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Will Banker Pay Cuts Trim Share Price?
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Investors are beginning to wonder if some of the Street’s top talent may pack up their bags and gallup out of Dodge due to government mandated pay cuts.
On Thursday the Treasury outlined plans for the seven companies that have not paid back TARP money to make deep cuts to their top executives' compensation.
They are Bank of America [BAC
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] , American International Group [AIG
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], Citigroup [C
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], General Motors, GMAC [GMA
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] , Chrysler and Chrysler Financial.
Companies that have repaid the bailout money, including Goldman Sachs [GS
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] and JPMorgan [JPM
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], are not affected.
The cuts apply to the 25 highest-paid executives, and according to published reports, their total compensation, including salaries and bonuses, will be cut dramatically. Most basic salaries will be less than $500,000, an average cut of 90%.
Will the move send top talent running for the exits?
CNBC's Charlie Gasparino says yes. “I talked to people at Merrill and Citi and they told me, if they cap my salary I’m gone.”
So what’s the trade?
Tim Seymour tells the desk the action in the options market speaks volumes -- at least in Citi. Investors are selling upside calls in Citigroup above $5.50. It suggests they don’t think the stock can go any higher than that.
What do you think? We want to know!
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Trader disclosure: On October 22nd, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (CEPH) Call Spread; Najarian Owns (LAZ), Is Short (LAZ) Calls, Owns (LAZ) Puts; Najarian Owns (RIMM) Call Spread; Najarian Owns (STX) Call Spread; Najarian Owns (XLF) Call Spread; Najarian Owns (YHOO) Call Spread; Finerman's Firm Owns (CLX), (MSFT), (NOK), (WMT); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (WFC) Preferred; Finerman's Firm Is Short (IJR), (MDY), (SPY), (IWM), (USO), (UNG), (CAKE); Finerman's Firm Owns (YUM); Finerman's Firm Owns (BKC); Finerman's Firm Is Short (CPKI); Terranova Owns (SUN), (HES), (NOV), (GS); Seymour Owns (MSFT); Seygem Asset Management Is Short (MELI)
For JoeTerranova
Terranova Works For (VRTS)
Terranova Is Chief Market Strategist Of Virtus Investment Partners, Ltd.
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (CAL)
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DLR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (DBA)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (UA)
For Bill Fleckenstein
Fleckenstein's Fund Owns (MSFT)
Fleckenstein's Fund Owns (LLY)
Fleckenstein's Fund And Fleckenstein Own Gold
Fleckenstein Owns (LLY)
CNBC.com with wires
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