Daily Briefing

DAILY BRIEFING

December 18, 2008

Suit should go forward, lawyers for Jews argue

Attorneys for William L. Jews, the former CareFirst BlueCross BlueShield chief executive who was fired in 2006, argued yesterday that a lawsuit to collect his full severance benefits should be allowed to go forward in federal court. In August, Jews filed suit in U.S. District Court against the state's insurance commissioner, Ralph S. Tyler, who in July cut Jews' termination compensation in half - from $18 million to $9 million - because he found the package excessive. Attorneys for the Maryland Insurance Commission argue that the case should be heard in state Circuit Court. But Jews' attorney, Andrew Graham, pointed out that a parallel Circuit Court case has been put on hold pending a decision from the federal court. Judge Benson Everett Legg asked whether Jews had any way of knowing an employment termination agreement granted in 1998 might later be cut. "It seems to me, in fairness to him, the time to test the compensation was when he signed the contract and not after he left," Legg said, adding that he would "mull it over" before ruling.

Tricia Bishop

Legg Mason names CEO for ClearBridge unit

Baltimore-based Legg Mason Inc. said yesterday that it appointed Peter Sundman president and chief executive officer of ClearBridge Advisors, its largest stock-fund unit. Sundman, 49, was previously chief executive at Neuberger Investment Management's fund division, Legg Mason said in a statement. Sundman will replace Brian Posner, who left Legg Mason in March. Sundman's appointment comes as Legg Mason is struggling with investor redemptions and the subpar performance of funds, including those managed by New York-based ClearBridge and the Legg Mason Capital Management group led by Bill Miller.

Bloomberg News

Aetna to cut 1,000 jobs by the end of the year

HARTFORD, Conn.: Managed-care company Aetna Inc. plans to cut 1,000 jobs, or nearly 3 percent of its work force, by the year's end to reduce costs and adjust to the slowing economy. The insurer said yesterday that 375 positions will be eliminated in Connecticut, and 165 will be cut in Pennsylvania, mostly in the Philadelphia suburb of Blue Bell. The rest of the cuts will be spread out, spokesman Fred Laberge said. Aetna operates in all 50 states. He added that the insurer is not pulling out of any one location or market. "We're trying wherever possible just to combine efforts," he said. "It's not eliminating one area, it's just cutting back in a variety of staff areas." Employees were notified yesterday. Each person will receive nine weeks of salary, and additional severance will be based on the employee's length of service with Aetna.

Associated Press

General Growth gets extension on loan

General Growth Properties Inc., the second-largest U.S. shopping mall owner, said lenders agreed to extend a deadline to pay or refinance $900 million in loans for Las Vegas properties until Feb. 12. The company owns regional malls, including Harborplace and Towson Town Center, and is Columbia's master developer. The mortgage loans are for the Fashion Show and Palazzo properties, which house Neiman-Marcus and Barneys New York retail outlets, the Chicago-based company said yesterday. General Growth, which owns or manages more than 200 malls in 44 states, faced the possibility of defaulting on the loans.

Bloomberg News

Motorola freezes pensions, cuts pay

SCHAUMBURG, Ill: . Motorola Inc., which has been struggling to revive its business in recent years, is freezing its pension plans and reducing executive pay in another set of cost-cutting measures. The company, which blamed the recession for the moves disclosed yesterday, will permanently freeze its U.S. pension plans, temporarily suspend matching 401(k) contributions and reduce the base salary of its two co-chief executives. Motorola had announced an $800 million cost-saving plan in October.

Associated Press

Exxon to pay $6.1 million penalty for pollution

WASHINGTON : Exxon Mobil Corp. has agreed to pay an additional $6.1 million penalty after it reneged on a promise to cut air pollution from four refineries in California, Louisiana and Texas, the Justice Department said yesterday. The payment stems from a 2005 agreement between the government and Exxon Mobil in which the company agreed to pay $14.4 million in civil penalties and community-related environmental projects, while also installing new air pollution controls at the refineries. But Justice and EPA officials said Exxon Mobil violated the agreement by not adequately reducing smokestack sulfur pollution. As part of the settlement, Exxon Mobil originally paid a civil fine of $7.7 million, promised to spend $6.7 million on environmental improvements and said it was installing more pollution controls at six refineries.

Associated Press

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