Sketchy Gets Sketchier: Senator Loeffler Received $9 Million 'Gift' Right Before She Joined The Senate
from the seems-iffy dept
Kelly Loeffler is, by far, the wealthiest elected official in Congress, with an estimated net worth of half a billion dollars (the second wealthiest is Montana Rep. Greg Gianforte (famous for his body slamming a journalist for asking him a question and then lying to the police about it)). Loeffler may be used to getting away with tearing up the red tape in her previous life, but in Congress, that often looks pretty corrupt. In just the last few months since she was appointed, there were concerns about her stock sales and stock purchases, which seemed oddly matched to information she was getting during briefings regarding the impact of COVID-19. She has since agreed to convert all her stock holdings to managed funds outside of her control (something every elected official should do, frankly).
Now, the NY Times is noting another form of what we’ve referred to as “soft corruption” — moves that might technically be legal, but which sure look sketchy as hell to any regular non-multimillionaire elected official. In this case, Senator Loeffler received what was, in effect, a gift worth $9 million from her former employer, Intercontinental Exchange (the company that runs the NY Stock Exchange, and where her husband is the CEO).
The key issue was that since she was leaving the job to go join the Senate, she had a bunch of unvested stock. For normal people, if you leave a job before your stock vests, too bad. That’s the deal. The vesting period is there for a reason. But for powerful, rich people, apparently the rules change. Intercontinental Exchange changed the rules to grant her the compensation that she wasn’t supposed to get, because why not?
Ms. Loeffler, who was appointed to the Senate in December and is now in a competitive race to hold her seat, appears to have received stock and other awards worth more than $9 million from the company, Intercontinental Exchange, according to a review of securities filings by The New York Times, Ms. Loeffler?s financial disclosure form and interviews with compensation and accounting experts. That was on top of her 2019 salary and bonus of about $3.5 million.
The additional compensation came in the form of shares, stock options and other instruments that Ms. Loeffler had previously been granted but was poised to forfeit by leaving the company. Intercontinental Exchange altered the terms of the awards, allowing her to keep them. The largest component ? which the company had previously valued at about $7.8 million ? was a stake in an Intercontinental Exchange subsidiary that Ms. Loeffler had been running.
The entitlement factor oozes out of the statement put out from her office in response to this:
?Kelly left millions in equity compensation behind to serve in public office to protect freedom, conservative values and economic opportunity for all Georgians,? said Stephen Lawson, a spokesman for Ms. Loeffler. ?The obsession of the liberal media and career politicians with her success shows their bias against private sector opportunity in favor of big government.?
No, Stephen, that’s not the issue. The issue is that normal people who haven’t vested yet, don’t get to have the board change the vesting rules as you’re leaving to go legislate in order to give you a $9 million windfall you didn’t earn because it hadn’t vested. If it had just been a question of compensation, no one would be complaining. If she had played by the rules that everyone else played by, lived up to her end of the contract and vested the equity, then no big deal. The problem is the last minute changing of the rules to get her a pretty massive payout (perhaps not by her standards, but by anyone else’s).
Indeed, the details show that this wasn’t just a timing thing, like a standard vesting deal, but that Loeffler was supposed to reach certain milestones to be able to get the equity. She didn’t, but she still gets it. That’s the part that has people concerned.
In February 2019, Intercontinental Exchange gave Ms. Loeffler a stake in a limited liability company that owned a stake in Bakkt, according to a March 2019 securities filing. The company at the time estimated the award was worth $15.6 million. But Ms. Loeffler would be able to cash in on the award only under certain circumstances, including if Bakkt?s value soared or if it became a publicly traded company.
When Ms. Loeffler stepped down from the company less than 10 months later, she was poised to forfeit much of that Bakkt stake. But Intercontinental Exchange sped up the vesting process so that she got half of it immediately.
The company, of course, puts a nice spin on it, saying “We admire Kelly?s decision to serve her country in the U.S. Senate and did not want to discourage that willingness to serve,? but what else are they going to say anyway?
Still waiting for that supposed swamp draining we keep hearing about.