Why a child might consider becoming a CEO-- Your Weekly Update

When LeBron James signed his contract to return to the Cleveland Cavaliers a few days ago, Jeremy’s nephew Dawson was crestfallen. After all, it meant a breakup of the Miami Heat, his favorite team. Dawson didn’t mention if he knew LeBron signed for a reported $23 million per year.

Maybe it’s because $23 million is chump change compared to the last year’s compensation of some of America’s CEO’s.

This week’s Update looks at CEO compensation. By any measure the amounts are huge. Thankfully, so are some of the contributions these men and women make to their company’s shareholders as well as to the public. There are exceptions, of course.

In a market economy, compensation is a matter between employers and employees, so it’s not for us to say whether CEO’s earn “too much.” But it does make interesting reading!

All the best,
Lee and Jeremy


This Week’s Quote:
“Do your job and demand your compensation - but in that order.”
― Cary Grant


JL Davis Thoughts This Week:

As died in the wool capitalists, we at J.L. Davis are strong advocates of free enterprise. Having many current and retired business owners as clients, as well as a large number of significant corporate executives (including CEO’s), physicians and professionals gives us a good feel for the often enormous contribution these people routinely make. So we have no problem when they get paid for it.

We also like to see those who provide the labor it takes to get things done receive their just deserts, too. After all, their contributions are no less important. So the recent gains in worker’s wages being reported have been very heartening to us.
Our annual review of CEO compensation, though, convinced us that corporate America is back in a big way—in terms of what boards of directors are willing to pay for executive talent. Here are the top 10 CEO earners for 2013:

• CHENIERE ENERGY INC: Charif Souki 2013 compensation = $141,949,280
• GAMCO INVESTORS INC: Mario J. Gabelli 2013 compensation =  $85,049,800
• ORACLE CORP: Lawrence J. Ellison 2013 compensation = $78,440,657
• SANDRIDGE ENERGY INC: Tom L. Ward 2013 compensation = $71,119,765
• NABORS INDUSTRIES LTD: Anthony G. Petrello 2013 compensation = $68,246,187
• CBS CORP: Leslie Moonves 2013 compensation = $66,932,581
• TRANSDIGM GROUP INC: W. Nicholas Howley 2013 compensation = $64,214,656
• ZYNGA INC: Don A. Mattrick 2013 compensation = $57,814,391
• FREEPORT-MCMORAN COP & GOLD: Richard C. Adkerson 2013 compensation = $55,260,539
• MCKESSON CORP: John H. Hammergren 2013 compensation = $51,744,999

That’s quite an impressive list. Interestingly, Forbes reports that CEO’s earned an average of an astounding 331 times the wages of “average” workers. That’s a fairly recent phenomenon. In the 1940’s for example, CEO’s earned about 30 times the wages of average workers.

Here’s hoping that the rising tide we are seeing in the U.S. and world economy continues to float the boats of all, executives and workers alike. It works best that way in our view.

http://www.aflcio.org/Corporate-Watch/Paywatch-2014/100-Highest-Paid-CEOs
http://money.cnn.com/gallery/news/companies/2014/04/13/top-paid-ceos/
http://www.forbes.com/sites/kathryndill/2014/04/15/report-ceos-earn-331-times-as-much-as-average-workers-774-times-as-much-as-minimum-wage-earners/


Market Week: July 14, 2014

The Markets

After Alcoa's strong report unofficially kicked off the Q2 earnings season, domestic equities rebounded from two down days. However, investors decided to take advantage of equities' recent record levels and take some profits after revelations about a banking problem in Portugal revived concerns about Europe's financial sector. Meanwhile, the spot price of oil, which had spiked to $107 two weeks ago, ended the week just over $100 a barrel.

Last Week's Headlines
• The Federal Reserve currently expects its bond purchases to end in October, according to minutes of the most recent Federal Open Market Committee meeting. However, the minutes also reiterated that the end of bond-buying won't automatically mean higher interest rates, at least not for a "considerable time." The Fed also will continue to reinvest the proceeds of maturing bonds it already holds until after it acts on rates.
• Talks aimed at trying to address U.S.-China differences over Chinese currency policies began. The United States contends that those policies have kept the yuan artificially low, giving Chinese companies an unfair pricing advantage. Meanwhile, Chinese exports were up 7.2% in June from a year earlier, according to China's General Administration of Customs.
• A major Portuguese lender's failure to make payments on some of its short-term debt raised concerns once again about the stability of European banks and the possibility of contagion. Banco Espirito Santo has been known to be struggling since December, but investor reaction to the disclosure caused several other European companies to postpone bond offerings.


Key Dates/Data Releases
7/15: Retail sales, Empire State manufacturing
7/16: Wholesale inflation, international capital flows, industrial production, Fed “beige book” report
7/17: Housing starts, Philadelphia Fed manufacturing
7/18: Leading economic indicators, options expiration


Eye on the Week Ahead
Q2 earnings reports from some major financial and tech companies, due next week, could influence investor thinking about whether Q1's discouraging GDP really has given way to renewed growth. Housing and inflation data also are likely to be closely watched.

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

Prepared by Lee Davis** and Broadridge Investor Communication Solutions, Inc. Copyright 2014