Cheney exposed: he still gets paid by Halliburton

[CShine]

"A congressional report concludes that, under federal ethics standards, Vice President Dick Cheney still has a financial interest in Halliburton, the energy services company he used to run.

The report, by the Congressional Research Service, came at the request of Sen. Frank Lautenberg, a New Jersey Democrat and former player in the corporate world who has pushed Cheney on the issue.

In a written release, Lautenberg said, "I ask the vice president to stop dodging the issue with legalese, and acknowledge his continued ties with Halliburton to the American people."

Lautenberg said $205,298 was paid to Cheney in deferred salary by Halliburton in 2001, and $162,392 last year. Lautenberg said Halliburton stock options held by Cheney were 100,000 shares at $54.50 per share, 33,333 shares at $28.125 and 300,000 shares at $39.50 per share."

http://money.cnn.com/2003/09/25/news/companies/cheney/index.htm?cnn=yes

[qb]

1. Of course, Cheney can't be prosecuted...

National Security, you know.

[DoYouEverWonder]

2. The apparent conflict of interest is appalling

The fact that he gets a free ride from the DOJ, Congress and the press is even more appalling. Isn't anyone in this country going to expose these bastards and remove them from power?

[unblock]

3. what to do, what to do...

i have some (very limited) sympathy for cheney on this one.

as to the deferred salary, i'm not sure this is a problem. there's nothing wrong with salary deferral itself, in fact, i routinely defer my final december paycheck and get a double paycheck january 15. this is perfectly fine and legal if papered up properly.

if there's documented evidence that he earned the money while employed at halliburton and funded a deferred compensation plan through salary reduction, then he's already earned it and is entitled to it. more to the point, there's no conflict of interest since his payout is on a predetermined schedule and policy decisions have no bearing on how much he'll get.


as for the options, well this obviously does create a major conflict, since the value of the options could skyrocket or plummet based on the ongoing performance of halliburton stock. where i have my very limited sympathy is that he earned his employee stock options while ceo of halliburton. so the question is, what should (could) he have done with them?

employee stock options are not transferrable. i have similar options from previous employers. mine are, sadly, as worthless as those dot-bombs, but if they were worth a bunch, i don't know how i could get rid of them.

if they're in-the-money, he could exercise them and sell the shares, but that forfeits the option value, so he'd be losing some value by doing this. in my case, it wouldn't even be an possibility givin that my options are all in pre-ipo companies. no market in which to sell the stock.

if they're out-of-the-money, then there's only option value. he can't exercise them, and he can't sell them as options.

about the only things i think he could do is:
(a) sell them back to halliburton for cash. they'd have to agree on the option value (using the black-scholes formula?) but then there would be controversy over the valuation. most people would not understand getting a significant payout for out-of-the-money options, especially later, if it turns out the stock never reaches the strike price.
(b) write a derivative to completely hedge the options. thus effectively transferring them. he'd probably have to forfeit any tax advantage, though, since i'd guess the irs doesn't let you (effectively) transfer that.
however, either of these methods involve cutting a deal with someone after the election, so it would certainly look like a very transparent bribe.


now, where i DON'T have sympathy is his failure to disclose this in january 2001, and his failure to recuse himself from decisions that have an impact on halliburton.