Morning Business Memo:
While most U.S. households struggled to keep pace with inflation last year, the guy in the corner office did just fine. Profits at big U.S. companies broke records in 2011, and so did pay for CEOs. The head of a typical public company made $9.6 million, up 6 percent from 2010, according to an Associated Press analysis. The increase is about twice the rate of inflation. Companies trimmed cash bonuses but handed out more in stock awards. Many shareholder activists say CEO pay is exorbitant.
Morgan Stanley, the lead investment bank in the Facebook IPO, might pay money to some retail investors who overpaid when they bought the stock. Published reports say the firm is reviewing orders from Morgan Stanley Smith Barney clients. Technical problems at the Nasdaq stock market caused delays and confusion about Facebook trading last week. There have also been many questions, even lawsuits, over tip-offs received by Wall Street insiders about negative reports on Facebook’s future profits and revenues.
Today’s financial must-read is by former FDIC Chair Sheila Bair in Fortune Magazine. She says breaking up JP Morgan Chase into a “manageable size” would be good for taxpayers and shareholders. “Chase’s recent serious missteps have provided reform advocates with loads of ammunition,” Bair writes. “Banks of the size and complexity of JP Morgan Chase, Citi and Bank of America are just too difficult to manage,” the former banking regulator says, even for “talented managers” like Jamie Dimon. “The leadership of these megabanks should take the lead in downsizing. The best way for Dimon to provide a better return to his investors is to recognize that his bank is worth more in smaller, easier-to-manage pieces.”
More banking pain in Europe. Spain’s market regulator suspended trading of shares in bailed-out lender Bankia. The board of the struggling lender is expected to decide how much more rescue money it needs from the government. Spanish banks were heavily exposed to real estate, and now hold substantial amounts of soured investments, such as defaulted mortgage loans or devalued property.
Broadcasters Fox, NBC and CBS are suing Dish Network over a service that offers commercial-free TV. Dish, the nation’s second-largest satellite TV provider, has filed a suit of its own seeking a judicial OK for its “AutoHop” ad-skipping technology. Dish says the unique service it launched this month doesn’t violate copyrights and that it is seeing a “groundswell of support from consumers.” The fight is over this question: whether TV distributors can cut out commercials, or whether consumers hold that power alone with their fingers on the remote.