CalPERS has announced:
it is voting against the re-election of all 18 Bank of America directors, including Chief Executive Officer and Chairman Ken Lewis.
CalPERS contends that Lewis and other directors failed to disclose information to shareowners in connection with Bank of America’s merger with Merrill Lynch. The pension fund also believes that the undisclosed payment of billions of dollars in bonuses to Merrill Lynch executives – before completion of the merger – warrants a vote against all directors.
“The entire board failed in its duties to shareowners and should be removed,” said CalPERS Board President Rob Feckner. He noted the poor condition of the company, the failure by directors to disclose the extent of Merrill Lynch’s losses prior to consummation of the merger, the payment of billions of dollars to Merrill executives in bonuses for failure, and the failure of the board to act in the best interests of shareowners in overseeing management.
Mr. Lewis’ travails, publicized by Andrew Cuomo, were discussed on PrefBlog on April 24.
One wonders whether the CalPERS decision is genuine or another machination of the Obama Administration which – as far as I can tell – is looking to blame US economic problems on Evil Bankers. The response is warranted enough, but the emphasis on bonuses detracts from the credibility of the release.
The bonus issue for investment managers surfaced in Parliament last week, according to the Globe & Mail:
Senior officers of the [Public Sector Pension Investment] board fielded numerous questions from MPs at the Commons finance committee about whether they would receive bonuses – answering only that it will be up to their board of directors to decide.
But MPs warned the board’s managers that taking bonuses for the 2008-09 fiscal year could not be justified.
“Anyone in this country running something called an investment board that lost billions of dollars last year that even thinks of paying themselves a bonus needs their head [examined],” NDP finance critic Tom Mulcair told John Valentini, the investment board’s chief operating officer. “I’d like you to give that message to your board of directors.
“We would find it properly scandalous if in the light of what happened last year, that in addition to your considerable salaries, you decide to vote yourself bonuses.”
Liberal MP John McKay echoed the sentiment, telling the board’s managers that they should be eschewing bonuses when Canadian taxpayers are suffering.
“It would be inappropriate for your organization to be awarding themselves significant bonuses in light of not only your performance … but also the market conditions,” said Mr. McKay, a former parliamentary secretary to the finance minister under the last Liberal government. “Canadians have taken a pretty major haircut in the market in the last while.”
The quoted statements are so ignorant that I do not believe they were honestly made. The implication is that investment managers’ bonuses should be determined by the performance of the market, rather than by performance relative to a benchmark; and that a manager should get a bonus for deliviering +10% returns in a +20% market, but not receive one for a -10% return in a -20% market.
The politicians know this as well as I do. But sleazebag gutter politics gets their names in the paper, which is all that counts, right?
Good volume in the pref market today; PerpetualDiscounts managed to eke out a gain and FixedResets outperformed.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.5158 % | 967.8 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.5158 % | 1,565.2 |
| Floater | 4.54 % | 4.57 % | 74,332 | 16.28 | 2 | -0.5158 % | 1,209.1 |
| OpRet | 5.10 % | 4.30 % | 136,779 | 2.64 | 15 | 0.1474 % | 2,133.6 |
| SplitShare | 6.62 % | 8.50 % | 46,752 | 5.61 | 3 | 0.4620 % | 1,745.7 |
| Interest-Bearing | 6.03 % | 7.14 % | 27,441 | 0.65 | 1 | 1.0152 % | 1,977.3 |
| Perpetual-Premium | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0688 % | 1,638.1 |
| Perpetual-Discount | 6.67 % | 6.80 % | 142,181 | 12.84 | 71 | 0.0688 % | 1,508.7 |
| FixedReset | 5.87 % | 5.15 % | 623,668 | 4.54 | 35 | 0.1776 % | 1,923.3 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| HSB.PR.C | Perpetual-Discount | -2.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 18.16 Evaluated at bid price : 18.16 Bid-YTW : 7.13 % |
| CM.PR.H | Perpetual-Discount | -2.03 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 17.38 Evaluated at bid price : 17.38 Bid-YTW : 6.96 % |
| BAM.PR.M | Perpetual-Discount | -1.32 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 14.21 Evaluated at bid price : 14.21 Bid-YTW : 8.50 % |
| HSB.PR.D | Perpetual-Discount | -1.29 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 17.62 Evaluated at bid price : 17.62 Bid-YTW : 7.20 % |
| SLF.PR.B | Perpetual-Discount | -1.28 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 17.03 Evaluated at bid price : 17.03 Bid-YTW : 7.15 % |
| BAM.PR.I | OpRet | -1.21 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2013-12-30 Maturity Price : 25.00 Evaluated at bid price : 23.76 Bid-YTW : 6.91 % |
| CM.PR.J | Perpetual-Discount | -1.19 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 16.55 Evaluated at bid price : 16.55 Bid-YTW : 6.85 % |
| STW.PR.A | Interest-Bearing | 1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2009-12-31 Maturity Price : 10.00 Evaluated at bid price : 9.95 Bid-YTW : 7.14 % |
| RY.PR.F | Perpetual-Discount | 1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 17.85 Evaluated at bid price : 17.85 Bid-YTW : 6.25 % |
| SLF.PR.A | Perpetual-Discount | 1.08 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 16.83 Evaluated at bid price : 16.83 Bid-YTW : 7.16 % |
| BNS.PR.T | FixedReset | 1.10 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2014-05-25 Maturity Price : 25.00 Evaluated at bid price : 26.75 Bid-YTW : 4.70 % |
| ENB.PR.A | Perpetual-Discount | 1.20 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 24.22 Evaluated at bid price : 24.51 Bid-YTW : 5.70 % |
| NA.PR.L | Perpetual-Discount | 1.35 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 18.05 Evaluated at bid price : 18.05 Bid-YTW : 6.75 % |
| RY.PR.W | Perpetual-Discount | 1.50 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 19.58 Evaluated at bid price : 19.58 Bid-YTW : 6.27 % |
| TD.PR.Y | FixedReset | 1.67 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 23.64 Evaluated at bid price : 23.70 Bid-YTW : 4.04 % |
| RY.PR.H | Perpetual-Discount | 1.69 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 23.24 Evaluated at bid price : 23.40 Bid-YTW : 6.04 % |
| BNA.PR.C | SplitShare | 2.10 % | Asset coverage of 1.7+:1 as of March 31 according to the company. YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2019-01-10 Maturity Price : 25.00 Evaluated at bid price : 13.10 Bid-YTW : 13.47 % |
| CIU.PR.A | Perpetual-Discount | 2.17 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 17.88 Evaluated at bid price : 17.88 Bid-YTW : 6.56 % |
| IAG.PR.A | Perpetual-Discount | 3.00 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 16.50 Evaluated at bid price : 16.50 Bid-YTW : 7.07 % |
| BAM.PR.J | OpRet | 3.45 % | YTW SCENARIO Maturity Type : Soft Maturity Maturity Date : 2018-03-30 Maturity Price : 25.00 Evaluated at bid price : 21.00 Bid-YTW : 8.07 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| RY.PR.T | FixedReset | 85,557 | RBC crossed 25,000 at 26.10. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-23 Maturity Price : 25.00 Evaluated at bid price : 26.07 Bid-YTW : 5.53 % |
| TD.PR.K | FixedReset | 84,820 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-08-30 Maturity Price : 25.00 Evaluated at bid price : 26.02 Bid-YTW : 5.48 % |
| RY.PR.X | FixedReset | 80,155 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-09-23 Maturity Price : 25.00 Evaluated at bid price : 26.15 Bid-YTW : 5.39 % |
| HSB.PR.E | FixedReset | 39,995 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-07-30 Maturity Price : 25.00 Evaluated at bid price : 25.76 Bid-YTW : 6.08 % |
| RY.PR.D | Perpetual-Discount | 37,591 | RBC crossed 20,000 at 17.75. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2039-04-28 Maturity Price : 17.76 Evaluated at bid price : 17.76 Bid-YTW : 6.35 % |
| BMO.PR.N | FixedReset | 34,405 | Scotia bought 18,000 from Nesbitt at 27.00. It’s been a long time since I saw a 27-handle (on prices, I mean … seen WAY too many on yields!) YTW SCENARIO Maturity Type : Call Maturity Date : 2014-03-27 Maturity Price : 25.00 Evaluated at bid price : 26.80 Bid-YTW : 5.38 % |
| There were 37 other index-included issues trading in excess of 10,000 shares. | |||