While Bill Nuti is being wined and dined by our elected leaders and paid a princely sum for losing value of a once great company, the effects of his actions are killing the people who still have no choice about paying the taxes that support our government.
First, the taxpayers in N.Y. were hit for 1.5 million so he could move the executive offices- the “C-suite”- to NYC into high-rent offices in part of the new World Trade Center complex. Note- the office space in Dayton was pretty much paid off.
Then there was the $100 Million plus deal with the state of Georgia to move the rest of NCR to Duluth. The company isn’t doing that much better- but Nuti is making triple what he was when this insanity started. In 2010 Nuti took home $12,170,898. That’s $5,851 an hour, or $46,811 a day, $234,055 a week, $936,222 a month- just to make the numbers a bit “more real” and relevant to the taxpayer. Note- the stock price is about the same as when he hauled NCR out of Dayton- around $18 a share.
But, the raping of the taxpayer isn’t over yet:
Diebold Inc. faced a difficult decision after chief rival NCR Corp. was wooed from Ohio to Georgia.
Diebold didn’t want to leave Ohio, but it couldn’t compete with NCR after it received more than $60 million in incentives to move its corporate headquarters and 2,100-plus jobs south in June 2009.
So Diebold approached North Carolina and Virginia, where it has factories. Both states offered attractive deals to move.
When Ohio countered with its own offer of $56 million in tax breaks, grants and loans, Diebold was sold on staying.
via Diebold was ‘dead serious’ about leaving Ohio, company officials said | cleveland.com.
The comments on the story are divided between outrage, and praise for our “pro-business,” CEO-loving governor.
The current Diebold, CEO Thomas Swidarski only made $5,531,245.00. He’s been CEO since 2005- and the Feds are just squared up the books on the last CEO in June of 2010:
The SEC Clawbacks Compensation from Former Diebold CEO – But No Fraud Alleged (Again)
On Wednesday, the SEC announced it had charged Diebold and three former finance officers for engaging in a fraudulent accounting scheme to inflate the company’s earnings. The SEC separately settled an enforcement action (here’s the litigation release – and here’s the complaint) against Diebold’s former CEO Walden O’Dell, obtaining reimbursement of certain financial benefits that he received while Diebold was committing the accounting fraud. The SEC used the clawback provision under Section 304 of Sarbanes-Oxley to get the former CEO to agree to reimburse the company $470,016 in cash bonuses, 30,000 shares of Diebold stock and stock options for 85,000 shares of Diebold stock.
via The SEC Clawbacks Compensation from Former Diebold CEO – But No Fraud Alleged (Again) – TheCorporateCounsel.net Blog.
Let’s be real folks- while a $470K fine would kill most of us- this is slapping a 2 weeks with no pay on a guy like Bill Nuti- who couldn’t spend his money as fast as he made it if he had to buy just stuff for everyday living (no investments- just stuff you needed to live on a daily basis) without the unspent funds going away at midnight each night.
Yet, the story of corporate pillaging and corporate welfare is old news. How does this all end up playing in Peoria- or Dayton. The rich get richer while the small businessman gets screwed. Buy low, sell high doesn’t work for the little guy anymore. You have to be in the world of ratified air to have access to capital, and that, my friends, is still hard to come by.
A potential client came into my humble offices on Bonner Street about 4 months ago. He liked what I’d done with my former corner grocery- which I purchased Oct. 19, 1987. (the day of the Wall Street crash– (which was nothing compared to later) for $2,200 plus $2,400 in back taxes. He said to his wife- “Honey, we need a building like this” and I told him about a corner store down the street that was for sale for about $15K because of the demise of the owner. The building had been vacant, except for the squatters and thieves who had ripped out the plumbing for about the last 3 years. Around 10 years ago, a woman had died in a fire in one of the back apartments and parts of the building had been redone.
Turns out the estate was in settlement phase, and the widow was finding out that her husband had around 100+ properties all over Dayton- many with tenants paying very little to the landlord (her husband) because they were his girlfriends. This was all news to her- and the estate hadn’t been planned properly and she was wanting out. My clients were asked if they would like to make an offer on all three of his remaining South Park properties- including a grand manse on Wayne and a brick double down my street. They offered $15k for all three and it was accepted.
Their good fortune was that they had access to cash and had a deal in front of them too good to be true. They had 3 buildings in 2011 for $500 more than what I paid for my home on Jan. 28, 1986 (the day the first Space Shuttle blew up). The tenant in the brick double was paying $200 a month in rent- and had been for over 20 years. The other side was empty. My clients went to work- cleaning it out, fixing it up, putting in a new kitchen, bathroom, refinishing floors (believe it or not it had a new furnace and water heater) and $20K later- looked to get a first mortgage so they could then finish the next side and have working capital to start work on the next building.
The “appraisal” came in at $16K. The “appraiser” asked how much they bought it for- was it a sheriff’s sale, a foreclosure, or a bankruptcy?- and pulled comps to justify his number. Never mind that this house is in a stable block with 2 “Rehabarama” homes that sold for $250K and $200K- and just had a house sell for $105K a few months ago.
The bank won’t even make a loan on a home under $25K. The expected rent on the half that’s complete is over $700- for a three-bedroom, one-bathroom house with a formal living room, dining room and kitchen downstairs- a large yard and an unfinished tall attic.
Where is the support of this small businessman- who happens to have a full-time job as a sergeant. first class in the Army, who has been to the sandbox 7 times in service to his country. They just started a business that detects bedbugs with a trained Jack Russel– and are so booked with work that they are getting a second dog (these dogs are $10K to train). These are the hard-working, honest, small business people that really make this country great- yet they don’t get the millions in tax breaks, nor help from the governor. They jump through hoops and pay lawyers to make sure they have clear titles, they put their own retirement funds into their dreams and hope to make enough to be able to be able to pay for health insurance for both of them once he’s retired from the Army (which by the way- just switched from a 20 year to retirement to a 26 year plan I heard last night).
The effects of deregulation on banking has continued to skew our economy to the side of big business. The transaction costs and risk assessment costs of doing small deals is heavily outweighed by the value of creating credit default swaps and doing arbitrage. The power of the local banker for one of these megabanks is nothing more that that of a checkout clerk- putting numbers into a machine to get a printout. When a banker in the community used to be a judge of character and able to do a deal on a single sheet of paper (I found the 1988 home equity line note on my house- one page, in type you could read)- we now have empty suits hustling credit cards to those who don’t need them. Our entire financial system has become a giant pinball machine that has tilted and their are no balls in play- but it still lights up and says play me one more time.
One just has to take a quick look at this chart of banking CEO compensation in the US compared to the rest of the world for 2010. http://www.ritholtz.com/blog/2010/02/banking-compensation-around-the-world/
CEO pay around the world for bankers 2010
And when you start factoring in the fact that GE, the company that just broke ground in Dayton on former NCR property to build a new tech center also got 8.8 million in tax breaks, despite paying no corporate tax in 2010 you start to see how there is no more room at the table for the hardworking taxpayer at the bottom of the food chain to get ahead.
While those at the top can’t seem to admit that this country has been in a depression for the last three years, and that 10% unemployment is unacceptable and unsustainable- these deals at the top keep happening, while the deals at the bottom don’t. Rising gas prices are going to put the working class in an even bigger pinch this year- just as we’ve clawed our way back to a new normalcy. If our government doesn’t get serious about demanding a connection to jobs and payrolls to justify these outrageous salaries- and force Wall Street to stop doing deals among each other instead of on Main Street to create wealth- the fall of the Republic is near.
When it comes down to the eventual cage match between the high priced CEO and the SFC- I put my odds on the Sgt. any day- and we need the banking community to do the same. Otherwise America as we believe in it, is history.