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Pay Pig

Least complimentary mention of an Eph in yesterday’s New York Times? This:

Robert L. Nardelli’s unceremonious departure from Home Depot may spell the end of the era of super-size pay packages for chief executives of public companies, but a new refuge for lavish compensation and private jets is emerging elsewhere. Flush with hundreds of billions of dollars, private equity firms are beginning to offer compensation on a previously unimaginable scale to the chief executives who run the once-public companies that the firms have bought out. At the privately held firms, the executives still get salaries and bonuses, but a crucial difference lies in the ownership positions they can secure, which can turn into particularly bountiful riches when these businesses are sold or go public again. … Henry Silverman, who spent the last decade building Cendant into an $18 billion conglomerate — it owned dozens of the nation’s most prominent businesses like Century 21, Avis, Days Inn and Orbitz — through a number of stock deals, says being public is no longer attractive. He broke up Cendant into four pieces and last month sold Realogy, its former real estate unit, to Apollo Management, a private equity firm. “There is no reason to be a public company anymore,” he said. “You don’t need access to the public market,” because, he said, of the enormous amount of money sloshing around private equity and hedge funds. Like Mr. Nardelli, Mr. Silverman of Cendant had been accused of being an imperial chief executive with an outsized pay package. He is estimated to have made $36.6 million in salary and bonus and reaped $223 million from exercising options between 1998 and 2002. And he will make $135 million more as a result of selling Realogy. “Wherever I show up next, it will not be at a public company,” Mr. Silverman said.

There are not many public company shareholders who will miss the “services” of CEOs like Silverman ’61. Consider


An ordinary investor might think that a CEO who made $18.6 million last year (that’s just salary and bonus and doesn’t include a bunch of other compensation) might feel a little sheepish about having to hit up investors to also cover the expense of negotating his employment contract, particularly when the amount exceeds the salary of a first year associate at a top New York law firm. Unfortunately, that investor would be wrong. Cendant (CD) Chairman and CEO Henry Silverman, who has been described in the past as a “pay pig” by New York Times reporter Alex Berenson had no qualms in getting Cendant to reimburse $165K worth of legal expenses in 2004, according to the company’s recent proxy. That’s on top of the $203K in legal expenses he rang up in 2002, also for contract negotiations. Both figures also include tax gross-up payments for the legal bills, so it’s hard to figure out exactly how many hours Silverman’s legal eagles labored away negotiating his contract. Doing some quick back-of-the-envelope math of 100 hours times $500 an hour (which seems awfully excessive for an employment contract), it still only works out to $50K. While it’s true that many companies reimburse their executives for this expense, it’s very rare that these expense exceed $25K and it’s usually not an every-other-year event.

“Pay pig” is not something that I hope to see on my tombstone. More details here. Is Silverman ’61 a big Williams donor? Tough to know, but I can’t find a single mention on the Williams website. Perhaps he just prefers anonymity? My guess is that he is not a big donor and that the College spends a non-trivial amount of time trying to fix this sad state of affairs. Good luck with that! By the way, the whole article is mostly bunk. Every time the finance folks who control these deals give some hired CEO a big payment, that money comes out of their pockets, dollar-for-dollar. If Home Depot had been a private company during the the Nardelli era, there is no way he would have earned hundreds of millions of dollars. Private company CEOs will, on average, get paid a lot less (and shoulder more risks) than public company CEOs. And, don’t forget my master plan to lower CEO pay at public companies. Congressman Barney Frank is working on similar legislation, but it needs to provide a fixed dollar figure for shareholders to vote on. Someone tell Congressman Chris Murphy ’96!


First Days for Chris Murphy

As detailed in today’s Washington Post, Chris Murphy and other freshman members of the House are receiving their orientation to their new jobs this week. I like articles like these that remind me that even those we vest with great power have to learn a number of little things, much in the same way we all went through First Days seminars, job training, evacuation plans, and other mundane rituals that still feel charged with importance when they prepare you for a role you are eager to step into.

The Post article shares a “here I am” moment for each of some of the new members, and lucky for Ephblog, our own Chris is one:

Chris Murphy ducked out of the day-long orientation session in the Cannon Office Building and lingered in a hallway with a cellphone against his ear as he returned calls from a list of phone messages that filled four pages. “I still have thank-you calls to make,” said Murphy, 33, a state lawmaker from Connecticut who drew national attention by defeating 12-term Rep. Nancy L. Johnson (R).

Read more


Murphy Wins?

If a Republican writes, “But some bad news – Nancy Johnson looks like she’s going down in CT. Other CT races look real close.”, does that mean that Chris Murphy has won?



Here is a (Republican) update on Chris Murphy’s ’96 campaign in CT-5.

This year, Nancy Johnson’s got the best GOTV effort she’s ever had. I hear she’s going positive with a look-in-the-camera ad. There is an air of pessimism among some workers who’ve never been through a tough fight with her before; the last one was 2002 when she was redistricted into a race with a Democrat incumbent from the consolidated district. They believe, however that they can run even with Murphy in Waterbury. The shrewd young Democrat may have a serious mistake by suggesting to Waterbury Democrats he would punish them for the city for Democratic mayor’s reluctance to campaign for Murphy. The ugliness was duly reported Thursday in the widely read Waterbury Republican-American.

Do you we have any Murphy campaign workers who can provide a different perspective?


Evil Nancy Johnson

Chris Murphy ’96 is not pulling any punches in his campaign for Congress.

That’s right. Evil Nancy Johnson is against surgery for children!

Ever wonder why insurance premiums are so high? One reason is that legislators like Murphy keep forcing companies to cover conditions X, Y and Z. Want to buy cheaper insurance which does not cover these conditions? Tough luck. That’s illegal.


Richest 1%

Chris Murphy ’96 made the Washington Post today.

In the waning days before Tuesday’s election, Republican leaders are holding the issue of taxes out like a life raft to struggling congressional candidates. Few have grabbed it with greater enthusiasm than Rep. Nancy L. Johnson.

A 24-year incumbent from Connecticut who sits on the tax-writing House Ways and Means Committee, Johnson has run at least three television ads on fees and taxes, accusing her Democratic challenger, Chris Murphy, of raising “our taxes 27 times.” She presses the point in speeches, telling voters that while Murphy was hiking taxes as a state lawmaker in Hartford, she was helping President Bush cut taxes on Capitol Hill.

But it’s not clear the tax boat is going to float in this western Connecticut district, where Johnson, like Republicans nationally, is having trouble turning the economy into a winning issue. Murphy, 33, a lawyer and state senator, has opened a narrow margin in the polls by painting Johnson as a pawn of big business and attacking administration policies — including the tax cuts — as giveaways to millionaires.

Damn those evil millionaires! We hateses them.

As Murphy knocked on doors last week in Cheshire, a prosperous town about 25 miles south of Hartford, no one asked about the 27 tax hikes, a figure Murphy contends is exaggerated. But voters did express frustration with Republicans in Washington, saying the positive economic indicators have meant little in their lives.

“Good economy for whom? It’s a good economy for people who already have a lot of money,” said Kathleen Viereg, a family physician who was tending her lawn. Viereg said she has patients who postpone treatment because they can’t afford rising deductibles and co-payments — and those are the ones with insurance.

A political independent and undecided voter, Viereg said talk of tax relief leaves her cold when so many people are struggling financially. “The voodoo economics of these tax cuts doesn’t add up,” she said.

If we divided all of Connecticut into two groups: those that “have a lot of money” and everyone else, I would bet that a female physician is more likely to be in the former than the later.

Murphy attacks Johnson on a range of economic issues, from Social Security to a new drug benefit for Medicare recipients. If elected, Murphy says he will “absolutely” work to repeal cuts in the dividend and capital gains tax rates, calling them “tax breaks for the richest 1 or 2 percent of Americans.”

What percentage of the Williams graduates of the 1980’s (about 5,000 individuals) are in the richest 2% of Americans? You can bet that it is more than 2%. Chris Murphy: class traitor? Just asking!

I can’t find the data on where the cut off is for the richest 2%, but the richest 5% starts at $164,000. I would wager that at least 1/3 of Williams graduates from the 1980s are in this top 5%. Another great topic for a senior thesis.


Murphy ’96 Update

Is Chris Murphy ’96 in the lead? Tough to tell, but the momentum is certainly in his favor. Murphy did a walking tour of the district, leading to commercials like this:

Count me in favor of balanced budgets and no Congressional pay increases. Even though I am pro-Murphy, I couldn’t help but smile at his opponent’s spoof.

Was that last character based on someone from Williams? No WUFO jokes!


Ephs Running for Office

The Public Affairs office is looking for a list of all the Ephs running for public office. Let’s make one! I’ll start with:

Bill Harsch ’60 for Rhode Island Attorney General.

Martha Coakley
’75 for Massachusetts Attorney General.
Chris Murphy ’96 for Congress (CT-5).

And don’t forget Ephs like Ed Case ’75 (D-Hawaii) and Peter Monroe ’65 (R-Florida) who lost in their party primaries.

But surely there are others . . .


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