to C/Net, Oracle’s ring leader “will receive a base salary of $1 for fiscal 2010″ – down from $999,999 in 2009. The rest of his mind-blowing compensation, as you might have guessed, comes from owning 23.4% of all Oracle stock – over a billion in shares.

Oprah Winfrey: $275,000,000

Image Source

Often described as the most influential woman on earth, entertainment magnate Oprah Winfrey pulled in $275 million last year, according to Fox News. Like Tiger Woods (the next highest earner on our list), much of Oprah’s prodigious earning power stems from relentlessly shrewd branding of everything about herself. Simultaneously funny, inspiring, entertaining and — as witnessed by her outspoken support of Barack Obama’s 2008 campaign — controversial, Oprah has created a media empire that analysts say is among the most powerful brands in the world. With an estimated 44 million TV viewers, Oprah’s been near the top for a while now and we can expect her name to be a mainstay on lists like these for years or even decades to come.

Ray Irani: $222,639,705

Image Source

In an April 2009 profile, Forbes clocked Occidental Petroleum CEO Ray Irani’s yearly compensation at over $222 million, noting also that Irani’s five year compensation totaled over $740 million. The 74 year old executive derived only $1.3 million of 2009 pay from his salary, getting another #3.6 from bonuses, $33 million from “other” sources and $184 million from appreciation in company stock. This last figure is common among highly-paid executives: taking a trivial (relative to their position) salary and making their “real” money from bonuses and company stock. Few executives prospered so greatly from this approach as Irani in 2009.

Tiger Woods: $110,000,000

Image Source

It is a testament to the unshakable branding of Tiger’s persona that he managed to “rack up more than twice the earnings of any other athlete over the past 12 months despite being sidelined for eight months after knee surgery”, according to Forbes. How did Tiger manage to pull off such a Herculean earnings feat while injured and, recently, ensnared in a sex scandal? In a word: endorsements. Only around $11 million of this sum came from actual golf winnings. In addition to running a burgeoning golf course design business, Tiger was able to bank on lucrative endorsement deals with Nike, Accenture and Gillette while on the injury rehab trail.

Madonna: $100,000,000

Image Source

Ranked as the top-selling female artist of the twentieth century, pop diva Madonna raked in a cool $100 million in the last 12 months. And don’t think for a second that she’s resting on her laurels. According to the UK’s Guardian, Madonna “reigns supreme in Billboard’s 2008 Money Makers list”, ranking as the biggest-earning musician of 2008. As the Guardian reports, the bulk of Madonna’s massive recent earnings owe to her phenomenally successful Sticky and Sweet world tour, which broke records by grossing roughly £160m. While her album sales have sagged as of late, Madonna remains a financial juggernaut on the strength of undiminished demand for her live performances.

Tyler Perry: $75,000,000

Image Source

“Diary of a Mad Black Woman” and “House of Pain” star Tyler Perry quietly took home $75 million during the last 12 months, according to Fox News 5 Highest Paid People segment of Power Rankings. Primarily, Perry’s gigantic haul is a result of retaining full ownership of his movies and placing his name in front of every title in which he is involved. While Lionsgate Entertainment is his distributor, Perry nevertheless reaps the lion’s share of the profits from every project he invests himself into. In addition to movies, Perry has also written and toured with a dozen different stage plays.

Harrison Ford: $65,000,000

Image Source

The 2008 blockbuster Indiana Jones And The Kingdom Of The Crystal Skull heralded a triumphant return to the big screen for Harrison Ford. Starring in the fourth installment of the cult classic, Ford’s earnings from the film came solely from his stake from the profits remaining from the $786 million in box office revenue. Largely owing to this, Ford made off with $65 million in total compensation in the last 12 months, following several years of relatively low-profile living for the grizzled Hollywood veteran.

Adam Sandler: $55,000,000

Image Source

He might play a down-and-out loser in most of his movies (see Happy Gilmore, Big Daddy and 50 First Dates as just a few examples), but he always seems to come out on top in the end. 2009 was no exception for Adam Sandler, who rode box office hits like Bedtime Stories and Don’t Mess With The Zohan to $55,000,000 in total compensation according to Forbes. Together, these films grossed $413 million, leading to a most enviable payday for one of Hollywood’s most popular funny men.

Kobe Bryant: $45,000,000

Image Source

Long one of the most dynamic players in the NBA, Kobe Bryant proved this year that he could win without Shaq and his earning power is at an all-time high. According to the Los Angeles Times, Bryant’s number 8 Lakers jersey is the top seller in the NBA, edging out Boston’s Kevin Garnett and Cleveland’s LeBron James for top honors. The 11-time All-Star is sure to remain an economic powerhouse in the near future, as he is still in his prime on a Lakers team that competes year in and year out for the NBA championship. Bryant’s growing, friendly rivalry with James is another factor contributing to high merchandise sales.

Nicolas Cage: $40,000,000

Image Source

Nicholas Cage’s claim to high-earning fame is a “quantity over quality” approach that saw the ambitious actor commit himself to starring in six films in two years. Things aren’t all good for Cage, however. In spite of taking home $40,000,000 in the last 12 months, the ever-serious actor has fallen upon hard times in other financial respects. TheStreet.com reports Cage’s former business manager, Samuel J. Levin, as saying the star “was outspending even his large Hollywood paychecks.” As a last-ditch effort to get back to square one, Cage fired off a $20 million suit against Levin, auctioned off a dozen automobiles and a comic book collection valued at $1.6 million.

Dale Earnhardt Jr: $35,000,000

Image Source

Recent years have proven that not even diminished performance can slow Dale Earnhardt, Jr. down. According to Forbes, Earnhardt has been NASCAR’s most popular driver for seven years standing, despite winning only one race in the past two seasons. His merchandise sales were “twice the total of any other driver”, with additional money coming from his lucrative endorsement deals with the likes of Adidas, Nationwide Insurance, Polaris and Wrangler. With so much support and momentum behind him, Earnhardt promises to keep it a close race earnings-wise for years to come.

What’s Filling In for Steve Jobs Worth?

Drea — Mon, 28 Dec 2009 16:56:29 +0000

If you have to fill in for Steve Jobs, you might as well be handsomely rewarded. That’s exactly what happened to Apple COO Timothy Cook, who received a $12.3 million stock bonus this year. The Silicon Alley Insider has the story:

Apple COO Timothy Cook ran the company brilliantly during CEO Steve Jobs’s six month medical leave this year and thanks to Apple’s surging stock price, he’s been duly rewarded for it, according to an Apple filing with the SEC.

After earning stock awards worth $7 million and $6 million in 2007 and 2008, respectively, Tim walks away from 2009 with a $12.3 million stock award to go along with a raised salary (up to $800,000 from $700,000) and a nice cash bonus of $800,000. Tim’s total 2009 compensation: $14 million.

As usual, Steve Jobs took a $1 salary and a $1 bonus. (His 5.5 million shares of Apple stock performed pretty well, though.)

Unlike Wall Street bonuses, Cook’s bonus sounds reasonable and deserved.

Goldman Sachs Awards Bonuses in Stock. Another Smart Move by the Squid.

Drea — Thu, 10 Dec 2009 20:04:16 +0000

Instead of year-end cash bonuses, Goldman Sachs is awarding its 30 top executives with stock. The stock can’t be cashed for five years. Bloomberg (via BusinessWeek) has the details:

The award will be comprised of so-called shares-at-risk, allowing the firm to take them back if it determines that the executive failed to adequately analyze or raise concern about risks, the New York-based company said in a statement today. The firm also will give shareholders a non-binding vote on compensation.

The policy will apply to the 30 members of Goldman Sachs’s management committee, including Chairman and CEO Lloyd Blankfein, Chief Financial Officer David Viniar and the leaders of the firm’s global and regional divisions. Goldman Sachs has been criticized for setting aside $16.7 billion to pay employees in the first nine months of the year after benefiting from government support last year.

The New York Times has more of the backstory:

Goldman insists that it must pay its employees well to keep them from defecting to rivals. So far this year, it has set aside $16.7 billion to pay its workers this year, a figure that translates into roughly $700,000 a employee. Top producers will earn millions. Mr. Blankfein, who forwent a bonus last year, received a $53.4 million bonus in 2007 — a Wall Street record.

Thursday’s developments underscore Goldman’s quandary as Wall Street enters its annual bonus season and comes a day after the British chancellor of the Exchequer stunned London bankers with news that the government there would levy a windfall tax on bank bonuses.

The shares-at-risk statement is particularly clever, from a PR perspective. The language is ambiguous enough that the bank can choose how to apply it, but the consequences make you think that Goldman Sachs means business. This move also pressures other Wall Street firms to follow suite.

That said, the bankers don’t have to pay taxes on their bonuses quite yet, either. And if only the top 30 executives are getting bonuses in stock, what about GS’s other employees? I bet it’s cash.

If nothing else, the folks at Goldman Sachs are pretty smart.