Comments on: E*Trade figure does not compute… http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/ Michelle Leder's guide to what's hiding in SEC filings Tue, 06 Jan 2009 04:53:00 +0000 http://wordpress.org/?v=2.7 hourly 1 By: Paydex http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/comment-page-1/#comment-4408 Paydex Wed, 09 Jan 2008 19:17:36 +0000 http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/#comment-4408 Michelle- one word..... Goosebumps. WOW. what a simple 5 minute research can uncover... Izzy Michelle-

one word…..

Goosebumps.

WOW. what a simple 5 minute research can uncover…

Izzy

]]> By: Michelle Leder http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/comment-page-1/#comment-4379 Michelle Leder Fri, 04 Jan 2008 19:56:16 +0000 http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/#comment-4379 Thanks, Andrew, for bringing this to my attention. I guess it all boils down to what the meaning of the word bonus is (not to paraphrase Bill Clinton, but it is another political season!). It seems a bit ingenuous to me to cling to a zero bonus in the proxy and then use a different interpretation of the word bonus to calculate Caplan's exit. I also went back and looked at the proxy and the footnotes documenting that $4.7 million are pretty skimpy (and that's being charitable) since they explain $15K of the $4.7 million, leaving the rest a giant guessing game. The other thing that doesn't make sense is that if you take two times the $4.7 million and the $1.5 million to arrive at the $10.9, where's the money for the continued health and insurance coverage? The bottom line here is that it seems to me, at least on the surface, that they're still trying to play games with the numbers. And when a company plays around with the stupid stuff, you have to wonder what else they're hiding. Thanks, Andrew, for bringing this to my attention. I guess it all boils down to what the meaning of the word bonus is (not to paraphrase Bill Clinton, but it is another political season!). It seems a bit ingenuous to me to cling to a zero bonus in the proxy and then use a different interpretation of the word bonus to calculate Caplan’s exit. I also went back and looked at the proxy and the footnotes documenting that $4.7 million are pretty skimpy (and that’s being charitable) since they explain $15K of the $4.7 million, leaving the rest a giant guessing game.

The other thing that doesn’t make sense is that if you take two times the $4.7 million and the $1.5 million to arrive at the $10.9, where’s the money for the continued health and insurance coverage? The bottom line here is that it seems to me, at least on the surface, that they’re still trying to play games with the numbers. And when a company plays around with the stupid stuff, you have to wonder what else they’re hiding.

]]> By: Andrew http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/comment-page-1/#comment-4378 Andrew Fri, 04 Jan 2008 19:20:19 +0000 http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/#comment-4378 You are actually incorrect; in your calculation you forgot the value of cash incentive plan awards. The number they calculated of $10.9 million is "Salary and Bonus" but not in as transparent a manner as you expected (my apologies if you know this information already). Due to the year-old changes in the executive compensation disclosure rules by the SEC, the 'Bonus' column now truly reflects only a discretionary bonus (i.e. a bonus the compensation committee gives because they want to / a sign-on bonus / etc.). While some firms do note most of their bonus compensation in this column [such as American Express] most other firms are noting the value (both AXP and ETFC are placing the values in the correct locations) in the Non-Equity Incentive Plan Awards. These awards are the payout values for both short- and long-term cash incentive plans (now found in the Grants of Plan-Based Awards Table) and, represent in most situations, where most of the value of a 'Bonus' is derived. As such, the value displayed under that columns makes the numbers work. ($4,700,000 + $750,000) * 2 = $10.9 million. By all means email me if my explanation seems confusing. You are actually incorrect; in your calculation you forgot the value of cash incentive plan awards. The number they calculated of $10.9 million is “Salary and Bonus” but not in as transparent a manner as you expected (my apologies if you know this information already).

Due to the year-old changes in the executive compensation disclosure rules by the SEC, the ‘Bonus’ column now truly reflects only a discretionary bonus (i.e. a bonus the compensation committee gives because they want to / a sign-on bonus / etc.). While some firms do note most of their bonus compensation in this column [such as American Express] most other firms are noting the value (both AXP and ETFC are placing the values in the correct locations) in the Non-Equity Incentive Plan Awards. These awards are the payout values for both short- and long-term cash incentive plans (now found in the Grants of Plan-Based Awards Table) and, represent in most situations, where most of the value of a ‘Bonus’ is derived. As such, the value displayed under that columns makes the numbers work. ($4,700,000 + $750,000) * 2 = $10.9 million.

By all means email me if my explanation seems confusing.

]]> By: vboscaino http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/comment-page-1/#comment-4377 vboscaino Fri, 04 Jan 2008 18:20:52 +0000 http://www.footnoted.org/earnings-quality/etrade-figure-does-not-compute/#comment-4377 Nice catch. I guess the question any of us would have to ask is why the company even tried to rationalize the severance amount in the first place? In many of these situations it is obvious that there is no particular "formula" that is applied. Oftentimes the package the departing executive gets seems more related to his ability to extort from the firm, than anything having to do with "just and fair renumeration". The potential extortion leverage that the departing executive yields, being directly proportional to how many "skeletons in the closet" he may have knowledge of. The more important question in this situation is WHY did a CEO who was responsible for putting the firm, and the firms shareholders, in dire straights, get ANY severance whatsoever? Nice catch. I guess the question any of us would have to ask is why the company even tried to rationalize the severance amount in the first place?

In many of these situations it is obvious that there is no particular “formula” that is applied. Oftentimes the package the departing executive gets seems more related to his ability to extort from the firm, than anything having to do with “just and fair renumeration”. The potential extortion leverage that the departing executive yields, being directly proportional to how many “skeletons in the closet” he may have knowledge of.

The more important question in this situation is WHY did a CEO who was responsible for putting the firm, and the firms shareholders, in dire straights, get ANY severance whatsoever?

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