Archive for July, 2009

Power Breakfast: Wall Street pay up, SunTrust, Equifax

There’s been a lot of talk about restraining executive pay during this recession. But it seems that the talk far exceeds the action.

The Washington Post reports today that Wall Street banks are setting aside billions of dollars more to pay their executives and other employees, just months after these firms were rescued with a taxpayer bailout.

Buoyed by improving profits, Wall Street is on track to pay employees as much as, or even more than, it did in the pre-crisis days, the Post says. So far this year, the top six U.S. banks have set aside $74 billion to pay their employees, up from $60 billion in the corresponding period last year.

Meanwhile, at the other end of the labor market, the minimum wage is scheduled to go up by 70 cents an hour Friday to $7.25. That’s not easy to live on, to say the least.

Is there a disconnect here?

In the AJC:

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Study: Charismatic CEO language affects analysts

Words matter in business.

New CEOs that use charismatic language in their first letters to shareholders are more likely to gain higher recommendations for their company’s stock from securities analysts, according to a new study by three researchers.

What’s more, the study said the analyst recommendations turned out to be wrong more often, according to a Penn State University news release.

Charismatic language, the release said, tends to be very critical of the past and uses moral, ideological and emotional overtones when discussing future goals.

The research was conducted by Vilmos Misangyi, of Penn State University’s Smeal College of Business, Angelo Fanelli of HEC School of Management and Henry Tosi of the University of Florida. Their paper, “In Charisma We Trust: The Effects of CEO Charismatic Visions on Securities Analysts,” is forthcoming in Organization Science.

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Calling on workers and bosses: Your view on minimum wage

The minimum wage increases to $7.25 an hour Friday, another example of government’s role in the economy. Some believe it’s absolutely critical. Others see it as meddling.

Even with the 70 cents an hour increase, full-time employees would earn only $1,160 a month. That’s not easy to live on these days.

At the same time, small businesses are having a tough time in this economy, as sales decline and credit dries up. The wage increase adds to the pressure.

Where do you stand?

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Power Breakfast: Recession’s impact, F-22, Lake Lanier

No one is immune to this economic bug.

A new state Department of Labor report says white men in Georgia have been laid off in much higher numbers than any other group. They are now the largest group of workers receiving unemployment benefits in the state, write AJC reporters Tammy Joyner and Michael Kanell.

Before the recession began at the end of 2007, black women were the largest group receiving benefits, said Michael Thurmond, state labor commissioner.

Meanwhile, defense programs are getting axed. The U.S. Senate cut off funding for the F-22 Raptor fighter jet assembled in Marietta.

With the 58-40 vote, production at Lockheed Martin’s Marietta plant and other factories that make parts of the plane is expected to end in 2011, writes AJC reporter Bob Keefe.

And among public workers, teachers face three unpaid furlough days as the state moves to fill a $900 million hole in the budget with a number of cuts, writes AJC reporter Aaron Gould Sheinin.

Also in the AJC:

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Poll: Try again with paid airport security lines?

Should Hartsfield-Jackson try again with paid security lines?

AJC reporter Kelly Yamanouchi writes that a rival to the failed Clear paid security line operation, FLO Corp., says it wants to relaunch the service around the country.

Should Hartsfield-Jackson try again with paid security lines?

  • Yes
  • No

View Results

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But Hartsfield-Jackson International Airport is hesitant. With revamped federal security checkpoints at Hartsfield-Jackson, general manager Ben DeCosta said, “We’re in great shape. I don’t know whether there’s a business case for this.”

What do you think?

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Answers to your credit questions start Monday

Thank you for your credit questions.

Today, I met with Suzanne Boas, president of Consumer Credit Counseling Service of Greater Atlanta, to discuss what she and her staff have been dealing with during this recession. I’ll be writing a column about that for next Tuesday.

Her organization is going through your questions now, trying to select about 15 that apply to the most people.

Answers to those questions, about two or three a day, will begin appearing in this blog Monday. Stay tuned.

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In bad times, it pays to have an inexpensive product: Coke

Once again, Coca-Cola’s performance shows that when you have a relatively inexpensive product that you sell around the globe, you can make money in tough times. Lots of it.

Coca-Cola Co.’s second-quarter results beat analysts’ predictions as international markets, such as China, India, Mexico and Brazil, boosted its case-sales volume, AJC reporter Joe Guy Collier writes today.

The Atlanta-based beverage giant reported second-quarter profit of $2.05 billion, or 88 cents a share. That’s up more than 40 percent from the same period last year. Excluding one-time items, Coca-Cola had second-quarter earnings of 92 cents a share, down 9 percent from a year ago, but still beating analyst projections.

Global case sales — a key performance measure — rose 5 percent for the quarter. That’s during a worldwide recession.

Again, North America was the only region for Coca-Cola to report a decline in unit case volume for the quarter. It was down 1 percent.

Playing in 200 countries, as Coke has …

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Surviving real estate collapse

What do you do when half of your business gets clobbered?

If you’re Bob Peterson, you focus on growing the other half of your commercial real estate operations. You also search for new opportunities.

Peterson, chairman and CEO of Atlanta-based Carter, has had to pilot his company through an industry tailspin.

“I clearly think this is the worst I’ve been through,” said Peterson, a 35-year veteran of the business.

Essentially, he explained, every type of commercial development — office, retail, hotel, industrial and apartment — has been hit hard. By one measure, he said, the value of commercial properties has fallen about 30 percent during the past year.

The prognosis?

“It’s not going to get much worse, but we’ll stay here for a long time,” he said.

How long?

“A couple more years at this low point,” Peterson, 57, said. “We need to figure out how not to be a part of that.”

Privately held Carter, one of the country’s largest commercial real estate firms, is still profitable. But …

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Power Breakfast: Recovery coming soon, water talks, banks

That faint light at the end of the tunnel seems to be appearing.

Often in this space, you awake to depressing news about the economy.

Well yesterday, the index of leading economic indicators rose for the third straight month, the Conference Board reported. The group also said activity in the six-month period through June rose 2 percent, the Associated Press reported.

Seven of the index’s 10 indicators rose in June, including building permits, stock prices and manufacturers’ new orders for consumer goods, the Associated Press reported.

If these conditions continue, “expect a slow recovery this autumn,” Conference Board economist Ken Goldstein told AP.

It’s going to be a rocky road and unemployment will continue to rise. But three months of positive numbers mean we are headed in the right direction. Finally.

In the AJC:

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Tom Bell gets new role promoting free enterprise

Tom Bell, who retired as chairman and CEO of Atlanta-based Cousins Properties at the end of last month, will be in charge of a U.S. Chamber of Commerce campaign to promote free enterprise.

Bell told the Rotary Club of Atlanta on Monday that government actions and their unintended consequences threaten our “fragile system.”

“You can’t spread the wealth if there is no wealth,” Bell said. He added that financial and real estate markets hate uncertainty, but recent government actions create a lot of it.

“The federal government has to quit changing the rules,” he said.

To promote free enterprise, Bell told the business leaders to “buy a Ford,” referring to the automaker that did not receive a government bailout like General Motors and Chrysler.

On the real estate front, Bell said the market would bump along the bottom until late 2010 or 2011. “Asset prices still have not stabilized.”

In Atlanta, given how much it grew from 2000 to 2007, the real estate contraction has been …

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