Friday Oct 28 2022
Right on Time
Regulations are applied during bear markets. It has already started. A front page article in today's WSJ has the SEC applying a rule. The rule based in Dodd Frank will make public companies taek back executive p;ay if they (?) find significant (?) errors in financial statements, this during what the SEC says is during a time of rising shareholder discontent over pay practices.
This has precedent going back to the Clinton administration. In an effort to reign in exec pay, many times that of the worker on the factory floor, Treasury limited tax deductible pay to one million dollars. One could pay the exec more but it could not be deducted on the corporate tax return. The rule had the opposite result. The execs simply replied okay what you really want is a higher stock price. So pay us in call stock options and if the price goes up we all benefit. This kicked off the tremendous rise in stocks right into March 2000. And resulted in Enron and Worldcom cooking the books not to mention Apple backdating Steve Jobs options.
The rule imposition sets up lots of question unknown at this time. /what is significant? Does the SEC intend to audit all the firms or depend on external auditors, internal auditors, the PCAOB or the public? Is there a higher authority for appeal? And will companies just find other compensation formulas.
That said, the mood change is clear. SEC is lowering its many booms onexecutive pay.
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People apparently enjoy being frightened at the movies while they are experiencing fright over their stock market statements.
On page A 13 we learn that 1935's Mark of the Vampire and 1931's Dr. Jekyll and Mr. Hyde have been restored in 4K and will be available in blue ray. While not as well known as Frankenstein and Dracula they had notable directors who went on to other sucess and were money makers at the time.
This is an echo of the emergence of the modern horror movie in the 1930s, the Exorcist during the 16973-74 meltdown and a continuation of recent horror films like A Quiet Place and the remake of IT.
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