Tag Archives: RSBI:COMPENSATION

Trump executive Weisselberg prepares for jail on Rikers Island

NEW YORK, Jan 10 (Reuters) – A longtime executive for Donald Trump is expected to be sent to New York’s notorious Rikers Island jail after being sentenced on Tuesday for helping engineer a 15-year tax fraud scheme at the former president’s real estate company.

Allen Weisselberg, the Trump Organization’s former chief financial officer, pleaded guilty in August, admitting that from 2005 to 2017 he and other executives received bonuses and perks that saved the company and themselves money.

Weisselberg is expected to be sentenced to five months behind bars, after paying nearly $2 million in taxes, penalties and interest and testifying at the criminal trial of the Trump Organization, which was convicted on all counts it faced.

The sentence will be imposed by Justice Juan Merchan, who oversaw the trial in a New York state court in Manhattan. Weisselberg would likely serve 100 days with time off for good behavior.

Those days will probably not be easy for Weisselberg, 75, at a jail known for violence, drugs and corruption. Nineteen inmates there died last year.

“You’re going into a byzantine black hole,” said Craig Rothfeld, a prison consultant helping Weisselberg prepare for lockup.

50-YEAR RELATIONSHIP

Many convicts in New York City facing one year or less behind bars head to Rikers Island, which lies between the New York City boroughs of Queens and the Bronx and houses more than 5,900 inmates.

Rothfeld spent more than five weeks at Rikers in 2015 and 2016 as part of an 18-month sentence for defrauding investors and tax authorities when he was chief executive of the now-defunct WJB Capital Group Inc.

He now runs Inside Outside Ltd, which advises people facing incarceration. Another client is Harvey Weinstein, the former Hollywood movie producer convicted twice of rape.

After being sentenced, Weisselberg will likely be driven to Rikers and trade his street clothes for a uniform and sneakers with velcro straps.

Rothfeld said he hopes Weisselberg will be segregated from the general population, and not placed in a dorm with inmates who may not know him but will know his boss, who is seeking the presidency in 2024.

“Certainly Mr. Weisselberg’s 50-year relationship with the former president is on all our minds,” Rothfeld said.

A spokesman for the city’s Department of Correction said the agency’s mission is “to create a safe and supportive environment for everyone who enters our custody.”

Rikers is scheduled to close in 2027.

STAR WITNESS

Weisselberg was the star government witness against his employer.

He told jurors that Trump signed bonus and tuition checks, and other documents at the heart of prosecutors’ case, but was not in on the tax fraud scheme.

Though no longer CFO, Weisselberg remains on paid leave from the Trump Organization. He testified in November that he hoped to get a $500,000 bonus this month.

Weisselberg testified that the company is paying his lawyers. It is paying Rothfeld as well, a person familiar with the matter said. Rothfeld declined to comment.

Trump was not charged and has denied wrongdoing. The Manhattan District Attorney’s office is still investigating his business practices.

Merchan will also sentence the Trump Organization on Friday. Penalties are limited to $1.6 million.

Weisselberg remains a defendant in New York Attorney General Letitia James’ $250 million civil lawsuit alleging that Trump and his company inflated asset values and Trump’s net worth.

Rothfeld said he advised Weisselberg not to go outside at Rikers because of the risk of violence in courtyards, and not to interject himself into conversations between other inmates.

“The goal is to keep to yourself,” Rothfeld said.

Reporting by Karen Freifeld; Editing by Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Trump Organization found guilty of tax fraud scheme

NEW YORK, Dec 6 (Reuters) – Donald Trump’s real estate company was convicted on Tuesday of carrying out a 15-year-long criminal scheme to defraud tax authorities, adding to the legal woes facing the former U.S. president as he campaigns for the office again in 2024.

The Trump Organization – which operates hotels, golf courses, and other real estate around the world – was found guilty of paying personal expenses for top executives including former chief financial officer Allen Weisselberg, and issuing bonus checks to them as if they were independent contractors.

The company faces up to $1.6 million in fines after being convicted on all charges, including scheming to defraud tax authorities, conspiracy and falsifying business records. Trump was not charged in the case.

Justice Juan Merchan, who presided over the trial in state court in New York, set a sentencing date for Jan. 13.

While the fine is not expected to be material for a company of the Trump Organization’s size, the conviction could complicate its ability to do business.

Weisselberg, 75, testified as the government’s star witness as part of a plea deal that calls for a sentence of five months in jail.

Manhattan District Attorney Alvin Bragg, whose office prosecuted the case, called the verdict “very just.”

“The former president’s companies now stand convicted of crimes,” Bragg said in the New York courthouse after the verdict, speaking of the Trump Corporation and Trump Payroll Corporation, the two units of the Trump Organization which were convicted.

Asked if he regretted not charging Trump in the case, Bragg did not respond.

He has said that the office’s investigation into Trump is continuing.

APPEAL

Alan Futerfas, a lawyer for the Trump Organization, said the company would appeal and that the criminal law governing corporate liability was vague.

“It was central to the case,” he told reporters after the verdict.

The jury deliberated for about 12 hours over two days.

The case centered on charges that the company paid personal expenses like free rent and car leases for executives including Weisselberg without reporting the income, and gave them bonuses as non-employee compensation from other Trump entities like the Mar-a-lago Club, without deducting taxes.

According to testimony during the four-week trial, Trump himself signed the bonus checks annually, paid private school tuition for Weisselberg’s grandchildren, authorized the lease for his luxury Manhattan apartment and approved a salary deduction for another executive.

“The whole narrative that Donald Trump was blissfully ignorant is just not real, prosecutor Joshua Steinglass told jurors during his closing argument on Friday.

He said the “smorgasbord of benefits” was designed to keep top executives “happy and loyal.”

Republican Trump, who on Nov. 15 announced his third campaign for the presidency, said in a statement he was “disappointed” by the verdict but called the case a “Manhattan witch hunt.” Both Bragg and his predecessor who brought the charges, Cyrus Vance, are Democrats.

SEPARATE LAWSUIT

The Trump Organization separately faces a fraud lawsuit brought by New York state Attorney General Letitia James.

Trump himself is being investigated by the U.S. Department of Justice over his handling of sensitive government documents after he left office in January 2021 and attempts to overturn the November 2020 election, which he lost to Democrat Joe Biden.

Lawyers for the Trump Organization argued that Weisselberg carried out the scheme to benefit himself, not the company. They tried to paint him as a rogue employee. Weisselberg is currently on paid leave and testified that he hopes to get another $500,000 bonus in January

Trump wrote on his Truth Social platform on Nov. 19. that his family got “no economic gain from the acts done by the executive.”

Weisselberg, who pleaded guilty in August to concealing $1.76 million in income from tax authorities, testified that although Trump signed checks involved, he did not conspire with him.

He said that the company saved money by paying for his rent, utilities, Mercedes-Benz car leases for him and his wife and other personal expenses rather than raising his salary, because a wage hike would have had to account for taxes.

He said Trump’s two sons – who took over the company’s operations in 2017 – gave him a raise after they knew about his tax dodge scheme.

By then, Trump was president, and the company was preparing for greater scrutiny.

“We were going through an entire cleanup process of the company to make sure that since Mr. Trump is now president everything was being done properly,” Weisselberg testified.

Reporting by Luc Cohen and Karen Freifeld in New York; additional reporting by Andrew Hofstetter in New York; Editing by Noeleen Walder and Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

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Elon Musk trial opens to decide fate of his $56 billion Tesla pay

WILMINGTON, Del, Nov 14 (Reuters) – A trial opened Monday over shareholder allegations that Tesla Inc Chief Executive Elon Musk’s $56 billion pay package was rigged with easy performance targets and that investors were duped into approving it, with Musk slated to take the stand later this week.

A Tesla (TSLA.O) shareholder hopes to prove during the five-day trial that Musk used his dominance over the electric vehicle maker’s board to dictate terms of the 2018 package, which did not even require him to work at Tesla full-time.

Musk, the world’s richest person, will testify Wednesday, Greg Varallo, an attorney for shareholder Richard Tornetta, told a court in Wilmington, Delaware, on Monday.

The trial began with Ira Ehrenpreis, a Tesla board member since 2007, taking the stand to describe the early years of the company and Musk’s role.

“I was very impressed with his vision for this endeavor,” said Ehrenpreis.

Tornetta has asked the court to rescind the pay package, which is six times larger than the top 200 CEO salaries combined in 2021, according to Amit Batish of research firm Equilar.

Musk and Tesla’s directors, who are also defendants, have denied the allegations. They argued the pay package did what it aimed to do — ensure that the entrepreneur successfully guided Tesla through a critical period, which helped drive the stock tenfold higher.

The case will be decided by Chancellor Kathaleen McCormick of Delaware’s Court of Chancery. She oversaw the legal dispute between Twitter Inc (TWTR.MX) and Musk that ended with his purchase of the social media platform for $44 billion last month.

The Tesla shareholder lawsuit argues that the pay package should have required Musk to work full-time at Tesla. The company’s shareholders have become concerned that Musk is distracted by Twitter, which he has warned might not survive an economic downturn.

Musk told a business conference on the sidelines of the G20 summit in Bali, Indonesia, on Monday that he had too much on his plate at the moment.

Legal experts said Musk is in a better legal position in the pay case than he was in Twitter’s lawsuit, which prevented him from walking away from the takeover.

Boards have wide latitude to set executive compensation, according to legal experts.

However, directors must meet more stringent legal tests if the pay package involves a controlling shareholder, and part of this trial is likely to focus on whether that description fits Musk. While he owned only 21.9% of Tesla in 2018, plaintiffs are likely to cite what is seen as his domineering personality and ties to directors.

In all, 19 witnesses are scheduled to testify, including directors and executives from 2018, compensation experts, and advisors who helped craft the pay package.

The disputed package allows Musk to buy 1% of Tesla’s stock at a deep discount each time escalating performance and financial targets are met. Otherwise, Musk gets nothing.

Tesla has hit 11 of the 12 targets as its value ballooned briefly to more than $1 trillion from $50 billion, according to court papers.

A decision will likely take around three months after the trial and could be appealed to the Delaware Supreme Court.

Reporting by Tom Hals in Wilmington, Delaware; Editing by David Gregorio and Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

Tom Hals

Thomson Reuters

Award-winning reporter with more than two decades of experience in international news, focusing on high-stakes legal battles over everything from government policy to corporate dealmaking.

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As Musk focuses on Twitter, his $56 billion Tesla pay goes to trial

WILMINGTON, Del., Nov 7 (Reuters) – As Elon Musk is engulfed in his overhaul of Twitter, the entrepreneur is headed to trial to defend his record $56 billion Tesla Inc pay package against claims it unjustly enriches him without requiring his full-time presence at the carmaker.

A Tesla (TSLA.O) shareholder is seeking to rescind Musk’s 2018 pay deal, claiming the board set easy performance targets and that Musk created the package to fund his dream of colonizing Mars.

Tesla has countered that the package delivered an extraordinary 10-fold increase in value to shareholders.

The trial begins Nov. 14 and will be decided by Kathaleen McCormick on Delaware’s Court of Chancery. She oversaw Twitter’s lawsuit against Musk that ended last month when he agreed to close his $44-billion deal for Twitter, an acquisition which he financed largely with his Tesla stock.

“If Musk loses this pay package in some massive way, I think we can expect to see a lot of things that are going to be really hard to predict, like what happens going forward in terms of how Tesla is run and how Twitter is paid for,” said Ann Lipton, a professor at Tulane Law School.

However, Lipton and other legal experts said the lawsuit by Tesla shareholder Richard Tornetta is going to be much more difficult than Twitter’s case against Musk.

Musk founded and is CEO of SpaceX, one of the world’s most valuable private companies, and founded or co-founded Neuralink, which makes brain implants, tunneling venture The Boring Co, and OpenAI, an artificial intelligence research lab. Last week, he appointed himself Twitter CEO.

‘PART-TIME CEO’

Tornetta’s lawyers argue the 2018 package failed its stated purpose of focusing Musk on Tesla. They portray Musk as a “part-time CEO,” citing his testimony that in 2018 he worked Tuesday, Wednesday and Friday at the electric carmaker and Monday and Thursday at rocket company SpaceX, according to his deposition.

According to the lawsuit, Tesla’s board chair Robyn Denholm said the “minimal time” Musk was at Tesla was “becoming more and more problematic” in a 2018 email to Gabrielle Toledano, who at the time was the Tesla Chief People Officer.

The company has argued the package was not about requiring Musk to punch a clock and be on site specific hours each week, but to hit “audacious” targets, enriching Musk but also shareholders like Tornetta.

The disputed pay package allows Musk to buy 1% of Tesla’s stock at a deep discount each time escalating performance and financial targets are met; otherwise Musk gets nothing. Tesla has hit 11 of the 12 targets as its value ballooned to $650 billion from $50 billion on the back of ramped up Model 3 production, according to court papers.

Musk’s vested grants are worth around $50 billion, according to Amit Batish at Equilar, an executive pay research firm. The grants contribute to his $200-billion fortune, the world’s largest.

Musk’s package of stock grants is larger than the combined pay of the 200 highest-paid CEOs last year – six times over, according to Batish.

The trial is likely to focus on Tornetta’s claims the package was developed and approved by directors beholden to Musk and promoted to shareholders without revealing the first tranches were probable of being met based on internal projections.

BOARD CONTROL

Tornetta’s filings are full of examples of a board controlled by Musk.

For example, Antonio Gracias, described by the plaintiff as a close friend of Musk and who was lead independent director from 2010-19, testified in his 2021 deposition that Musk could sell Tesla if he wanted and the board could not stop him.

“Who worked for who? Does Elon Musk work for the board or does the board work for Elon Musk,” said Minor Myers, a professor at UConn School of Law.

Myers said if the pay package is rescinded, the board could simply create a new one and do so with McCormick’s ruling to guide them.

But circumstances have changed, complicating the process.

“He now owns Twitter. How do they want to factor that in?” said Myers, who added that it will be a challenge to determine how to keep Musk from being distracted by other ventures.

“How much money do they need to put in front of this guy to get his attention,” he said.

Reporting by Tom Hals in Wilmington, Delaware; additional reporting by Hyun Joo Jin in San Francisco
Editing by Noeleen Walder and Nick Zieminski

Our Standards: The Thomson Reuters Trust Principles.

Tom Hals

Thomson Reuters

Award-winning reporter with more than two decades of experience in international news, focusing on high-stakes legal battles over everything from government policy to corporate dealmaking.

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Berkshire shareholders vote to keep Buffett as chairman, reject climate disclosures

OMAHA, Neb., April 30 (Reuters) – Berkshire Hathaway Inc (BRKa.N) shareholders on Saturday rejected proposals to have an independent chair replace Warren Buffett, and require his company to disclose more about its climate-related risks and efforts to improve diversity.

Shareholders supported letting Buffett keep both the chairman and chief executive roles by a nearly 6-to-1 margin, Berkshire said at its annual meeting in Omaha, Nebraska.

Buffett, 91, has run Berkshire since 1965.

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The National Legal and Policy Center, a Berkshire shareholder, had said it was poor corporate governance for the legendary investor to retain both roles.

Its proposal gained greater attention when Calpers, which invested $460 billion on April 28 and is the largest U.S. public pension fund, expressed support, as it has at other companies.

Berkshire’s board, however, said Buffett should keep both roles. Buffett’s oldest son Howard Buffett, a Berkshire director, is expected to become non-executive chairman when his father is no longer in charge.

By approximately 3-to-1 margins, shareholders also rejected proposals to have the company disclose more about the climate-related risks, greenhouse gas emissions and diversity efforts in its dozens of businesses.

Berkshire’s board also opposed those proposals, saying its operating businesses already disclosed or appropriately managed environmental risks, and were committed to diversity, equity and inclusion.

The proposals faced long odds to pass, given Buffett’s control of 32% of Berkshire’s voting power. He owns approximately 16% of Berkshire’s stock.

Berkshire’s slate of 15 people to serve as directors won shareholder approval by an overwhelming margin.

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Reporting by Carolina Mandl and Jonathan Stempel in Omaha, Nebraska
Editing by Nick Zieminski

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Intel CEO earned 1,711 times more than average company worker in 2021

March 30 (Reuters) – Intel Corp (INTC.O) Chief Executive Officer Pat Gelsinger earned 1,711 times as much as the average worker at the U.S. chipmaker in just 11 months since he joined in February last year, a regulatory filing showed on Wednesday.

Compared to Gelsinger, former CEO Bob Swan had earned 217 times more than the average Intel employee in 2020.

Gelsinger earned $178.6 million in 2021 with stock awards making up nearly 79% of his total compensation, which was about 698% higher than Swan’s 2020 pay.

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Executive pay has been rising in the United States. Apple Inc (AAPL.O) CEO Tim Cook earned 1,447 times the average employee’s salary at the tech giant in 2021. Shareholders of Apple approved the pay package despite proxy advisory firm Institutional Shareholder Services pushing against it.

Intel has asked shareholders to vote in favor of its executives’ compensation at the annual stockholder’s meeting on May 12. It did not immediately respond to a Reuters request for comment.

After Gelsinger took the reins at Intel, once a world leader in chip-making technology, he unveiled a turnaround strategy for the company to regain its dominance in the semiconductor industry, currently led by Taiwan’s Taiwan Semiconductor Manufacturing Co (2330.TW).

Intel’s shares rose 6.8% last year after declining about 17% the year before as the company faced a manufacturing crisis and struggled with competition. The shares were up 0.3% at $52.41 on Wednesday.

Earlier this month, Intel laid out the first details of a $88 billion investment plan spanning across six European Union countries including a massive investment in Germany. read more

Gelsinger was CEO of VMWare Inc (VMW.N) before he returned to Intel as its top boss. He had spent 30 years at Intel before leaving.

His compensation included one-time new-hire equity awards with a target value of about $110 million, according to the filing.

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Reporting by Chavi Mehta in Bengaluru; Editing by Shinjini Ganguli

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Deutsche Bank to wind down in Russia, reversing course after backlash

  • Deutsche CEO had said exit ‘would go against our values’
  • Investors criticised Deutsche’s Russia presence
  • CEO’s 2021 pay up 20%

FRANKFURT, March 11 (Reuters) – Deutsche Bank (DBKGn.DE), which faced stinging criticism from some investors and politicians for its ongoing ties to Russia, said on Friday in a surprise move that it would wind down its business in the country.

Deutsche joins the ranks of Goldman Sachs (GS.N) and JPMorgan Chase (JPM.N), which were the first major U.S. banks to exit after Moscow’s invasion of Ukraine. Those moves put pressure on rivals to follow. read more .

Deutsche had resisted pressure to sever ties, arguing that it needed to support multinational firms doing business in Russia.

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But on Friday evening in Frankfurt, the bank suddenly reversed course.

“We are in the process of winding down our remaining business in Russia while we help our non-Russian multinational clients in reducing their operations,” the bank said.

“There won’t be any new business in Russia,” Deutsche said.

A day earlier, Deutsche Bank’s Chief Executive Christian Sewing explained to staff why the bank was not withdrawing.

“The answer is that this would go against our values,” he wrote. “We have clients who cannot exit Russia overnight.”

Bill Browder, an investor who has spent years campaigning to expose corruption in Russia, said that Deutsche Bank staying was “completely at odds with the international business community and will create backlash, lost reputation and business in the West.”

“I would be surprised if they are able to maintain this position as the situation in Ukraine continues to deteriorate,” Browder told Reuters earlier on Friday.

The criticism came as Russian forces bearing down on Kyiv were regrouping northwest of the Ukrainian capital and Britain said that Moscow could now be planning an assault on the city within days. read more

Fabio De Masi, a former member of the Bundestag and a prominent campaigner against financial crime, said that Deutsche Bank had close ties to the Russian elite, many of whom faced sanctions and that the relationship, where it involved criminal Russian activity, had to end.

‘MONITORING’

Deutsche Bank has said that it has pared down its Russian footprint in recent years. This week it disclosed 2.9 billion euros in credit risk to the country, and said exposure is “very limited”. read more

It also operates a technology centre with about 1,500 employees in Russia and opened a new main office in Moscow in December, which it said at the time represented “a significant investment and commitment to the Russian market”.

Russia has landed Deutsche Bank in hot water in the past.

The U.S. Department of Justice has been investigating it for years over trades that authorities said were used to launder $10 billion out of Russia, which has led to the German bank being fined nearly $700 million.

Deutsche Bank said on Friday that the DOJ probe “is understood to be ongoing”.

The row over Russia came as Deutsche Bank disclosed in its annual report that it paid Sewing 8.8 million euros ($9.68 million) in 2021, a 20% increase from a year earlier.

Overall, the lender paid 14% more, or 2.1 billion euros, in bonuses for 2021, rewarding staff for the bank’s most profitable year in a decade.

($1 = 0.9088 euros)

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Reporting by Tom Sims, John O’Donnell and Frank Siebelt; additional reporting by Carolyn Cohn; editing by Miranda Murray, Jason Neely, Alexander Smith and Chizu Nomiyama

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Former Ghosn deputy set for U.S. return after suspended sentence

Greg Kelly, former executive of Nissan Motor Co., walks in to the Tokyo District Court, in Tokyo, Japan, March 3, 2022. Zhang Xiaoyu/Pool via REUTERS

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TOKYO, March 3 (Reuters) – A Tokyo court on Thursday handed former Nissan Motor executive Greg Kelly a six-month suspended sentence for helping Carlos Ghosn hide pay from regulators, paving the way for the American lawyer to return home after more than three years in Japan.

“The court finds the existence of unpaid remuneration” and the failure to disclose amounted to “false” reporting, the chief judge Kenji Shimotsu said, telling Kelly he was responsible for one of the eight years included in the charges.

“I was shocked by the judgment,” Kelly said in a statement after the ruling. “The court found me mostly innocent, but I do not understand why it said I was guilty for one of the years,” he added.

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His lawyers said they will appeal the conviction, which Kelly should be able to do from the United States.

In a pointed criticism of the prosecutors, the ruling also pinned blame for Ghosn’s alleged failure to disclose $80 million of income over eight years on Toshiaki Ohnuma, a Nissan official overseeing compensation, who was given legal immunity in return for testimony implicating Kelly.

“Ohnuma’s statement is fraught with danger that he was making statements that conformed to the prosecutors’ wishes,” Shimotsu said. “There was a danger as an accomplice that he would seek to shift responsibility to Ghosn,” he added.

The court also fined Nissan , which pleaded guilty at the start of the trial 18 months ago, 200 million yen ($1.73 million) for its part in the financial wrongdoing and took aim at corporate governance failings.

“The dysfunctional governance of the company allowed Ghosn to act in his own self interest. The severe damage to the company’s social reputation can only be described as it suffering the consequences,” Shimotsu said, describing Ghosn’s tenure there as a “dictatorship”.

DRAWS A LINE

The verdict more than three years after Kelly’s arrest alongside Ghosn draws a line under a case that threatened to strain relations between Japan and the United States, its closet ally. Some Western observers criticised the Japanese justice system for its treatment of Kelly.

Suspects in Japan are not allowed to have a lawyer present during interrogations and can be detained for up to three weeks without charge and often in solitary confinement. And 99% of cases that go to trial end with a conviction.

“While this has been a long three years for the Kelly family, this chapter has come to an end. He and Dee (his wife) can begin their next chapter in Tennessee,” U.S. ambassador in Japan Rahm Emanuel said in a statement.

Kelly testified that his only intent was to give Ghosn, who was also the chief executive at Renault, a compensation package that would dissuade him from defecting to a rival automaker.

Bill Hagerty, a U.S. Senator from Kelly’s home state Tennessee, said he planned to welcome his constituent at the airport.

“Greg has been subjected to circumstances corporate America could never contemplate,” Hagerty said. “Greg is innocent of the charges levied against him,” he added.

The court ruling, however, does not mean an end to legal troubles faced by the former head of Nissan and alliance partner Renault SA (RENA.PA), but it may be the closest the Tokyo court gets to ruling on Ghosn’s culpability.

Ghosn is beyond the reach of Japanese prosecutors after fleeing to Lebanon in 2019 hidden in a box on a private jet. He is unable to leave without risking arrest.

In addition to the charge of hiding his earnings, Ghosn is also accused of enriching himself at his employer’s expense through $5 million of payments to a Middle East car dealership, and for temporarily transferring personal investment losses to his former employer’s books.

Ghosn has denied all the accusations against him.

($1 = 115.5900 yen)

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Reporting by Tim Kelly and Satoshi Sugiyama; Editing by Grant McCool, Michael Perry and Emelia Sithole-Matarise

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