An auto industry publication today tells us that Cerberus CEO Stephen Feinberg has been making a lot of trips to Washington D.C. lately to lobby legislators against proposed increases in fuel economy standards.
We know that Cerberus is named after the 3-headed dog that guards the gates of hell, but that doesn’t mean they have to oppose efforts to stop global warming here on earth.
Mr. Feinberg should (a) make a commitment to protect the environment in the communities in which his firm does business, (b) replace that old Ford truck he boasts about with a newer fuel efficient car, and (c) buy some carbon offsets for all those trips to D.C.
Wednesday, June 27, 2007
Monday, June 25, 2007
Cerberus to buy a Bounty Hunter?
In articles published in both the San Francisco Chronicle and the Orange County Register last week, ACS’s role in property confiscation procedures in California was characterized as:
ACS’s take in this process is said to be 11% of whatever it seizes, and since 2003 the Texas company has made a cool $40 million. Of course, to be fair, they did donate more than $100,000 to California candidates between 2002 and 2003.
In Tulare County, California, however, officials have decided to stop doing business with ACS after 18 years because, are you ready for this, ending the outsourcing agreement will save them as estimated $2 million a year.
The County is working to place as many of the long-time ACS employees in the new department as possible. Wouldn’t it be great if Cerberus would be as open about its plans for ACS employees?
“..acting like bounty hunters that coerce banks and financial institutions into turning over assets that may or may not qualify as lost or abandoned for a percentage of the find.”
ACS’s take in this process is said to be 11% of whatever it seizes, and since 2003 the Texas company has made a cool $40 million. Of course, to be fair, they did donate more than $100,000 to California candidates between 2002 and 2003.
In Tulare County, California, however, officials have decided to stop doing business with ACS after 18 years because, are you ready for this, ending the outsourcing agreement will save them as estimated $2 million a year.
The County is working to place as many of the long-time ACS employees in the new department as possible. Wouldn’t it be great if Cerberus would be as open about its plans for ACS employees?
Tuesday, June 12, 2007
Queuing Up for Cash
It looks like several of the folks involved in the proposed buyout of ACS are already putting measures in place to ensure they get some green out of the process.
In response to shareholder questions about the value of the Cerberus bid, ACS announced last Friday that it was opening up the buyout process to competing bids. But don’t cry for Cerberus just yet, they get a consolation prize of $7.5 million and could see another $15 if the deal blows up entirely.
And don’t fret for Chairman Darwin Deason, either; if his personal share in a competing offer is higher than the one made by Cerberus he has to hand over 40% to them, but gets to keep the other 60% for himself.
And at the ACS annual meeting last Thursday, other ACS executives protected their own pay levels when the company’s management defeated a measure requiring non-binding shareholder approval of executive compensation. Vote margins have not been released. The defeat came after proxy advisors Glass Lewis & Co. and Institutional Shareholder Services (ISS) had recommended that shareholders pass the measure, the AP reported:
And, ACS is among the U.S.-based companies the American Federation of State County and Municipal Employees (AFSCME) chose to send its “say on pay” shareholder proposal in January. It seems that many on Capitol Hill agree. In April, the House passed a “say on pay” bill that would give shareholders a voice on executive compensation issues. The bill has strong advocates in the Senate.
Executive compensation issues are being discussed in the context of rising inequality, a trend that more Americans are feeling, more acutely, everyday. According to ISS counsel Patrick McGurn, passage of the “say on pay” bill by the House indicates that the issue of income inequality will be gaining traction among the American public, and will be a major campaign issue during the approaching national election cycle. When it comes to curbing out-of-control CEO pay, the public is looking to activist shareholders, who have been flexing their muscle to great effect of late.
So here is the multi-million dollar question in our minds: Given how the end of the exclusivity deal played out, can we be blamed for assuming that if ACS is taken behind the closed doors of Private Equity that ACS and PE execs will make sure they benefit richly while ACS employees are left wondering what will happen to them?
In response to shareholder questions about the value of the Cerberus bid, ACS announced last Friday that it was opening up the buyout process to competing bids. But don’t cry for Cerberus just yet, they get a consolation prize of $7.5 million and could see another $15 if the deal blows up entirely.
And don’t fret for Chairman Darwin Deason, either; if his personal share in a competing offer is higher than the one made by Cerberus he has to hand over 40% to them, but gets to keep the other 60% for himself.
And at the ACS annual meeting last Thursday, other ACS executives protected their own pay levels when the company’s management defeated a measure requiring non-binding shareholder approval of executive compensation. Vote margins have not been released. The defeat came after proxy advisors Glass Lewis & Co. and Institutional Shareholder Services (ISS) had recommended that shareholders pass the measure, the AP reported:
Both proxy advisory firms said it would be in shareholders' best interest to vote for an investor proposal that would require non-binding shareholder approval of executive compensation.Indeed, ACS CEO Lynn Blodgett recently earned a spot on The Corporate Library’s “pay for failure” list, which ranks CEOs according to a pay to performance ratio.
In an analysis, Glass Lewis found Affiliated Computer Services paid more compensation to its top officers than the median compensation for 43 similarly-sized companies.
And, ACS is among the U.S.-based companies the American Federation of State County and Municipal Employees (AFSCME) chose to send its “say on pay” shareholder proposal in January. It seems that many on Capitol Hill agree. In April, the House passed a “say on pay” bill that would give shareholders a voice on executive compensation issues. The bill has strong advocates in the Senate.
Executive compensation issues are being discussed in the context of rising inequality, a trend that more Americans are feeling, more acutely, everyday. According to ISS counsel Patrick McGurn, passage of the “say on pay” bill by the House indicates that the issue of income inequality will be gaining traction among the American public, and will be a major campaign issue during the approaching national election cycle. When it comes to curbing out-of-control CEO pay, the public is looking to activist shareholders, who have been flexing their muscle to great effect of late.
So here is the multi-million dollar question in our minds: Given how the end of the exclusivity deal played out, can we be blamed for assuming that if ACS is taken behind the closed doors of Private Equity that ACS and PE execs will make sure they benefit richly while ACS employees are left wondering what will happen to them?
Wednesday, June 6, 2007
Is ACS giving Cerberus the cold shoulder or just being coy?
Last week, TheStreet.com reported that the board has taken little action to negotiate with Cerberus and Chairman Darwin Deason since increasing their take-private offer to $62 a share last month.
One senses the animosity between the special committee and the Deason/Cerberus team has evolved into a standstill. The board has yet to open its financial books to Cerberus, "which would have signaled a willingness to cooperate rather than resist and remain a publicly traded company." Perhaps, the board is still shopping around for other bids - although one analyst claims that possibility is unlikely. Thus far, no competing bids have been made public.
Regardless, Credit Suisse analysts say the offer is still too low compared to other strategic deals, "particularly in light of what appears to be an improving fundamental outlook for ACS."
From the start, this deal has not been greeted with the enthusiasm Darwin Deason and Cerberus may have wished; and if shareholders side with Credit Suisse's take on it, they may not end up with the profits they hoped for either.
Cerberus may have some work to do to win the hearts and minds of the ACS special committee. Given the Cerberus connection to the Walter Reed scandal and problems with other government contracts (such as the IRS), it may be in ACS’s interest to just take a pass.
One senses the animosity between the special committee and the Deason/Cerberus team has evolved into a standstill. The board has yet to open its financial books to Cerberus, "which would have signaled a willingness to cooperate rather than resist and remain a publicly traded company." Perhaps, the board is still shopping around for other bids - although one analyst claims that possibility is unlikely. Thus far, no competing bids have been made public.
Regardless, Credit Suisse analysts say the offer is still too low compared to other strategic deals, "particularly in light of what appears to be an improving fundamental outlook for ACS."
From the start, this deal has not been greeted with the enthusiasm Darwin Deason and Cerberus may have wished; and if shareholders side with Credit Suisse's take on it, they may not end up with the profits they hoped for either.
Cerberus may have some work to do to win the hearts and minds of the ACS special committee. Given the Cerberus connection to the Walter Reed scandal and problems with other government contracts (such as the IRS), it may be in ACS’s interest to just take a pass.
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