College football contracts are dotted with extras and provisions - USATODAY.com

Not strictly corporate finance, but a very interesting look at some contracts of college football coaches

College football contracts are dotted with extras and provisions - USATODAY.com: "Head football coaches' contracts with NCAA Division I-A schools can be more than a matter of money."

a few examples (for more read the article):

*"Cincinnati's Mark Dantonio and Florida's Urban Meyer can be suspended or fired for "commission of a crime ... whether prosecuted or not." Not counting minor traffic offenses."

* "Air Force's Fisher DeBerry will get a lifetime monthly annuity after he steps down — $7,000 a month if he coaches through the 2006 season, a figure that rises to $9,000 a month if he coaches through the 2010 season. His wife would collect two-thirds of the monthly amount if he dies before she does."


From a companion piece maybe CEOs are that highly paid afterall. The average NCAA Div 1 football coach makes $950,000 before benefits, bonuses, and otehr incentives.

Study Charts Broad Manipulation of Options - New York Times

Study Charts Broad Manipulation of Options - New York Times:

"Abuses of stock option grants are perceived to have spread like a virus among high-technology companies. But a new study suggests that hundreds of old-economy companies may also have caught the backdating bug.

In a paper to be released today, researchers estimate that 590 nontechnology companies appear to have manipulated options so their chief executives received them at the lowest price of the month. That compares with 130 technology companies that appear to have backdated their chief executives’ options to a monthly low."

A quick look-in to the paper by Bebchuck, Grinstein, and Peyer that the NY Times mentioned:

"*Lucky grants were more likely when the company did not have a majority of independent directors on the board and/or the CEO had longer tenure -- factors that are both associated with increased influence of the CEO on pay-setting and board decision-making.
• Lucky grants were more likely to occur when the potential payoffs from such luck were high; indeed, even for the same CEO, grants were more likely to be lucky when granted in months in which the potential payoffs from manipulation were relatively higher.
• Luck was persistent: a CEO's chance of getting a lucky grant increases when a preceding grant was lucky as well.
• We find no evidence that firms providing backdated options reduced the compensation paid through other sources"

Economist Milton Friedman dies at 94 - Yahoo! News

Economist Milton Friedman dies at 94 - Yahoo! News:

"Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three U.S. presidents, died Thursday at age 94.
Friedman died in San Francisco, said Robert Fanger, a spokesman for the Milton and Rose D. Friedman Foundation in Indianapolis. He did not know the cause of death."

Compensation Special Report, Parts I & II -- CFO.com

CFO.com hhas a great series of articles in their spoecial report on CFO pay. HIGHLY RECOMMENDED!!

Compensation Special Report, Parts I & II -- CFO.com:

"Thanks to a growing battle for finance talent, CFOs are making more. Those at big companies saw their pay surge as much as 25 percent. Many firms are seeking to upgrade their finance talent, and the dwindling of the chief operating officer has also contributed to the boost, since CFOs often are asked to take on many of the former COO's duties....But with the Securities and Exchange Commission shining a new spotlight on compensation, boards are also making CFOs work harder to achieve the mega-pay levels that became common in the 1990s."

FRB: Speech, Kroszner--The Conquest of Worldwide Inflation: Currency Competition and Its Implications for Interest Rates and the Yield Curve--November

Great read: It is from today's speech by Fed GOvernor Randall Kroszner. PERFECT for a money and banking class!

FRB: Speech, Kroszner--The Conquest of Worldwide Inflation: Currency Competition and Its Implications for Interest Rates and the Yield Curve--November 16, 2006:

"I will begin by providing a few facts about the substantial improvement of inflation during roughly the past decade compared with the quarter century that preceded it. I will then try to understand why this remarkable decline in inflation has taken place. In particular, I argue that globalization, deregulation, and financial innovation, in part spurred by experiences of high inflation in the 1980s, have fostered currency competition that has led to improved central bank performance and, hence, the recent conquest of worldwide inflation. Friedrich Hayek had long ago advocated permitting greater competition among currencies, arguing that there would be a race to the top rather than a race to the bottom."

Utah finance conference

What a cool thing to do if you want to know what is is going on in the field of finance!

SSRN :

"The Utah 2006 Sixteenth Annual Winter Conference has partnered with the Social Science Research Network (SSRN) to provide electronic journal distribution and online subscription management services.

Registration is required to receive the E-mail abstracting journal and free access to the issue’s full text articles.

"

Hedge Manager Is Almost Famous - New York Times

An interesting look at how Hedge funds have become the profit centers for Investment Banks.

Hedge Manager Is Almost Famous - New York Times:

"More than any other investment bank, Goldman Sachs relies on trading gains to drive its profits. Mr. Agus had a very good year in 2005 — he is estimated to have made $10 million to $20 million — and he will surely get a raise in 2006. His year is further evidence that on Wall Street, the real money is being made not by investment bankers cutting high-profile deals, but by anonymous traders making risky, profitable bets with their firm’s capital."

An interesting question is what the success of hedge funds says about market efficiency.

Risk and Reward Column: The Invisible Problem of Risk Blindness

As the semester begins to wind down, many classes (mine included) take a look at various financial cases and what events led to the problems. Thus the timing of the FENews article on " The Invisible Problem of Risk Blindness is especially good:

A few look-ins:

"There is an old saying that everything changes, but everything remains the same. This is especially true with financial disasters. The precise circumstances – the people, amounts lost, etc. – always vary, but underneath these superficial differences there are remarkable similarities....Their risk models turn out to have been blind to the risks the firm was actually taking and no one realized until too late."

"So what are the causes of this “risk blindness?” One cause is false assumptions.... Another example is when VaR models rely on historical correlations and fail to allow for correlations polarizing in crises....." A second cause is estimation error.

And later:

"So what can be done to reduce these problems? Part of the answer is for risk managers to pay more attention to qualitative factors, to focus less on the models and more on the judgmental questions surrounding them."

And finally:

"agency problems go right the way up the corporate hierarchy. So how do we ensure that senior managers and directors take their responsibilities seriously? Again, the answer is simple, but won’t be popular – at least with senior management....to abolish limited liability."

Wow! Good article! Highly recommending reading the entire thing!

Small cos problem clouds US Sarbanes-Oxley revamp | Reuters.com

Small cos problem clouds US Sarbanes-Oxley revamp | Reuters.com:

"Work on revising 2002's post-Enron Sarbanes-Oxley (SOX) corporate audit reforms is hung up on the question of how small companies should be treated, with U.S. regulators expected to meet on the issue on Sunday.

The chairmen of the Securities and Exchange Commission and the Public Company Accounting Oversight Board are expected to meet to discuss how SOX Section 404 should apply to companies with $75 million to $700 million in market capitalization."

Too Many Regulators For Wall Street? - Forbes.com

We always talk in class, that when the environment changes, so too do the various contracts and relationships that affect the firm. Here is a good case in point:

Too Many Regulators For Wall Street? - Forbes.com:

"With two pending trans-Atlantic stock exchange mergers, the world's largest futures exchange forming in Chicago and rumors of more consolidation in the markets to come, there is the sense that the multiple federal securities regulators, state regulators and self-regulated entities like the NYSE Group (nyse: NYX - news - people ) and NASD will have to come to some sort of consensus for dealing with the shifting landscape."

VC Deals More Company-Friendly - - CFO.com

VC Deals More Company-Friendly - - CFO.com:

"Venture capital backers are getting friendlier. In the past four years, the deal terms they've been handing start-up companies have shifted in favor of fledgling companies, says a new survey released by Dow Jones VentureOne's. Indeed, new deal terms offer improved liquidation preferences and decreased percentages of investor ownership, noted the study, which surveyed 350 executives.

The data provider attributes the shift to increased competition among VCs that are vying for the most promising entrepreneurs."

NYSE Group to cut more than 500 jobs - MarketWatch

I am fascinated at the way the NYSE-Archipelago merger is having concrete results in reducing costs. It will continue to interesteing to see how they mesh the electronic with the floor trading. Stay tuned.

NYSE Group to cut more than 500 jobs - MarketWatch:

"Since March 2005 -- when the NYSE, Archipelago Holding and Securities Industry Automation Corp. had 3,484 employees on a combined adjusted basis -- there has been a reduction of 35% of its total workforce or more than 950 employees, the NYSE said.

'We estimate that the headcount reduction will save NYSE roughly $60 milllion per year in costs and that the reduction in consultants will reduce professional fees by roughly $20 million year,' Prudential analysts said in a research report Wednesday."

Financial page: PBS Frontline: Can You Afford to Retire

Barry over at Financial Page points to an interesting article on the state of retirement planning in the US.

Financial page: PBS Frontline: Can You Afford to Retire

A quick look-in:

" Half of America's private sector workforce are not covered by any retirement savings plan; their retirement will be anchored only by Social Security and whatever they have managed to save on their own.

The other 50 percent have one of the two main employer-sponsored retirement savings strategies: a traditional lifetime pension or a 401(k)-style investment plan. Today, twice as many workers have 401(k)s than have lifetime pensions, a complete reversal from 25 years ago, according to David Wray of the Profit Sharing/401(k) Council of America."

Good coverage!

SSRN-A Comparison of Five Federal Reserve Chairmen: Was Greenspan the Best? by Ray Fair

SSRN-A Comparison of Five Federal Reserve Chairmen: Was Greenspan the Best? by Ray Fair:

"Abstract:
This paper examines the performance of the past five Federal Reserve chairmen using optimal control techniques and a macroeconometric model. Each chairman is judged by the actual performance of the economy under his term relative to what the performance would have been had he behaved optimally. Comparing chairmen only on the bases of actual performance of the economy is not appropriate because it does not control for different exogenous-variable values and shocks that the Fed has no control over. The results suggest that Greenspan was indeed the best, but followed closely by Martin. Volcker also does well, but probably not quite as well as Greenspan and Martin."