TIME Transportation

General Motors Says 100 People Have Now Died from Faulty Ignition Switches

Faulty Ignition Switch Repair At A General Motors Dealership
Jeff Kowalsky—Bloomberg/Getty Images Shop foreman John Chapman performs a service recall on a General Motors Co. (GM) 2005 Saturn Ion at Liberty Chevrolet in New Hudson, Michigan, U.S., on Friday, April 25, 2014.

The malfunctioning switches have prompted the recalls of millions of GM vehicles

The death toll from faulty ignition switches in General Motors’ vehicles officially reached 100 this week, putting a grim tally on the long-running saga of the company’s delayed recalls.

The automotive firm’s compensation fund said it had approved the 100th compensation claim resulting from the issue on Monday, the New York Times reported.

This number, according to the Times, is significantly higher than the 13 deaths that GM claimed were the only ones from malfunctioning ignitions on multiple models.

Several lawsuits against the company allege that the actual death toll far exceeds even the latest number, and accuse the company of downplaying the number of deaths in multiple congressional hearings.

“The success of the cover-up for over a decade leaves most of the victims unaccounted for,” Robert Hilliard, one of the lead lawyers, told the Times. “One hundred is not even the tip of the iceberg.”

Read more at the Times

TIME compensation

This Was the Highest-Paid Woman in the U.S. Last Year

Apple iPhone
Tony Avelar—AP Angela Ahrendts, senior vice president of retail and online stores at Apple Inc., walks through the Apple Store during the launch and sale of the new iPhone 6 on Sept 19, 2014, in Palo Alto, Calif.

Apple's new head of retail earned big bucks in 2014

Angela Ahrendts, the Burberry CEO-turned-Apple retail chief, was the highest-paid woman in the U.S. last year.

She earned $82.4 million in 2014 after she took over the role of Apple’s vice president of retail and online stores, according to an analysis by Bloomberg. The pay figure includes a sign-on bonus and a grant for compensation she wasn’t able to bring along from Burberry. In addition to overseeing the Apple Stores, which are rumored to have a redesign in the works, Ahrendts has been instrumental in the rollout of the Apple Watch.

Trailing Ahrendts on Bloomberg’s list were Oracle Chief Financial Officer Safra Catz, earning $71.2 million, and Yahoo CEO Marissa Mayer, who earned $59.1 million.

MONEY Apple

CEOs Love Buybacks. But Should You?

apple sign
Toby Melville—Reuters

Like Apple, many American corporations favor stock buybacks over dividends. For investors things are little more complicated.

On Monday, Apple Inc. APPLE INC. AAPL 0.88% reported another knock-out quarterly profit and said it would return an eye-popping $200 billion to shareholders by March 2017 through a combination of dividends and share buybacks. Pundits have been debating whether that’s a smart strategy.

Apple shareholders—and other investors who can look forward to corporate goodies being announced this earnings season—may have a more immediate question: What’s better, getting a dividend check or letting management spend the money to snap up shares?

By earmarking $140 billion of the $200 billion for repurchasing shares, Apple appears to favor buybacks. That’s a stance popular across corporate America. Last year, companies in the S&P 500 spent $550 billion on buybacks vs. $350 billion on dividends. But it’s not necessarily clear buybacks are always the best option.

Keep in mind that, in an ideal situation, companies wouldn’t buy back stock or pay dividends. Instead, they’d re-invest profits to grow their businesses and generate even more profits in the future. But even the most promising companies can grow only so much for so long before they run out of highly compelling ideas for further investment—at which point they have an obligation to start paying out profits to shareholders, who can invest the money as they see fit. And it appears that Apple, having amassed nearly $200 billion in cash, is no longer confident it can profitably invest all that money.

Companies like Apple looking to hand cash back to investors have two basic routes. They can simply write a check to existing shareholders in the form of a dividend. Or they can use the money to buy out some of those shareholders—a so-called buyback—which essentially leaves each of the remaining owners with a bigger slice of the company and its profits.

In theory all companies should eventually aim to pay out profits directly. After all, the prospect of future dividends is the reason a stock has value in the first place. But in the meantime, buybacks can benefit investors by boosting the stock price—since every remaining share represents a bigger claim on the same pool of corporate assets.

So which route is better?

Economic theory suggests they should be roughly equivalent. But the tax code isn’t always based on economic theory—and it turns out the IRS gives buybacks a big advantage. When a company hands you a dividend check, you owe taxes on that income in the current tax year even if you plan to re-invest the dividend and hold the stock for years. By contrast, when a company buys back shares and the share price goes up as a result, you owe no taxes until you actually sell the stock, which could be years in the future.

But taxes alone don’t settle the question—and buybacks aren’t necessarily all they’re cracked up to be.

For one thing, many smart investors, including Warren Buffett, promote buybacks when management believes shares are undervalued. The problem is that most managers turn out to be just as bad as the rest of us at gauging whether the market has placed the right value on their shares. Case in point: Many companies went on buy-back sprees in the early part of the last decade, only to look like they’d squandered shareholders’ money when the 2008 financial crisis hit.

Another knock against buybacks: They give management too much discretion. Like Apple, many companies grab headlines by announcing the total amount they’ll use to buy back shares over a period of years. That gives managers the flexibility to buy the shares when prices look advantageous. A dividend, by contrast, is a less splashy quarterly obligation for a company’s managers, who know that the stock market doesn’t react well to dividend cuts. And just because management chafes at such restrictions, doesn’t mean you should. Especially in an era of push-over boards, many investors see a regular dividend as one of the few reliable ways to hold managers to account.

Finally, critics of buybacks argue that they ultimately benefit managers more than shareholders. The reason? Executive compensation is typically tied to share price, an effort to align the interests of management with those of shareholders. But it doesn’t always work because an executive can use buybacks to hit short-term stock price goals at the expense of his company’s long-term interests—by skimping, for example, on expensive but necessary research and development.

That’s probably not an issue for Apple, considering its $200 billion bank account. But research suggests it may be for the broader market.

The upshot: It’s easy to see why managements prefer buybacks. But investors—especially those with the bulk of their savings in a 401(k) or IRA, where taxes aren’t an issue—may be better off with an old-fashioned dividend.

 

 

 

TIME animals

Chinese Man Gets Attacked by a Wild Panda, Sues Government for $80,000

Panda resting in a tree
Jay Schipper—Flickr RF/Getty Images

It must have been sheer pandamonium

A man in China has been awarded more than $80,000 in compensation from the government after a wild panda bit him on the leg, his lawyer said Monday.

Local officials had tried to capture the panda after it wandered into Liziba village in China’s northwest Gansu province, but ended up chasing it onto Guan Quanzi’s land, reports Agence France-Presse.

“I saw a panda jump out in front of me, its body completely covered in mud,” he told local paper the Lanzhou Evening News.

Guan endured seven hours of surgery after the incident, which happened in March last year. The panda managed to escape.

Guan’s son sued local forestry officials who now have agreed to pay $83,000, which will cover the man’s ongoing medical bills.

Though pandas are known for being pretty easygoing bamboo eaters, they are part of the bear family and can deliver a fierce bite. They’ve also been known to attack humans.

[AFP]

TIME Aviation

MH 370: Lawyers Say Faulty Beacon Battery May Prove Key to Compensation

The shadow of a Royal New Zealand Air Force (RNZAF) P3 Orion maritime search aircraft can be seen on low-level clouds as it flies over the southern Indian Ocean looking for missing Malaysian Airlines flight MH370
Rob Griffith—Reuters The shadow of a Royal New Zealand Air Force's P3 Orion maritime search aircraft can be seen on low-level clouds as it flies over the southern Indian Ocean looking for the missing Malaysia Airlines Flight MH 370 on March 31, 2014

Report suggests engineering failure responsible for expired beacon battery on plane

The revelation that a beacon battery, which could have served as an underwater locator for tracking missing Malaysia Airlines Flight 370, had long expired may heavily influence any potential compensation claim, according to lawyers representing passengers’ families.

A report Sunday on the fate of the Boeing 777-200, which vanished en route from Kuala Lumpur for Beijing March 8 last year, revealed the beacon battery, designed to emit pulses in the event of a crash at sea, had expired in December 2012 and was not replaced, Reuters reports.

Kreindler & Kreindler LP, a U.S. law firm representing nearly 20 families against the beleaguered carrier, believes that the expired battery could prove “potentially very significant” in compensation negotiations with relatives of the 227 passengers and 12 crew.

The report, published by Malaysia’s Department of Civil Aviation to mark the one-year anniversary of the tragedy, suggests that the engineering department of Malaysia Airlines could be held responsible for failing to correctly update a computer system.

In an email to Reuters, Kreindler & Kreindler LP’s aviation attorney Justin Green said, “This airline … even more clearly now may be responsible for the unsuccessful search for this plane.”

[Reuters]

MONEY salary

500,000 Walmart Workers Are Getting a Raise. Here’s How You Can Get One, Too

Walmart raise minimum wage $1.75
Gunnar Rathbun—Invision for Walmart

These 5 moves can help you make sure you get what you deserve.

Two corporate giants have made headlines recently for perking up their workers’ paychecks.

Last month, health insurance provider Aetna announced it would be raising the lowest wage it pays to $16 an hour, effectively giving raises to 5,700 of the company’s workers. On Thursday, Walmart followed Aetna’s lead, revealing it would be giving 500,000 associates a salary bump of at least $1.75 above the federal minimum wage.

While across-the-board wage increases such as these are unusual, other corporations are also expected to be more generous with pay this year. Among mid- and large-sized employers, the average increase in base pay is expected to be 3.0% in 2015, up from 2.9% in 2014 and 2.8% in 2013, according to HR consulting firm Mercer.

You can help your chances of boosting your pay with these five tips:

1. Ask at the Right Time

Choosing the optimal time to approach your boss about a raise will significantly increase your chances of success. Stay on top of your own industry’s salary trends and consider whether your company and division are doing well enough to afford what you’re asking for. It’s also a good idea to ask for a raise a few months before performance reviews so that salaries aren’t already set.

Read more: How to Tell if Now Is a Good Time to Ask for a Raise

2. Know What Others are Getting

Before you ask for a raise, you’re going to need to know what kind of raise is reasonable. Check sites like PayScale.com and GlassDoor.com to get an idea of the industry standard for your position, then consult your colleagues to see what the story is internally. For women, that means making sure to check with your male mentors as well. As MONEY’s Margaret Magnarelli writes, female employees tend to be underpaid relative to their male counterparts, and often remain unfairly compensated because they compare salaries with female colleagues who are also underpaid. Gathering a broad cross section of salary data can help break through the ceiling.

Read more: The Foolproof Way to Make Sure You Land a Big Raise This Year

3. Be Able to Prove You’re Better than Average

The 3% average bump that Mercer projects isn’t bad, but being better than the norm can be very lucrative. In 2014, Mercer said the highest-performing employees received a 4.8% raise—more than 2 percentage points higher than the average for that year. How do you show you’re the best of the best? Gather a portfolio of past endorsements and ask satisfied clients to write testimonials. Then do your best to quantify your accomplishments so that your boss has the hard numbers as well.

Read more: 5 Ways to Get a Big Raise Now

4. Identify Your Added Value

Think about what you do that no one else at the office can do—either where you’ve particularly excelled or what highly marketable skill you bring to the table—and then frame your ask around this added value. Jim Hopkinson of SalaryTutor.com suggests framing your requests as follows: “Not only do I have [all the standard requirements that everyone else has] + but I also possess [the following unique traits that make me worth more money].”

Read more: The Secret Formula that Will Set You Apart in a Salary Negotiation

5. Just Ask!

As Wayne Gretzky said, you miss you 100% of the shots you don’t take. According to CareerBuilder, 56% of workers have never asked for a raise, which is a shame because 44% of those who did ask got the amount they asked for, and 31% still got some kind of salary boost. It might seem daunting to ask for more money with the economy still in recovery mode, but job openings are the highest they’ve been in a decade, almost three-quarters of employers say they’re worried about losing talented workers, and raises are gradually getting larger. Being assertive can be scary, but don’t let fear stand in the way of a bigger salary.

Read more: New Study Reveals the Odds You’ll Actually Get the Raise You Ask For

More from Money.com:

How to Balance Spending and Safety in Retirement

When to File an Auto Insurance Claim—and When Not To

4 Ways to Hit Your Money Goals

TIME Innovation

Five Best Ideas of the Day: January 26

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. We spent more than $170 billion on the wars they fought for us. Can we spend $5 billion to give veterans a guaranteed income?

By Gar Alperovitz in Al Jazeera America

2. A ‘teaching hospital’ model could work for journalism education by making students work collectively to produce professional results.

By Adam Ragusea at Neiman Lab

3. Humans are born with an intimate understanding of pitch, rhythm, and tone. We’re all musical geniuses.

By Elizabeth Hellmuth Margulis in Aeon

4. WarkaWater Towers — which produce up to 25 gallons of water out of fog and dew every day — could change lives in drought-stricken countries.

By Liz Stinson in Wired

5. Private sector investment savvy and funds can help us tackle poverty’s toughest challenges. It’s time for impact investing.

By Anne Mosle in The Hill

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY salary negotiation

The 10 Commandments of Salary Negotiation

The Ten Commandments of Salary Negotiation graphic treatment
MONEY

Thou shalt be paid more! Tech recruiter Elizabeth Morgan takes to the mount to offer some wisdom on squeezing money from a stone.

This is the first in a series of six posts on salary negotiation published in partnership with PayScale.com.

1. Never accept the first salary offer.

2. Remember that you can negotiate more than just salary. A sign-on bonus and stock options are also major components of your offer that can be negotiated.

3. Work with your recruiter. Recruiters are your friends. But they are friends who have a budget. Ideally, they want you to accept the offer they are extending to you. Provide concrete data (see #10) to support why you are asking for a different compensation package.

4. Role-play the salary-negotiation conversation. Practice, practice, practice.

5. Utilize time as your golden trump card. Let’s say you found your dream job, but still aren’t happy with the salary that is being offered to you. It’s okay to put a timer on the offer after negotiations. Suggest a short turnaround time (i.e. “I will accept this offer by 5pm today if you can deliver the offer I am asking for”) to your recruiter to provide you with the salary criteria you requested.

6. Don’t be the first to disclose a number. Always let the recruiter or hiring manager be the first to share salary ranges or an offer post interviews.

7. Keep emotion out of the process. Remember: Business is business, and you can’t count on karma or other magical thinking. Sorry.

8. Always prepare a counter offer.

9. Remember that the negotiation process revolves around two factors: what you are worth and what they are willing to pay for you.

10. Always research your value and the company prior to interviewing for a job. Data is key to effective salary negotiating. Payscale.com is a great resource to leverage when doing research to determine your professional worth and how much you should be getting paid.

Elizabeth Morgan has over 15 years of technical recruiting experience, with companies that include Microsoft, Google, Amazon and LinkedIn. Currently, she is building LinkedIn’s Engineering Leadership team and helping launch LinkedIn’s Women in Tech program.

More on salary negotiation from PayScale.com:

 

MONEY

If Women Want to Get Paid Fairly, Here’s What They Should Do

Woman CEO reviewing paper by female employee
Cultura Creative—Alamy

New research shows that high-achieving women who want to get paid fairly should work for high-achieving women.

“The higher a woman rises in Corporate America the more likely she is to be paid as much as her male peers,” said absolutely no one ever who knows anything about men, corporations, or America.

Now comes new research to suggest that no one with even the slimmest connection to reality will be tempted to say such a thing in the near future, either. Two Canadian researchers, whose findings were just published in the journal Management Science, reveal fairly conclusively “that CEOs pay officers of the opposing gender less than officers of their own gender, even when controlling for job characteristics.”

And while such a revelation might give slight pause to gender warriors—perhaps it’s familiarity bias, not sexism, behind the male-female pay disparity in American workplaces at all levels—researchers David Newton and Mikhail Simutin found only “limited evidence that male officers of female-lead firms are paid less, or that they receive smaller in increases in compensation relative to female officers.”

In other words, male-led organizations discriminate against executive-level women via paychecks to a much greater extent than female-led companies discriminate against male officers. (It’s old news that female CEOS themselves are underpaid relative to male CEOs, although progress has been made in recent years.)

What’s worse, this pay disparity often means that high-level women are paid less than men beneath them in the org chart. Looking at data from 1996-2011, the researchers found that “male CEOs pay female officers on average $46,500, or over 12% of median compensation, less than they do their male subordinates who work at the same firm. Moreover, female officers receive significantly lower increases in compensation than do male officers when the firm is headed by a male CEO.”

Not surprisingly, this gender bias is more pronounced the older the top dog in the corner office, especially if said canine is a human person of masculine gender. “Older and male CEOs exhibit the greatest propensity to differentiate on the basis of sex.”

Put another way, given that roughly 95% of the largest American companies are run by men, there is slim to no chance (and slim is on vacation) that a female officer in Corporate America is being paid fairly relative to her male peers, either at her company or in her industry or pretty much anywhere.

The study—clunkily titled Of Age, Sex, and Money: Insights from Corporate Officer Compensation on the Wage Inequality Between Genders—is interesting for other reasons. There is a growing notion that corporations in general might be better off if led by a female CEO, not least because their share prices seem to outperform those of companies helmed by men. Many reasons have been put forward to explain this, including the idea that women are more cooperative decision-makers and possess a more rational approach to risk. There’s also a theory that women are better corporate shoppers than men, e.g., they tend to pay less when acquiring companies.

That last hypothesis is supported indirectly by the Canadian study, which suggests that when shopping for talent, male CEOs—particularly older ones—pay far too much across the board. “We find evidence that male CEOs compensate their officers more richly than female CEOs do,” the authors write. “The difference in compensation by male and female chief executives amounts to $15,210 per year on average, or 4% of the median officer total compensation.”

So, to sum up: Male CEOs likely pay more to executives who manage their companies less well than suits hired at lower salaries by female CEOs (who are also paid less). Not exactly what investors think of as enhancing shareholder value.

It’s a wonder there isn’t a raft of class action suits against American corporate boards for gross negligence—for letting men run their companies at all.

TIME Careers & Workplace

Why ‘You’re Getting a Bonus’ Is Actually Horrible News

78700274
Joel Sartore—Getty Images/National Geographic RF

Sounds good. Often isn't

So your boss just said, instead of a raise this year, you’ll be eligible for a bonus. Great, right?

Not so fast. Companies today are increasingly turning to bonuses instead of raises, and while it might seem like pretty much the same thing, there are some big potential drawbacks for workers.

According to HR consulting firm Aon Hewitt’s annual Salary Increase Survey, more than 90% of companies now have what’s called, in HR jargon, “variable pay,” a category that can include signing bonuses, awards for individual or team performance, profit-sharing and the like. Nearly 13% of companies’ payroll budget, on average, is going to variable pay this year. This is a significant increase from Aon Hewitt’s pre-recession data and the trend is expected not only to continue, but to grow larger.

In the meantime, companies are still doling out raises with a relative eyedropper; last year, the average was below three percent for white-collar professional workers — a little better than the puny 1.8% it hit in 2009, but not by much.

“Based on historical trends and based on the indicators that we see — both economic and HR indicators — we think the level of spending on salaries will continue to be flat for the foreseeable future, and the level of spending on variable pay will continue to rise,” says Ken Abosch, compensation, strategy and market development leader at Aon Hewitt.

While bonuses have always been a part of the pay structure for certain jobs, like those in sales, Abosch says this trend is across the board. “We’re seeing it in pretty much every sector, including higher education and not-for-profits,” he says. So if you haven’t had your raise replaced with a bonus yet, that could be coming.

For businesses, there are a few advantages to giving bonuses instead of raises in today’s lackluster recovery. The biggest is that it’s not a permanent commitment. They dole out the money once, and they only have to repeat it if certain performance benchmarks — benchmarks which can and do change regularly — are met. Since bonuses and similar performance incentives are often viewed by workers as a sort of add-on perk, they can also be used as a “carrot” to motivate workers, and they can give workers a perception that they’re more in control of how much they earn.

That perception isn’t really based in reality, though: Performance metrics often include company-wide targets. You might be the best help-desk associate or accountant in the building, but if somebody in the corner office makes a bad decision, the company’s bottom line could tank and you can kiss that bonus goodbye.

That’s only one of the problems that switching raises with bonuses has for workers. “It impacts pensions and retirements,” Abosch says. Certain benefits calculations are based on your salary, so even if you’re getting the money in the form of a bonus, it’s not counting towards these important ancillary calculations. And if you lose that job, your unemployment benefits are calculated based on — you guessed it — your salary.

That’s not all. If you’re looking to take out a mortgage, buy a car or obtain any other kind of financing, the lender is going to look at how much you make. Depending on their underwriting practices, bonuses may or may not get the same weight as a fixed salary. The result? You could wind up paying higher interest on your loan, or even be denied outright.

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