Press Releases

10/31/2008

Ask AP: Pay limits and the bailout, Somali pirates

By The Associated Press

When the federal bailout of the nation's banks was being debated in Washington, a recurring theme emerged: The top executives at companies that benefit simply can't be handed massive pay packages anymore.

But how exactly is executive pay being limited under the bailout?

Curiosity about those restrictions inspired one of three questions in this edition of "Ask AP," a weekly Q&A column where AP journalists respond to readers' questions about the news.
If you have your own news-related question that you'd like to see answered by an AP reporter or editor, send it to newsquestions(at)ap.org, with "Ask AP" in the subject line.

And please include your full name and hometown so they can be published with your question.
___
In the first few weeks after Somali pirates seized the MV Faina, there was news almost every day concerning the international response, including a Russian ship that was sent to help. But recently, I have seen no news. What is going on with the Faina?
Joe Jackson
Huntington, W.Va.
___
The MV Faina is still anchored near the central Somalia coastal town of Hobyo. U.S. warships continue to surround it, trying to make sure none of its military cargo is offloaded and ends up in the hands of Islamic extremists.

The pirates say the ship's operator is negotiating a possible ransom payment for the release of the ship and its 20-man crew but has no interest in the military cargo. Kenya claims the cargo but refuses to pay any ransom to get it back. The pirates say they got this information in a fax from the head of ship operator Tomex Team, and a spokesman for that company confirmed that they do not want the cargo.

Seven ships that NATO deployed arrived in the Gulf of Aden over the weekend of Oct. 25 to beef up the existing multinational effort to prevent further piracy attacks in the gulf and along Somalia's Indian Ocean coastline.

The Russian missile frigate Neustrashimi also arrived in the Gulf of Aden over that weekend. Russia has said it will cooperate with NATO and others in operations to prevent piracy in the area.
Tom Maliti
Associated Press Writer
Nairobi, Kenya
___
I've read that the federal government's bank bailout will impose restrictions on pay and benefits received by executives at participating companies. What are these restrictions, in dollar amounts?
Barbara Boris
Woodstock, N.Y.
___
There is no way to tell the actual dollar amounts of such pay restrictions. Much depends on what happens to the companies that participate in the federal rescue program and each individual executive's employment contract.

Some compensation limits are already active under the bailout's capital purchase program, which involves the government buying stakes in the nation's banks and financial institutions. Some $250 billion in taxpayer money has been earmarked for that purpose.

These companies are banned from giving out "golden parachutes" to the top five senior executives should any of them depart from the company. The intention of that is to reduce the financial benefits to the executive, especially if the departure is driven by poor performance.

Another provision allows firms participating in the bailout to "clawback," or reclaim, any bonus or incentive compensation paid to an executive based on inaccurate financial statements. There is no way to tell how much that could be until it is revealed that such behavior was discovered.
Rachel Beck
AP Business Writer
New York
___
When a person's unemployment pay from the state runs out and he is still without a job, is he still counted as unemployed in government statistics? If not, does anyone know how many of those folks there are now?
Ralph Barton
Valdosta, Ga.
___
The Labor Department's monthly employment report that provides the national unemployment rate -- now at 6.1 percent -- is based on a monthly survey of a sample of U.S. households. It is not based on whether people are drawing state unemployment insurance benefits.

In the Labor Department's "household survey," people who are without jobs and are actively seeking and available to work are included among the unemployed. People temporarily laid off are included as unemployed even if they did not actively look for work.

All told, over the past year, the number of unemployed has risen by 2.2 million to 9.5 million.
Jeannine Aversa
AP Economics Writer
Washington
___
Have questions of your own? Send them to newsquestions(at)ap.org.