Archive for January, 2010

American Express CEO gets 60 percent salary raise (AP)

Friday, January 29th, 2010 | Finance News

DES MOINES, Iowa – The CEO of American Express Co. is getting a 60 percent raise in his base salary.

Kenneth Chenault's base salary rises to $2 million this year from $1.25 million, according to documents filed Friday with the Securities and Exchange Commission.

Chenault, 58, also received options for 650,918 shares, at an exercise price of $38.10 per share, the company said in a separate filing dated Thursday. At that price, the shares are worth about $2.48 million. The options can be exercised in four equal annual installments beginning Jan. 26, 2011.

Three other executives are getting smaller base salary increases ranging from 21 percent to 33 percent.

They are Vice Chairman Edward P. Gilligan, whose salary increases to $1.45 million from $1.1 million; Chief Information Officer Stephen J. Squeri, whose salary climbs to $1 million from $750,000; and Chief Financial Officer Daniel T. Henry, whose salary increases to $850,000 from $700,000.

The raises go into effect Feb. 1.

The company said the increases shift compensation for the executives toward a higher base pay and lower incentive awards. Executive compensation still is weighted toward long-term incentives, particularly stock-based awards, it said.

Chenault's 2009 total compensation has not yet been filed.

In 2008 he was paid $42.9 million, a large portion was stock options and awards, the value of which fell considerably when the stock dropped more than 60 percent.

He declined a bonus for 2008, although the other executives were paid multimillion dollar bonuses that year.

New York-based American Express earlier this month said its profit jumped in the final three months of the year as the company set aside less money to cover bad loans.

The credit card company earned $716 million in the quarter, or 60 cents per share, up from $240 million, or 21 cents per share, in the same period a year ago.

On an adjusted basis, excluding discontinued operations, the company earned 59 cents per share, which beat analysts' estimate of 57 cents per share, according to Thomson Reuters.

The gain broke a streak of eight consecutive quarters of falling profits.

The company earned $1.54 per share for the full year, just missing analysts' forecast of $1.55 per share. The company earned $2.32 per share in 2008.

Shares rose 23 cents to close at $37.66 Friday.


Toyota sends gas pedals to factories, not dealers (AP)

Friday, January 29th, 2010 | Finance News

DETROIT – The Associated Press has learned that Toyota is sending new gas pedal systems to car factories rather than dealerships who want the parts to take care of millions of customers whose pedals may stick.

Toyota spokesman Brian Lyons confirms information in a company e-mail obtained by the AP that says parts were shipped to factories. Lyons says that's how the company normally distributes parts.

But some dealers say they should get the parts first because they now have no way to fix the pedals on any of the 4.2 million recalled vehicles affecting eight U.S. models.

Toyota has halted production and sales of the models, including the best-selling Camry sedan.

Lyons said Toyota did not send the parts to dealers because it has not decided whether to have the systems in the recalled vehicles repaired or replaced.

The company on Thursday presented a remedy to the National Highway Traffic Safety Administration, and it is awaiting a decision before proceeding.

"We're not ready to launch this program yet," Lyons said, adding that letters must be sent to customers whose vehicles were recalled and service technicians must be trained on whatever solution the company ultimately decides.

He said he did not know if any parts had been shipped from factories to parts depots, which is the next step in the process, but dealerships don't have them.

Engineers and other workers were up all night Thursday getting the process ready, he said.

The company has said its highest priority is fixing the pedals for existing customers.

"Nothing is more important to Toyota than doing the right thing for our customers — and restoring their confidence in the safety of our vehicles," Toyota said in a statement.

But dealers and customers were unhappy with the delays in getting parts.

Earl Stewart, owner of a Toyota dealership in North Palm Beach, Fla., said his service technicians might not know the details of how to fix the gas pedal systems, but they know to install new ones, and the parts should have gone to dealers rather than factories.

"That's absolutely stupid," he said. "It makes no sense at all."

He said Toyota may be trying to save money by using a less-expensive repair on the millions of vehicles that already have been sold, and using the new parts to restart factories that have been closed while it irons out the problem.

"That just doesn't wash well with the customers out there driving these vehicles," he said. "I think at this point you throw cost to the wind and do everything you can to rebuild your brand and your image."

Toyota owners were both confused about what to do with their cars and angry that they didn't have any answers on when a fix would be available.

"I've got a $30,000 vehicle and they don't know how to fix it," said Johnathan Jones, a 30-year-old salesman from Fort Mitchell, Ala., who said he won't put his 10-year-old twins in his 2009 Toyota Tundra. "To me, it's a big safety hazard with my children."

The U.S. House Oversight and Government Reform Committee is launching an investigation into the problems with Toyota's accelerator pedal systems. It has scheduled a Feb. 4 hearing entitled, "Toyota Gas Pedals: Is the Public at Risk?"


AP Writer Ken Thomas contribued to this report from Washington.


US announces $6B arms sale to Taiwan (AP)

Friday, January 29th, 2010 | Finance News

WASHINGTON – In a move sure to aggravate China, the Obama administration on Friday announced plans for more than $6 billion in arms sales to Taiwan, the self-governing island the Chinese claim as their own.

The sale would include Black Hawk helicopters, Patriot missiles, mine-hunting ships and information technology. Lawmakers have 30 days to comment before the plan proceeds; senior lawmakers have traditionally supported arms sales to Taiwan.

Taiwan is the most sensitive matter in already-tense relations between the U.S. and China, two powers increasingly linked by security and economic issues. The sale could spark a temporary break in U.S.-China military ties.

The United States, which only told China of the sale hours before the announcement, acknowledged Friday that Beijing may retaliate by cutting off military talks with Washington, which happened after a multibillion dollar U.S. sale to Taiwan in 2008.

Wang Baodong, a spokesman for the Chinese Embassy in Washington, said Beijing will lodge a formal protest against the U.S. decision. Asked if China would cut off military ties, he said, "Let's wait and see."

China vehemently opposes U.S. arms sales to Taiwan. It has threatened to invade Taiwan should the island ever formalize its de facto independence.

The United States is Taiwan's most important ally and largest arms supplier.

The package, posted on a Pentagon Web site, dodges one thorny issue: The F-16 fighter jets that Taiwan covets are not included.

The sale satisfies parts of an $11 billion arms package originally pledged to Taiwan by former President George W. Bush in 2001, which has been provided in stages because of political and budgetary considerations in Taiwan and the United States.

The arms sale will test the Obama administration's China policy, which U.S. officials say is meant to improve trust between the countries, so that the inevitable disagreements over Taiwan or Tibet don't reverse efforts to cooperate on nuclear standoffs in Iran and North Korea and other issues.

China aims more than 1,000 ballistic missiles at Taiwan; the U.S. government is bound by law to ensure the island is able to respond to Chinese threats.

The package includes 114 Patriot missiles designed to shoot down other missiles, 60 Black Hawk helicopters, and two mine-hunting ships.