Posted on 12/30/2008 9:39:28 AM PST by cmdjing
Where is the government's bank-bailout money going? In part to pay for Wall Street banker Peter Kraus's $37 million Park Avenue spread.
Kraus had excellent timing. He signed on as a top executive at Merrill Lynch in May, negotiating a $50 million pay package, with much of that guaranteed if the company was sold. He didn't officially start until September. A couple of days later, Merrill CEO John Thain sold the company to Bank of America for $50 billion, triggering a $25 million payout under Kraus's contract.
Bank of America got a $25 billion capital injection from the government. Kraus resigned and collected his cash, taking a job as CEO of AllianceBernstein, a money-management firm. And then he bought, for an estimated $37 million, an apartment at 720 Park Avenue from Democratic fundraisers Carl Spielvogel and Barbaralee Diamonstein-Spielvogel.
Let's be clear: Kraus got this apartment fair and square: He suckered Merrill Lynch into a pay guarantee, and had the gall to hold Merrill and Bank of America to his contract, even though he only worked a couple of days.
Bankers deserve bonuses — but only when they really earn them. Thain, who arguably saved Merrill Lynch from the disastrous fate of Lehman Brothers and Bear Stearns, declined to seek a bonus this year, but he would have been justified in getting one. Kraus got a bonus, but he didn't earn it. He did nothing illegal. He just did something unseemly.
The 5-bedroom spread technically belongs to Kraus's wife, who was listed as the purchaser. But given the circumstanced of its sale, I like to think it belongs to all of us. Behold the splendor of the People's Palace.
25 million of taxpayer backed golden parachute for less than 3 months of nothingburger. Good work if you can get it. And all I wanted was a pony...
Don't blame Kraus, blame the Board at Merrill Lynch that approved such an outrageous contract.
I can't believe there aren't more shareholder actions against these wreckless CEO contracts.
Probably a Democrat, but I haven't checked the donation db.
Behavior like this causes socialism.
“And then he bought, for an estimated $37 million, an apartment at 720 Park Avenue from
Democratic fundraisers
Carl Spielvogel and Barbaralee Diamonstein-Spielvogel.”
Fundraising must be BIG business!
Atleast this guy wasn’t a “fund raiser”.
Exactly!
Right or wrong, everything fell under the rules of his contract no matter how outrageous it may seem. That company approved his salary and his contract. It’s his money...
To be a little fair, Kraus’ guarantee was the money he left behind at Goldman Sachs (unvested stock, deferred compensation etc...) Merrill had to buy him out to entice him to come. While he clearly didn’t earn that at Merrill (though he was a key negotiator in selling the company according to yesterday’s Wall St. Journal), that was money that he earned at Goldman Sachs in previous years that he didn’t collect yet (golden handcuffs).
I’m uncofrtable belittling this man. He simply lucked out. It’s up to the stock holders and company at large to determine compensation.
What am I curious about is how did the FORMER OWNERS,
Democratic fundraisers Carl Spielvogel and Barbaralee Diamonstein-Spielvogel afford this?
What am I curious about is how did the FORMER OWNERS,
Democratic fundraisers Carl Spielvogel and Barbaralee Diamonstein-Spielvogel afford this?
True but I bet if you asked most people they would assume he is a Republican, seems over half the country believe rats can do no wrong.
Instead of handing out 700 Billion to all the banksters. A nice 5000 dollar check from Paulson to every American taxpayer would have probably done a lot more. Oh well, c’est la vie.
It doesn't say much about a person who takes money he didn't earn.
‘Behavior like this causes socialism.”
No behavior like this causes bankruptcy, or it should. Socialism causes socialism. That and stupidity.
” It doesn’t say much about a person who takes money he didn’t earn.”
Well he did leave his last plush job wherever that was. He woulda been unemployed and broke without it.
How did he “not earn” it? Two parties agreed to a contract stating he would be paid should the company be sold. It was. He got paid according to the contract. Contracts are the foundation of our market system.
SELLER: Carl Spielvogel and Barbaralee Diamonstein-Spielvogel LOCATION: 27 Gin Lane, Southampton, NY PRICE: Upon Request, but around $35,000,000
http://realestalker.blogspot.com/2007/05/spielvogels-clean-up-in-southampton.html
He worked for it. Spielvogel is founder and CEO of Carl Spielvogel Associates, an international investment and management firm.
The problem is that not everyone gets a contract. If I got a new job offer that I took up that suddenly fell through, I’d have been given jack and squat. If only such contracts were as common elsewhere as on Wall Street...
Unless he managed to run Merrill Lynch into the ground in the 30 days that he ran the place then I can't think of what he did to earn it.
Every American who used the easy credit of the 2000's to buy a house and car he couldn't actually afford took money he didn't earn. It's become a national entitlement. ;)
The money spent here went back into the economy - ultimately no harm done. The bigger problem is when the government destroys wealth by subsidizing non-productive activities or people for partisan political purposes.
According to the contract he negotiated and signed. He earned it. That’s what it comes down to. Like I said, right or wrong. It’s is his money.
If you have a contract that includes incentives and rewards for performance, that money isn't a "bonus," it is a paycheck. It's compensation that the company agreed to pay the executive in order to retain their services. I suspect that most of the "multimillion dollar" bonuses we hear about are actually just paychecks.
Sometimes executives get in situations like this guy did. It's basically like winning a lottery. He didn't ask for it. The contract gave it to him. He's a shrewd negotiator and the company was already going down the tubes and making bad decisions. He took advantage of this.
Spending his "winnings" so extravagantly might have been a mistake, though. The market for high paid executives isn't nearly as strong as it was last year.
Since when is signing a contract with an employer suckering them?
Enforcing a contract when money is owed to you? Damn Skippy!
Why can't we agree that this guy is a poster child for what's wrong with the financial industry, not hold him up as someone to emulate.
Yeah right.
The Feds should challenge the contract under the grounds that it was an unconscionable contract.
Where are the Boondock Saints when you need them?
When you are dealing at that level, employment contracts are a must and a simple part/cost of doing business. Most public companies “C” level jobs and some director level jobs have employment contracts. Not unusual.
There is a separate usually six figure base pay. I have no problem with bonus pay for performance. Usually though performance isn’t defined as losing trillions of investor money. The problem is that Wall Street has been blowing bubbles using low interest rates and excess liquidity and creating mirage profits. They’ve been gorging themselves on that for years and the early ins did indeed make money, much like a Ponzi scheme. However, like the aforementioned Ponz scheme, eventually everyone else at the bottom ends up paying for it. The thing is, even after all the money lost, all the taxpayer money injected, the banksters are still paying themselves “performance” bonuses. A roomful of monkeys throwing darts to determine investing choices could not have done worse. Best of all, they could have been paid in bananas.
Thanks for that info...makes his 25$ million payout more justified
Don’t blame Kraus, blame the Board at Merrill Lynch that approved such an outrageous contract.
No, blame Bush and the congress, including McCain.
What apiece of crap! Nice to know it’s now worth 350,000!
I know that movie. So this man deserves to be shot for signing a kick a*s contract?
All this talk just seems like a bunch of jealousy. So how many people here would have done the same thing when facing a huge pay out like that?
I think it’s BS, but it’s still his money.
“Unless he managed to run Merrill Lynch into the ground in the 30 days that he ran the place then I can’t think of what he did to earn it.”
First, he didn’t “run” Merrill. He was an EVP and a member of their Management Committee but did not “run” Merrill. Kraus was a very high level employee at Goldman Sachs and was extremely successful. To leave a firm like that at that level, employment contracts are routine and necessaryto get people to leave one place and join another. Not his problem or fault that Merrill went bankrupt. His contract was merely enforced and he got paid per the terms.
Good info. Thanks.
“He worked for it. Spielvogel is founder and CEO of Carl Spielvogel Associates, an international investment and management firm. “
Okay ... so why is he a Demoncrat?
WOWEE!
http://realestalker.blogspot.com/2007/05/spielvogels-clean-up-in-southampton.html
Another wealthy Demoncrat!
If private contracts are not enforceable then the Republic is worthless.
He worked for it. founder and CEO of Carl Spielvogel Associates, an international investment and management firm.
According to this his pedigree is as impeccable as Bernie Madoff’s:
http://www.tuj.ac.jp/newsite/main/news/specialevents/events_2006/pdf/20060615_icjs.pdfis
I am advocating the Feds use the currently existing process to dispute the contract. Happens every day and the Republic hasn’t crumbled.
And lo and behold his wife Barbaralee Songbird is an author just like Ruth Madoff
Historically, this sort of thing ends one way only. Break out the guillotine.
Unless this was a setup; a way to take money out of the company. That's what's getting through my tinfoil.
You bet, like "I'll pay you 50% of whatever we get from robbing the bank". Sound contracts are important. So the stockholders lose. That's business.
Except robbing banks is illegal which voids contracts........but you knew that already.....
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