Quotes of the Day

Sunday, May. 04, 2003

Open quote

German companies are watching nervously as a federal judge in New Jersey prepares to rule on a case that could reopen a floodgate of Holocaust — related litigation. The suit was filed by the children of Günther and Fritz Wertheim, who ran a thriving Jewish chain store before fleeing Nazi Germany. Believing their assets worthless, they sold to a German businessman in 1951 for $18,400. In doing so, they lost prized Berlin real estate, according to the $500 million suit against KarstadtQuelle, Germany's biggest retailer, which now owns the property. The case threatens a 1999 accord designed to settle all Holocaust-related claims against German firms; the Wertheims argue their case isn't covered because it involves an alleged swindle after the war. Germany's U.S. ambassador sides with Karstadt, saying the case will "endanger the legal peace." But Stuart Eizenstat, the former U.S. official who brokered the €5 billion Holocaust deal, takes the family's side. A ruling could come this month. — By Peter Gumbel

Fat Cats Get Creamed over pay
Hefty pay packages,
Shrinking stock prices
Josef Ackerman
Deutsche Bank CEO
Pay: $7.73 million
Share price: -4%
Jean-Pierre Garnier
GlaxoSmithKline CEO
Pay: $6.65 million
Share price: -30%
Christopher Gent
Vodafone CEO
Pay: $3.8 million
Share price: -36%
Tom Glocer
Reuters CEO
Pay: $2.7 million
Share price: -75%
Brian Moffat
Corus CEO
Pay: $432,000
Share price: -64%
Based on 2002 compensation and stock performance
The stocks are down, the fur is up, and as the annual general meetings kick off, the claws are out for corporate "fat cats." Last week 21% of shareholders voted against executive pay packages at British group HBOS, nearly 50% voted no at BAE Systems, and U.K. Trade and Industry Secretary Patricia Hewitt began investigating ways to limit executive compensation. This despite the fact that most European execs earn a pittance compared to their American cousins: Novartis' respected CEO Daniel Vasella took a top spot on Europe's pay charts by earning $14.9 million last year — less than the U.S. average and under one-fifth of what disgraced Tyco CEO Dennis Kozlowski earned. That's because European shareholders and unions have long campaigned against corporate excess. But with stock prices falling, the demands have become more strident, hitting even CEOs like Jean-Pierre Garnier and Christopher Gent, who have finally begun to heave their stock prices in the right direction. But at least they had a chance to start before being attacked — on Thursday, Britain's National Association of Pension Funds launched a preemptive strike on the drugstore chain Boots' plan to pay its new CEO a guaranteed bonus, saying that until bosses prove they can bring home the bacon for shareholders, they don't deserve any fat for themselves.

INDICATORS
Slouching Toward Oblivion
If you have any doubt that market woes in the eurozone are at once-in-a-lifetime lows, consider this. With German stocks down 75% from their peak, and the French market down over 60%, the two combined are not worth as much as the U.K.'s 20 top companies — or the U.S. market's four largest.

The Oils Of War
George W. Bush isn't the only one who had a good war. First quarter results hit record highs at British Petroleum, where net profit soared 136% to $3.7 billion; at Royal Dutch Shell, where profits jumped 96% to $3.91 billion; and at Exxon, which saw profits more than triple to $7.04 billion.

Cracker Jacked
A crummy week for Swedish cracker-maker Wasa, after a Swedish court ordered it to re-brand a 27-year favorite, Moraknaecke. Why? The crackers aren't made in the right region. With reasoning like that, can euro membership be far behind?
The Bottom Line
We may not as a nation have a character which enjoys the execution of a contract as much as we do winning the next one.
ROBERT WALMSLEY, outgoing U.K. chief of defense procurement, on problems at BAE Systems
Close quote

  • Bizwatch looks at Holocuast litigation and Fat Cat pay