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How much is good advice worth? At least one St. Louis company paid a director more than $1 million, most of it in stock that has since declined in value.

Other directors collected hundreds of thousands by serving on multiple boards.

For fiscal 2007, David M. Meyer, who serves as non-executive chairman of CPI Corp., got compensation worth $1.4 million from the company, which operates Sears Portrait Studios and other photography businesses. At CPI, he outearned many directors who serve on two or more boards. Meyer also drew $143,679 in pay as a director of Ashworth Inc., a California clothing maker.

Meyer is a co-founder of Knightspoint Partners LLC, a New York-based investment company that led a shareholder ouster of CPI directors in 2004. He served as the company’s interim chief executive until 2005.

Meyer’s pay includes $16,500 in cash and $7,810 in miscellaneous pay in addition to 28,253 shares of restricted stock valued at $1.4 million in the proxy statement. Meyer got a little over half of the shares for his help with an acquisition last year and the rest for unspecified services he provided to the company in 2006.

Meyer’s case illustrates one of the problems with the way companies are reporting pay for directors. They’re required to report the accounting expense of the compensation, not what directors actually received.

Until the restrictions on the shares expire, they’re carried on the company’s ledgers. When the value of the stock declines, its value on the books must be written down.

The stock Meyer received was valued at an average of $48.56 a share in the proxy, but CPI’s stock has fallen recently in value, hitting a low of $12.39 Aug. 21 and trading recently for less than $13 a share.

If the company marks the value of the shares down, it could mean that CPI will report Meyer’s pay as a negative number next year.

That’s exactly what happened at Brown Group.

The company, which had the highest paid director a year ago, this year reported that most of its directors lost money on their service to the company. Big gains in stock values that had been reported on last year’s proxy were reversed when the value of Brown Shoe stock fell from a high of $37.39 in February 2007 to $11.91 on Jan. 8.

Directors who deferred their pay saw the biggest declines. Brown defers pay into "stock units," which correspond in value to the company’s common stock. They’re paid out in cash when a director leaves the board.

Patricia McGinnis, who deferred all of her cash pay, was the area’s highest-earning director for 2006 at $754,358. Brown reported her 2007 pay as a negative $639,858. The company valued her stock-based pay at $699,858 for 2006 but as a negative $699,858 for 2007.

Brown Shoe said McGinnis’ negative stock award reflects a paper loss on deferred compensation from earlier years through 2006. For 2006, the number was positive, reflecting a gain in value through the end of 2006. For 2007, the company marked the value down because of the lower stock price, but it could not reduce the award by more than the amount it increased in 2006 fiscal year. Brown declined to provide further details.

According to Brown’s proxy, the figure the company reported doesn’t reflect the market value of the underlying stock or what McGinnis would receive if she left the board. That would depend on the number of stock units she had accumulated and the stock prices when she leaves.

Peter Lupo, managing director of Pearl Meyer & Partners, a New York-based compensation consulting firm, agrees that the way directors’ stock-based pay is reported can be confusing. If a company provides information about the amount of stock given and its vesting schedule, you can calculate the "consulting value" of the stock. However, assigning a value could be arbitrary if the company doesn’t tell you when the director got it.

This year’s second-highest paid director was Patrick T. Stokes, the former chief executive of Anheuser-Busch Cos. Stokes serves on the boards at A-B, Ameren Corp. and U.S. Bancorp. Altogether, Stokes took in $1.3 million, including $1.07 million from the two companies based here.

Stokes’ biggest paycheck, $927,018, came from his former employer, where he has a post-retirement consulting gig that paid $750,000 last year. A-B provides Stokes with an office and administrative help as well as transportation when he is providing the consulting service. It spent $390,000 on the office and other expenses for Stokes’ consulting arrangement last year.

Stokes’ consulting was due to end next August, but it will come to an early end as a result of Belgian giant InBev’s agreement to buy A-B pay day loans. The deal is expected to close later this year.

August A. Busch III, also a former A-B chief executive, took home more than $1.1 million in pay for serving as a director of A-B and Emerson here and at AT&T of San Antonio.

Busch III’s $579,649 in pay from the brewery includes $392,168 for personal security and $16,992 in consulting fees. According to company documents, the company provides security at Busch’s home "in recognition of Mr. Busch III’s continued prominence resulting from his years of service to the company."

A-B also provides Busch with an office, administrative help and transportation when he consults for the company. It also pays some bills related to aircraft owned by Busch or companies in which he has an interest. Busch’s consulting and other post-retirement arrangements cost the brewer $635,000 over and above his director pay.

A-B paid another $407,611 to Ginnaire Rental Inc., a company that Busch owns, to lease aircraft for business use.

William P. Stiritz was the next-highest paid director at $818,233, including $610,622 from three St. Louis area companies. Stiritz, the former chief executive of Ralston-Purina Co., once served on more than 10 boards.

Stiritz, 74, has cut his board commitments in half. He now serves at Ralcorp Holdings Inc., Energizer Holdings Inc., Reliance Bancshares Inc., Macy’s and Vail Resorts Inc. Ralcorp and Energizer both were spun off from Ralston under Stiritz’s guidance. Ralcorp owns about 19 percent of Vail Resorts.

Public companies here spent amounts ranging from $93,500 to nearly $4 million on director pay last year.

Anheuser-Busch topped the list, spending $3.96 million on 15 directors, followed by Express Scripts Inc., which spent $2.66 million for 11 directors. Twenty-one boards spent more than $1 million.

Companies pay directors in cash, stock awards, stock options and miscellaneous pay, which can include travel for spouses, consulting fees and things like insurance or home security.

About 46 percent of the $46.6 million St. Louis companies paid directors here last year was cash — a combination of retainers, fees for attending meetings and extra pay for serving as committee chairmen. The pay total is for 339 outside directors occupying 363 board positions; some directors serve on multiple boards.

Another $16 million or 33 percent of pay was stock, and $7.5 million or 16 percent was in stock options. The amounts listed in these categories represented the company’s cost for the stock-based pay, not necessarily what directors will realize if they sell the stock or exercise the options.

Because this is the first year all St. Louis-based companies were required to disclose director pay, it’s almost impossible to determine whether director pay is increasing overall. Eleven companies increased the retainers they pay to directors. RehabCare Group and First Banks Inc., which were among a handful not paying director salaries in prior years, added them this year.

Some companies require directors to take all of their pay in stock or units that rise and fall in value along with the company’s stock. Others encourage it by giving directors a bonus for selecting stock rather than cash pay. Still others divide directors’ pay between stock and cash.

Corporate governance experts say that requiring directors to hold stock aligns their interests with those of other shareholders.

Arch Coal, for example, requires directors to defer $40,000 of their $120,000 retainer into a hypothetical investment in Arch stock, which is paid in cash when a director leaves the board.

Belden Inc. pays a $60,000 cash retainer and also gives directors restricted stock worth $115,000. Similarly, Charter Communications Inc. pays directors $40,000 in cash and gives them restricted stock worth $65,000.

At Emerson, $100,000 of each director’s $150,000 retainer is paid in restricted stock.

Express Scripts gives directors $115,000 in stock at the first meeting and a $200,000 grant every year in addition to a $30,000 cash retainer.

Bill Coleman, chief compensation officer for Salary.com, says he thinks it’s good for directors to hold stock because it aligns their interests with shareholders. However, he thinks directors’ pay should be kept pretty simple, with few benefits, because they should be paid for their knowledge and what they can contribute to the company.

jerristroud@post-dispatch.com | 314-340-8384

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Will the tightening of the global credit markets throw InBev’s takeover of Anheuser-Busch Cos. off track? Not if you ask the Belgian brewer. But the mood on Wall Street is a little less certain.

In the wake of meltdowns at Bear Stearns and Lehman Bros., there may be traces of skepticism floating around one of the biggest buyouts in history.

Shares of Anheuser-Busch Cos. dropped nearly 3 percent to $66.20 on Monday in the midst of a market-wide slide, and closed at $66.05 Tuesday.

Anheuser-Busch’s stock has never risen above $68.43, even after Anheuser-Busch’s board agreed to the $70 per share. Is that an indication that investors are not quite sure that InBev will be able to secure credit and complete its $70-per-share, $52 billion buyout?
InBev said it is still on track to close the transaction by the end of the year. But Edward Jones analyst Jack Russo lowered his rating on Anheuser-Busch’s stock from ‘hold’ to ’sell’ on Tuesday, citing risks to InBev’s financing package.

"While we still see it as probable that the deal closes as planned at $70 in an all-cash offer, fragile credit markets increase the risk that financing falls through, gets delayed, or gets restructured," he wrote in a research note. He said the risk/reward ratio for owner Anheuser-Busch stock is poor, since there is "substantial downside" if the transaction does not go through.

Morningstar analyst Ann Gilpin likewise urged caution.

"Given the recent deterioration in the credit markets and general uncertainty in financial institutions worldwide, we feel it is prudent to raise our uncertainty rating for Anheuser-Busch," she wrote in a note to clients payday loans. "While we think the deal will likely go through, the state of the credit markets adds some uncertainty around our ($70) fair value estimate, which is based on the transaction price agreed to with InBev."

InBev said it has "fully committed financing" in place, with signed credit facilities from a group of leading financial institutions. It has already completed the primary syndication phase of lining up financing, spokeswoman Marianne Amssoms said in an e-mail.

The aligned banks represent "a very diversified group of strong banks, giving InBev access to all significant capital markets," she said.

jmcwilliams@post-dispatch.com | 314-340-8372

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The future of Wall Street is up for grabs — and changing by the minute.

In the course of a few hours Sunday, Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz), the fourth-largest investment bank hobbled by toxic real estate assets, was left for dead and may file for bankruptcy before Monday.

Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz), the No. 3 investment bank and weakest remaining firm after $40 billion of write downs, rushed into the arms of Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) for $29 a share — less than half its 52-week high but almost $12 higher than its closing price Friday.

These moves, coming after the U.S. government’s takeover of Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and six months after the meltdown of Bear Stearns and its shotgun marriage to JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), renew questions of what Wall Street will look like in an environment of lower leverage and reduce appetite for risk.

Now there are questions whether any of the independent firms will still be around pay day loans. Certainly, for those that survive the current 100-year storm, Wall Street will look a lot different.

“It seems perfectly clear leverage is going down, that banks will be more careful who they do business with, and that there is a desire to be more of an agent than a principal,” said Donald Marron, head of private equity firm Lightyear Capital and former CEO of PaineWebber Group.

“There will be a trend toward specialization. It’s hard to be in too many different places. Firms will concentrate on their strengths.”

After more than 13 months of a global credit crunch, the rules of the marketplace have changed. 

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Bank of America says it will buy back about $4.5 billion of auction-rate securities as part of a settlement agreement with Massachusetts regulators.

The Charlotte, N.C.-based bank says it continues to cooperate fully with ongoing investigations by the Securities and Exchange Commission and the New York Attorney General’s Office.

Bank of America (BAC, Fortune 500) joins eight other big investment banks that have agreed to buy back a total of more than $50 billion of the securities.

The auction-rate securities market involved investors buying and selling instruments that resembled corporate debt, except the interest rates were reset at regular auctions, some as frequently as once a week payday advance. The market for the securities collapsed in February. 

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General Electric Co. said Friday it has been informed that the Securities and Exchange Commission may recommend fines and other action for possible violations of securities law related to accounting changes the company made.

GE said in a regulatory filing that the notification, called a "Wells notice," is related to issues dating to several years ago concerning GE’s accounting for certain derivatives used for hedging interest rate risk and other transactions.

GE said it disagrees with a recommendation for civil action and is cooperating with the SEC.

The conglomerate says the change was made in its accounting for profits in 2002 on some aftermarket spare parts, primarily in its aviation business, as well as on transactions in 2003 and earlier involving financial intermediaries in its rail business and other GE units.

The impact of the changes was to reduce net earnings by about $300 million from 2001 through Dec online payday loan. 31, 2007, GE said.

Net earnings for GE, which makes locomotives, water treatment plants and owns NBC-Universal, totaled $22.2 billion last year.

GE (GE, Fortune 500) said it has established "remedial actions and internal control enhancements" that have been reviewed or discussed with its accounting firm, which audited all GE financial statements in the period under review.

GE, based in Fairfield, disclosed in 2005 that in a regular audit review, it concluded it improperly accounted for financial instruments used to protect the company’s financial services businesses from changes in interest rates and currency exchange rates.

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Stocks plummeted Thursday, with the Dow plunging around 345 points as mixed retail sales, lower oil prices and dour labor market readings amplified worries about a global economic slowdown.

The concerns overshadowed a better-than-expected sales report from Wal-Mart Stores and surprisingly strong readings on productivity and the services sector.

The Dow Jones industrial average (INDU) lost 345 points, or 3%. It was the fourth-biggest one-day decline on a point basis this year and the third-worst day on a percentage basis.

It was the 51st session in 2008 in which the Dow posted triple-digit losses, according to Dow Jones. That’s the worst record for the blue-chip barometer since 2002, when the Dow declined at least 100 points 67 times during the year.

The big daily swings this year reflect the markets’ volatility amid the uncertainty concerning the economy and financial sector.

The broader Standard & Poor’s 500 (SPX) index fell 3.2% and the Nasdaq composite (COMP) lost 3%.

Small caps got pummeled too, with the Russell 2000 (RUT) index plunging 3%.

Friday’s focus will be the August employment report from the government. But economists don’t expect a job market turnaround anytime soon. (Full story).

Investors have come back from Labor Day and the summer to find that few of the negatives have changed, said Gus Scacco, managing director at AG Asset Management.

"The market is looking out and trying to discount six months from now, but all the same issues are still there," he said. "And now there’s more of a realization that global growth has slowed. That’s become a front-burner issue."

Stocks were mixed Wednesday as falling oil prices, a sluggish economic reading from the Federal Reserve and weak sales reports from many automakers added to recession fears. Such concerns were magnified Thursday by the retail sales reports and economic news.

"I think the economy is really weak and this bear market is a correct reflection of that," said Len Blum, managing director at Westwood Capital.

He said that whether it meets the technical definition of a recession or not, the current environment feels like a recession and it’s being led by the consumer.

"Consumers are getting hit on a lot of fronts," he said. "They’re getting crushed at the grocery store and the gas pump, they can’t borrow and the labor market is weak."

A lot of those realities were reflected in the day’s news.

Adding to the gloom and doom in the afternoon: comments from two Fed officials that reiterated the central bank’s dour forecast. Dallas Fed president Richard Fisher discussed anemic growth. San Francisco Fed president Janet Yellen said that the credit crunch is severe and deepening and that the housing market has not bottomed yet.

Additionally, bond manager Bill Gross stated in a commentary on the PIMCO Web site that the Treasury needs to step up its efforts to help Fannie Mae and Freddie Mac and to rescue the housing industry.

Wal-Mart: The world’s leading retailer reported stronger-than-expected August sales at its stores open a year or more, a metric known as same-store sales. Sales rose 3% versus forecasts for a rise of 1.6% and included the critical back-to-school period. (Full story)

Wal-Mart (WMT, Fortune 500) shares ended the session barely lower.

Other retailers: While Wal-Mart and select other discount retailers benefited from the need for a strapped consumer to still buy essentials, mall-based clothing chains and high-end sellers suffered.

Clothing chain Abercrombie & Fitch (ANF) said sales fell 11%, versus forecasts for a 7.9% drop. Shares slumped 6.8%. Pacific Sunwear of California (PSUN) reported a decline of 6%, shy of forecasts for a drop of 8.8%. Shares dropped 4%.

On the high end, Saks (SKS) said same-store sales fell 5.9% versus forecasts for a drop of 4.7%. Shares were little changed. Nordstrom (JWN, Fortune 500) said same-store sales slumped 7.9%, worse than the 7.1% consensus. Shares slipped 4%.

Jobs: The number of Americans filing new claims for unemployment jumped unexpectedly last week, rising to 444,000 from a revised 429,000 the previous week, the government said. Economists surveyed by Briefing.com thought claims would fall to 420,000 last week.

A separate report from payroll services firm ADP showed that the private sector lost 33,000 jobs in August, eclipsing forecasts for a drop of 30,000 payday loan.

The report can sometimes be a harbinger of the broader government-issued monthly employment report, due Friday. Employers are expected to have cut 75,000 non-farm jobs from their payrolls, after cutting 51,000 in July. The unemployment report, generated by a separate survey, is expected to hold steady at 5.7%.

Other economic news: Other reports were more positive. Second-quarter productivity was revised up to a 4.3% annualized rate from an initial rate of 2.2%. Economists thought it would be revised up to a 3.5% rate.

At the same time, unit labor costs, the report’s inflation component, showed a bigger-than-expected decline, suggesting that the boost in productivity has not boosted wages.

And the Institute for Supply Management’s reading on the services side of the economy showed expansion in the sector, versus forecasts for further erosion. The index rose to 50.6 in August from 49.5 in July. Economists thought it would hold steady at 49.5. Any number over 50 signals expansion and a number below it signals weakness.

Company news: Ciena (CIEN) reported a steep drop in fiscal third-quarter profit and warned that fourth-quarter sales won’t meet forecasts as large customers delay purchases due to the weak economy. Shares of the network-gear maker slumped almost 25% in active Nasdaq trade and dragged on the technology sector. (Full story).

Cisco (CSCO, Fortune 500), Oracle (ORCL, Fortune 500), Intel (INTC, Fortune 500), Yahoo (YHOO, Fortune 500), Amazon.com (AMZN, Fortune 500) and Google (GOOG, Fortune 500) were among the big tech stocks sinking.

Blue chips were hit hard too, with 29 of 30 Dow components sliding. The lone exception was Coca-Cola (KO, Fortune 500).

The Dow’s biggest losers were financial components AIG (AIG, Fortune 500), American Express (AXP, Fortune 500), Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and JP Morgan Chase (JPM, Fortune 500).

Caterpillar (CAT, Fortune 500) declined 5.6%. The heavy-equipment maker has been sliding for the last few sessions and was also reacting Thursday to fellow machinery maker Terex (TEX, Fortune 500)’s warning that 2008 profit won’t meet forecasts. Terex fell almost 20%.

Aluminum producer Alcoa (AA, Fortune 500), aerospace companies Boeing (BA, Fortune 500) and United Technologies (UTX, Fortune 500), automaker General Motors (GM, Fortune 500) and telecom Verizon Communications (VZ, Fortune 500) all lost around 4%.

Among other movers, airlines, railroads and truckers declined, dragging down the Dow Jones Transportation (DJTA) average by 2.7%.

Market breadth was negative. On the New York Stock Exchange, losers beat winners five to one on volume of 1.3 billion shares. On the Nasdaq, decliners topped advancers by nearly four to one on volume of 2.38 billion shares.

Fuel prices: U.S. light crude oil for October delivery fell $1.46 to settle at $107.89 a barrel on the New York Mercantile Exchange, a fresh five-month low.

Prices slipped after the government’s weekly inventories report showed crude stockpiles tumbled unexpectedly. Investors were also keeping an eye on updates about the damage from Gustav to Gulf Coast oil facilities, which account for about 25% of U.S. oil production.

Oil has fallen steadily over the last few weeks after tumbling more than 20% off the record high of $147.20 a barrel hit on July 11. Worries about Gustav’s impact initially added to that rise, but the storm proved to be less destructive than had been feared, and oil prices resumed their slide on bets of a global economic slowdown. (Full story)

Gas prices declined for a fourth straight day, according to a national survey of credit-card activity. Even the Gustav-ravaged Gulf Coast states saw prices decline.

Other markets: In global trade, Asian and European markets ended lower.

In the bond market, Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.62% from 3.70% late Wednesday. Prices and yields move in opposite directions.

The dollar gained versus the euro and fell versus the yen.

COMEX gold for December delivery fell $5 to $803.20 an ounce. 

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China has the cash and ambition to be a major player in the world’s biggest sale of financial assets in half a century, but politics, a lack of expertise and an aversion to risk will relegate it largely to the sidelines.

Nationalistic worries about how state-owned Chinese firms might behave if they had a controlling stake in a major foreign bank are probably Beijing’s biggest obstacle, but there are others almost as daunting.

“Chinese financial institutions are not mature enough to make a large overseas acquisition,” said Zhao Xiao, an economics professor at the Beijing University of Science and Technology.

“They must gain experience helping China’s thriving manufacturers to move overseas … and in five years they may be ready,” said Zhao.

China’s cautious regulators are also reluctant to approve such acquisitions due to volatile markets, recent losses from earlier financial stakes and a lack of experience.

“The Chinese may have that ambition .. fast cash advance. but that would just not be allowed,” said Glenn Maguire, Hong Kong-based chief Asia economist for Societe Generale.

“Politically, it is very sensitive,” said Maguire, pointing to rising protectionist sentiment in the United States in a presidential election year.

China’s financial stakes in Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and Blackstone (BX.N: Quote, Profile, Research, Stock Buzz) have also soured as the credit crisis has spread, offering painful lessons in market volatility to investors accustomed to uninterrupted double-digit economic growth. 

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French bank Societe Generale SA said Tuesday net profit fell 63% in the second quarter, after its investment banking unit posted a loss.

Net profit dropped to $1 billion in the second quarter from $2.71 billion a year ago, SocGen said in a statement.

Continued turmoil in global financial markets led SocGen’s corporate and investment banking unit to a $290 million loss, compared with a $1.12 billion profit a year earlier, the bank said.

SocGen is still managing the fallout from $7.18 billion hit it took closing what it calls unauthorized positions by former trader Jerome Kerviel cash advance loan. The loss was announced in January but included in the bank’s 2007 results.

France’s second-largest bank has tightened security and changed its top management this year, splitting the posts of CEO and chairman.

CEO Frederic Oudea, promoted from CFO in May, said the second quarter result "reflects the robustness" of the bank’s portfolio of activities, despite what he calls "a crisis on an exceptional scale." 

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Nissan Motor Co. will soon sell cars that push back when drivers try to put the pedal to the metal.

The Japanese carmaker Monday announced its new "ECO Pedal" system, which makes the gas pedal press upward when it senses motorists are speeding up too quickly.

Nissan (NSANY) said in a press release the system, which will be available next year, can help drivers improve fuel efficiency 5% to 10%.

It calculates the most efficient rate of acceleration in a vehicle based on how fast fuel is being burned and other factors, and causes the gas pedal to push back to alert overzealous drivers no fax payday loans. A special meter on the dashboard flashes and changes colors to help drive the message home.

Nissan says the system is designed to help drivers become more fuel efficient behind the wheel. Part of the company’s strategy for reducing carbon dioxide emissions is modifying driving behavior.

Drivers can also opt to switch the system off. 

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Marvel Entertainment Inc is expected to post a 26 percent rise in second-quarter profit on the strength of its licensing business, which is expected to benefit from merchandising related to its successful “Iron Man” movie.

Tuesday’s second-quarter report will be the first quarter after the comic-book publisher started releasing its first self-produced films.

But analysts are really tuned to the third and fourth quarters, when most expect Marvel to reap the rewards from its first movie titles, and will be looking for potential outlook comments.

Marvel is expected to possibly increase its outlook for the year and give more clarity about when revenue from its films will be reflected on its income statement.

“The story really is about the film business cheap payday loans. Everything else is the same old Marvel,” Wedbush Morgan Securities analyst Michael Pachter said.

In April, Marvel entered Hollywood film-making with “Iron Man,” its first self-produced film, that had the second-biggest non-sequel box office opening in history.

“Iron Man,” which was distributed by Viacom Inc’s Paramount Pictures, has made $315.7 million in domestic box office so far, according to Box Office Mojo.

The movie was followed by “The Incredible Hulk,” far-less successful, but still expected to bring in a moderate profit. 

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