US stocks open higher after holiday weekend

NEW YORK — The U.S. stock market is opening higher as traders return from a long holiday weekend.

Investors were encouraged by a report that orders for big-ticket items unexpectedly rose last month.

The Standard & Poor's 500 index rose eight points, or 0.4 percent, to 1,908 in the first few minutes of trading Tuesday.

The Dow Jones industrial average rose 58 points, or 0.4 percent, to 16,663. The Nasdaq composite rose 27 points, or 0.6 percent, to 4,212.

U.S. markets were closed Monday for the Memorial Day holiday.

The S&P 500 index, the benchmark for most U.S. mutual funds, closed above 1,900 for the first time on Friday.

Bank of America rose 3 percent after the bank said it's resubmitting its capital plan to the Federal Reserve.

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US home prices rise at slower rate in March

WASHINGTON — U.S. home prices rose in March, but the gains are decelerating as fewer Americans can afford to buy.

The Standard & Poor's/Case-Shiller 20-city home price index rose 12.4 percent in March compared with 12 months earlier. While healthy, that rate of growth has slowed from both February and January.

Home prices rose in 19 of the 20 cities in March compared with the previous month, with only New York registering a slight decline, Standard & Poor's reported Tuesday. Leading the gains was San Francisco with a 2.4 percent monthly increase, while prices in Seattle, another hub for technology firms, rose 1.9 percent.

The housing market has struggled in recent months, after notching strong growth in the first half of 2013.

Rising prices and higher interest rates beginning in the middle of last year made homes less affordable for would-be buyers.

Meanwhile, a limited supply of homes is available to buy. New construction has focused increasingly on rental apartments, instead of single-family homes. And 9.7 million Americans are stuck in homes worth less than their mortgage debts, making them reluctant to sell, according to the real estate data firm Zillow.

The price gains over the past 12 months were the "result of a witch's brew," said Stan Humphries, chief economist at Zillow. It was made possible by the lows of the housing bust that began in 2007, the historically low mortgage rates and a limited supply of homes on the market.

"These influences are beginning to fade, and we're already seeing a monthly slowdown in home prices in more recent data," Humphries said.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the monthly gains reported by the Case-Shiller index seem excessive.

"Every indicator of housing market activity and prices we know is slowing or falling outright," Shepherdson said.

The index is not adjusted for seasonal variations, so the gains can reflect the warmer weather after a harsh winter.

Tampa showed the largest slowdown in annual price gains. Its growth rate went from 13.4 percent year-over-year in February to 10.7 percent in March. Las Vegas and San Francisco posted the strongest year-over-year growth.

Home sales and construction started recovering about two years ago from the Great Recession. But a sharp jump in mortgage rates last spring caused sales of existing homes to start falling in the summer.

Average rates for fixed, 30-year mortgages last week are 4.2 percent, compared to 3.51 percent a year ago.

The National Association of Realtors said Thursday that existing homes sold in April at a seasonally adjusted annual rate of 4.65 million, a 6.8 percent decrease over the past 12 months.

The Case-Shiller index covers roughly half of U.S. homes. The index measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.

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Median CEO pay crosses $10 million in 2013

NEW YORK — They're the $10 million men and women.

Propelled by a soaring stock market, the median pay package for a CEO rose above eight figures for the first time last year. The head of a typical large public company earned a record $10.5 million, an increase of 8.8 percent from $9.6 million in 2012, according to an Associated Press/Equilar pay study.

Last year was the fourth straight that CEO compensation rose following a decline during the Great Recession. The median CEO pay package climbed more than 50 percent over that stretch. A chief executive now makes about 257 times the average worker's salary, up sharply from 181 times in 2009.

The best paid CEO last year led an oilfield-services company. The highest paid female CEO was Carol Meyrowitz of discount retail giant TJX, owner of TJ Maxx and Marshall's. And the head of Monster Beverage got a monster of a raise.

Over the last several years, companies' boards of directors have tweaked executive compensation to answer critics' calls for CEO pay to be more attuned to performance. They've cut back on stock options and cash bonuses, which were criticized for rewarding executives even when a company did poorly. Boards of directors have placed more emphasis on paying CEOs in stock instead of cash and stock options.

The change became a boon for CEOs last year because of a surge in stocks that drove the Standard & Poor's 500 index up 30 percent. The stock component of pay packages rose 17 percent to $4.5 million.

"Companies have been happy with their CEOs' performance and the stock market has provided a big boost," says Gary Hewitt, director of research at GMI Ratings, a corporate governance research firm. "But we are still dealing with a situation where CEO compensation has spun out of control and CEOs are being paid extraordinary levels for their work."

The highest paid CEO was Anthony Petrello of oilfield-services company Nabors Industries, who made $68.3 million in 2013. Petrello's pay ballooned as a result of a $60 million lump sum that the company paid him to buy out his old contract.

Nabors Industries did not respond to calls from The Associated Press seeking comment.

Petrello was one of a handful of chief executives who received a one-time boost in pay because boards of directors decided to re-negotiate CEO contracts under pressure from shareholders. Freeport-McMoRan Copper & Gold CEO Richard Adkerson also received a one-time payment of $36.7 million to renegotiate his contract. His total pay, $55.3 million, made him the third-highest paid CEO last year.

The second-highest paid CEO among companies in the S&P 500 was Leslie Moonves of CBS. Moonves' total compensation rose 9 percent to $65.6 million in 2013, a year when the company's stock rose nearly 70 percent.

"CBS's share appreciation was not only the highest among major media companies, it was near the top of the entire S&P 500," CBS said in a statement. "Mr. Moonves' compensation is reflective of his continued strong leadership."

Media industry CEOs were, once again, paid handsomely. Viacom's Philippe Dauman made $37.2 million while Walt Disney's Robert Iger made $34.3 million. Time Warner CEO Jeffrey Bewkes earned $32.5 million.

The industry with the biggest pay bump was banking. The median pay of a Wall Street CEO rose by 22 percent last year, on top of a 22 percent increase the year before. BlackRock chief Larry Fink made the most, $22.9 million. Kenneth Chenault of American Express ranked second with earnings of $21.7 million.

Like stock compensation, performance cash bonuses jumped last year as a result of the surging stock market and higher corporate profits. Earnings per share of the S&P 500 rose 5.3 percent in 2013, according to FactSet. That resulted in an average cash bonus of $1.9 million, a jump of 12.9 percent from the prior year.

More than two-thirds of CEOs at S&P 500 companies received a raise last year, according to the AP/Equilar study, because of the bigger profits and higher stock prices.

CEO pay remains a divisive issue in the U.S. Large investors and boards of directors argue that they need to offer big pay packages to attract talented men and women who can run multibillion-dollar businesses.

"If you have a good CEO at a company, the wealth he might generate for shareholders could be in the billions," says Dan Mitchell, a senior fellow at the Cato Institute, a libertarian think tank. "It might be worth paying these guys millions for doing this type of work."

CEOs are still getting much bigger raises than the average U.S. worker.

The 8.8 percent increase in total pay that CEOs got last year dwarfed the average raise U.S. workers received. The Bureau of Labor Statistics said average weekly wages for U.S. workers rose 1.3 percent in 2013. At that rate an employee would have to work 257 years to make what a typical S&P 500 CEO makes in a year.

"There's this unbalanced approach, where there's all this energy put into how to reward executives, but little energy being put into ensuring the rest of the workforce is engaged, productive and paid appropriately," says Richard Clayton, research director at Change to Win Investment Group, which works with labor union-affiliated pension funds.

Investors have become increasingly vocal about executive pay since the recession. This has led to an increasing number of public spats between boards of directors, who propose pay packages, and shareholders, who own the company. These fights become public during "say on pay" votes, when shareholders have an opportunity to show they approve or don't approve of pay packages. Votes are non-binding, but companies sometimes act when there is clear disapproval from shareholders.

Petrello was the best-paid CEO largely because the board of directors of Nabors Industries' wanted to end his previous contract. Under that contract, Petrello could have been owed huge cash bonuses, and the company could have paid out tens of millions of dollars if he were to die or become disabled. The board changed his contract following "say on pay" votes in 2012 and 2013 that showed shareholders were unhappy with how Nabors paid its executives.

There have been other signs of shareholder concern about CEO pay. This month, 75 percent of Chipotle Mexican Grill shareholders voted against a proposed pay package for co-CEOs Steve Ells and Montgomery Moran. Ells earned $25.1 million in 2013 while Moran earned $24.3 million, a 27 percent rise in compensation for each. Chipotle spent $49.5 million on CEO pay last year, the fourth highest in the S&P 500.

"Companies are now taking the time to think through their pay practices and are talking more with shareholders," says Hewitt of GMI Ratings. "There's still a long way to go but pay practices are getting better."

To calculate a CEO's pay package, the AP and Equilar looked at salary as well as perks, bonuses and stock and option awards, using the regulatory filings that companies file each year. Equilar looked at data from 337 companies that had filed their proxies by April 30. It includes CEOs who have been at the company for two years.

One prominent name not included in the data was Oracle CEO Larry Ellison, who is typically one of the best paid CEOs in the country.

Oracle files its salary paperwork later in the year, so Ellison was excluded in the 2013 survey data. He was awarded $76.9 million in stock options for Oracle's fiscal year ending May 2013, according to proxy filings.

Among other findings:

— Female CEOs had a median pay package worth more than their male counterparts, $11.7 million versus $10.5 million for males. However, there were only 12 female CEOs in the AP/Equilar study compared with 325 male CEOs that were polled.

— The CEO who got the biggest bump in compensation from 2012 to 2013 was Rodney Sacks, the CEO of Monster Beverage. Sacks earned $6.22 million last year, an increase of 679 percent. Monster's board of directors awarded Sacks $5.3 million in stock options to supplement his $550,000 salary and $300,000 cash bonus.

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Follow Ken Sweet on Twitter @kensweet

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US consumer confidence moved up in May

WASHINGTON — U.S. consumers were slightly more confident in the economy in May than in April, partly because they are more optimistic about future hiring and income gains.

The Conference Board says that its confidence index rose to 83 from 81.7 in April, which was revised lower. That's the second-highest reading since January 2008, just after the Great Recession began. Only March was higher at 83.9.

But the index still isn't back to healthy levels. It regularly topped 90 before the recession.

Just over one-fifth of Americans expect their incomes to grow over the next six months, according to the survey, the highest level since December 2007.

Consumer sentiment is a closely watched figure, as consumer spending accounts for 70 percent of the nation's economic activity.

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Philadelphia Inquirer, Daily News up for auction

PHILADELPHIA — Businessman Lewis Katz and philanthropist H.G. "Gerry" Lenfest are taking over Philadelphia's two largest newspapers with an $88 million auction bid.

Katz and another businessman, George Norcross, had bought The Philadelphia Inquirer, the Philadelphia Daily News and the Philly.com news website for $55 million in 2012. But they began feuding and competed to take control at Tuesday's auction.

Katz made his fortune investing in the Kinney Parking empire and the Yankees Entertainment and Sports Network in New York. He supports the investigative reporting favored by current Inquirer editor Bill Marimow.

Norcross had owned just over 50 percent of the company. Katz held a 26 percent stake and his ally Lenfest, a former cable magnate, a 16 percent stake.

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Startup lets clean water flow

When you are tackling one of the biggest problems on the planet, you need as many people on your side as possible.

That is the strategy Drinkwell, a Cambridge-based startup, is using to help provide clean water to the Third World.

"You really want to work with locals and have local ownership of the problem," said Minhaj Chowdhury, CEO and co-founder of Drinkwell.

Drinkwell, which has developed a cheap, reusable system of removing toxins such as arsenic, fluoride and iron, partners with people in third-world villages to treat and sell clean water to their neighbors.

"What you really want to do is create a true opportunity for the community to maintain the system and, while you're at it, create some kind of economic opportunity," Chowdhury said. "What we wanted to do is come up with a solution that actually lasts. It's really life and death for a lot of these folks."

Nearly 800 million people do not have access to clean water, and as many as 8 million people a year die from water related illnesses, according to the United Nations.

Drinkwell's model is designed to create a permanent solution. Many programs that have tried to bring clean water to the Third World have fizzled when funding waned. Drinkwell will not have this issue, Chowdhury said, because towns and villages will rely on local employees instead of an international group.

Drinkwell's water purifying system fits over existing wells, making a liter of clean water available for half a penny.

The system cleans water using ion-exchange technology, stripping toxins from the water using reusable resin beads, to provide enough water for 600 households. It produces 99 liters of clean water for every 100 liters of water put in, much more than established methods.

Drinkwell systems are connected to Twitter, so they can be monitored remotely. Because many people have basic access to cellphones and Twitter in the countries Drinkwell is serving, information about the levels of toxins in certain systems and even how long the line is for clean water can be shared in real-time.

Announced as a MassChallenge finalist last week, Drinkwell currently has 200 systems in place in India, Laos, Nepal and Cambodia through various partnerships, but is hoping to put its own model in place soon.

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Starting 2012 Chrysler van gives driver a jolting jump

Recently I purchased a 2012 Chrysler Town & Country SXT V6 van with 39,000 miles. It is a one-owner vehicle with no Carfax issues. When starting out anytime, the accelerator pedal moves about an inch down before the vehicle responds from idle. When it does it jumps forward rather than a smooth reaction. This makes me let up on the pedal and then it jumps again when I reapply the throttle. This may be an inherent characteristic. I can describe the issue like this: If it is idling at 800 rpm at a stop, it jumps to 2500 rpm to get going, then adjusts to the pedal position. I called the dealership and they want to do a diagnostic and test drive for more than $100.

You are correct that some of the transmission's characteristics may be inherent. The software that controls the transmission is programmed to maximize fuel economy by tailoring shifts to specific driving conditions. The "ECO" button, for example, will cause the transmission to shift directly from first to third gear, softening acceleration to improve fuel economy.

Chrysler has issued two software updates that address shift quality from the 6-speed automatic transmission in this vehicle. One of these is called the "enhanced pedal" update which, according to the bulletin, "will make the vehicle more responsive with less pedal input and take less effort to maintain a constant cruising speed."

You didn't mention where you purchased the vehicle, but it's worth asking the dealer if your vehicle is affected by the bulletin, and if the update was done at no cost to the original owner. If not, even though the vehicle is just a few thousand miles out of warranty, this may be covered as a goodwill adjustment.

I have a 2007 Ford Focus with a trunk release issue. When I push the trunk release button on the dash and when I push the trunk release button on the remote, it sounds like a loud machine gun firing and always causes heads to turn in the parking lot. This occurs about 90 percent of the time. Usually the trunk does release, but occasionally it doesn't work and I have to repeat the process or unlock it with the key. Also, the dash light appears, indicating that the trunk isn't locked after I close it even though usually it is locked.

The most likely cause is a poor electrical connection or ground in the trunk release solenoid circuit. Ford issued service bulletin #10-5-9 in March 2010 outlining a diagnostic procedure for the trunk release. The bulletin deals with an inoperative solenoid and identifies the possibility of a poor connection between the trunk release harness connector and the solenoid. Even though your symptom is a bit different, this is the place to start.

I have a 2005 Mercury Mariner that I purchased new. The vehicle is in showroom condition with 47,000 miles on it. Here's the issue. The tachometer on the left has a little window that displays information such as direction, door open, oil change needed, etc. This has dulled to the point of being barely visible. The dealer states that the whole section of the dash must be replaced at a cost of around $700. Is there not a less expensive way? I like everything to be just right!

The dashboard on your vehicle is back-lit with a number of small light bulbs. The individual bulbs are replaceable by removing the dashboard to gain access. The real question is whether the "dulled" display is due to a burned-out bulb or failed module supplying the info to the display. If you can read the specific information displayed, even when dulled, I suspect the lamp behind it is burned out.

Paul Brand, author of "How to Repair Your Car," is an automotive troubleshooter, driving instructor and former race-car driver. Readers may write to him at: Star Tribune, 425 Portland Ave. S., Minneapolis, Minn., 55488 or via email at paulbrand@startribune.com. Please explain the problem in detail and include a daytime phone number.

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Chips still on web gambling

Online gaming proponents are vowing to push ahead despite a leading casino industry lobbying group's withdrawal of support for expanded Internet gambling, which has proved to be a divisive issue among Las Vegas gaming titans.

State Treasurer and gubernatorial candidate Steven Grossman said the reversal by the American Gaming Association does not chill his interest in exploring online gaming to boost the state Lottery.

"They can have their squabbles out there all they want," Grossman said. "We'll continue to move forward … to study this issue and how it can potentially affect us, one way or another. Any smart business of any kind, public or private, would study that. You have to change to survive and flourish."

The AGA announced this past week it would no longer push to expand online gaming into new states, an issue that has pitted opponents such as Sands chief Sheldon Adelson and Wynn Resorts head Steve Wynn against supporters such as MGM and Caesars Entertainment.

Grossman said the near $5 billion state Lottery still wants to explore if online gaming can help preserve its market share, so long as credit cards can't be used to play and if it doesn't increase gambling addiction or hurt Lottery retailers.

"I hear the differences of opinion out there," Grossman said. "We're not going to get dragged one way or another into that debate. We'll simply study and be very careful with any approach to online gaming that doesn't protect the people of this commonwealth appropriately."

A bill is pending in the Legisla-

ture that would clear the path for the Lottery to experiment with online gaming.

Adam Krejcik, managing director at Eilers Research, which tracks online gambling, said the AGA's move dampened the prospects for new states jumping into the arena, particularly in the wake of poor returns in New Jersey.

"I think a state would much rather have the AGA support … someone needs to be leading the charge," Krejcik said. "It's hard to put a positive spin on it."

Krejcik said online gaming revenue this year in New Jersey, where casinos run gambling sites, "will come in below the most conservative estimates out there," about $140 million. Projections were as high as $1.2 billion, he said.

The state Gaming Commission — whose chairman, Stephen Crosby, called a forum in March to discuss online gambling, saying "the time is now" to discuss legalizing it — said the AGA decision does not change its posture.

"The AGA's decision to withdraw from discussions regarding online gaming reinforces the commission's position on this topic," the commission said in a statement. "The commission believes that a slow and deliberate approach to this issue is the most responsible way to move forward given the significant varying opinions on this matter."

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New FHA rules making condos no-lending zones

WASHINGTON — For young first-time buyers, people with modest down payment cash, or seniors who want to tap their equity using a reverse mortgage, it's a growing problem: They cannot use Federal Housing Administration financing in condominiums.

It's not that these buyers and unit owners can't qualify on credit and income grounds for a loan personally — they often can. Instead, it's because the entire condominium development is ineligible. As the result of policy changes at the federal level and decisions by condominium boards of directors, thousands of communities have essentially become prohibited lending zones for FHA in the past several years.

The agency has banned so-called "spot" loans and will only insure mortgages on units in condo projects that have passed a certification process that examines budgets, reserves, insurance coverage, percentage of renters compared with owners in the development and delinquencies on payment of condo fees.

FHA says that its revised procedures weed out fiscally weak, poorly managed developments and reduce taxpayer exposure to future losses. Condominium boards, on the other hand, argue that some of FHA's evaluation criteria are too strict and that the certification process is bureaucratic and costs them money they'd prefer not to spend.

Since toughening its financing rules and requiring certification of entire projects four years ago, the number of condo developments approved for FHA financing has plunged by more than half. As of mid-month, it stood at just 10,020 communities, according to an FHA spokesman. Industry sources estimate the total number of condo projects nationwide is around 144,000.

FHA financing is important because of the special niches it fills. Among the three major federal lending intermediaries — Fannie Mae and Freddie Mac are the other two — FHA is the most flexible on credit issues. It is also lenient on debt ratios and allows down payments as small as 3.5 percent.

As a result, FHA for decades has been the go-to mortgage option for moderate-income purchasers and has been a key resource for African-American and Latino buyers, many of whom have made their first purchase in a condominium development.

FHA also plays an outsized role in the reverse mortgage market for seniors 62 and older. Its insured reverse mortgage product accounts for more than 90 percent of all borrowing in that field, allowing seniors to extract needed cash from their home equity to support their retirement expenses.

But with the sharp decline in FHA-approved condominium projects, many buyers and unit owners are finding themselves financially frozen out. Equally troubling, unit owners who want to sell find the pool of potential buyers reduced — along with the market value of their property — because FHA mortgages are banned.

Seth Task of Berkshire Hathaway HomeServices Professional Realty in Solon, Ohio, said a condo unit client his firm represented recently was forced to sell for $10,000 below what she had been offered by a buyer who was pre-qualified for an FHA loan — a loss solely attributable to the condominium's non-certified status. Situations like this are becoming more frequent, housing industry experts say, and the lack of FHA financing eligibility for entry-level-priced condo units is partially responsible for the decline in first-time buyer participation in the real estate market.

But now a movement is getting underway to reverse this shrinkage. At this month's spring legislative conference of the National Association of Realtors here in Washington, California brokers and agents unveiled a campaign to convince condo boards to re-think their objections to FHA certification — for their unit owners' sakes.

The primary focus, said Mike DeLeon, president of the Orange County Association of Realtors, which debuted an educational video at the Washington conference, is to show reluctant condo boards of directors "the positive benefits" of certifying with FHA. The video stresses "keeping condo unit values at their highest" by widening the pool of potential purchasers; helping existing unit owners tap their equities for retirement; and the relatively low risk of default presented by today's FHA buyers.

For most condo developments the message is this: Give some thought to the issue. FHA certification has its complications and costs, but it could be more than worth the effort for your current residents and future business.

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Private hospitals could take some pressure off VA

WASHINGTON — The Obama administration's decision to allow more veterans to get care at private hospitals could take some pressure off backlogged Veterans Affairs facilities struggling to cope with new patients from the wars on terrorism as well as old soldiers from prior conflicts.

Agreeing to recommendations from lawmakers, the administration has said it will allow more veterans to obtain treatment at private hospitals and clinics in an effort to improve care.

Veterans Affairs Secretary Eric Shinseki also said VA facilities are enhancing capacity of their clinics so veterans can get care sooner. In cases where officials cannot expand capacity at VA centers, the Department of Veterans Affairs is "increasing the care we acquire in the community through non-VA care," Shinseki said.

Lawmakers from both parties have pressed for this policy change as the VA confronts allegations about treatment delays and falsified records at VA centers nationwide.

The department's inspector general says 26 VA facilities are under investigation, including the Phoenix VA hospital, where a former clinic director says as many as 40 veterans may have died while awaiting treatment.

Officials also are investigating claims that VA employees have falsified appointment records to cover up delays in care. An initial review of 17 people who died while awaiting appointments in Phoenix found that none of their deaths appeared to have been caused by delays in treatment.

The allegations have raised fresh concerns about the administration's management of a department that has been struggling to keep up with the influx of veterans returning home from the wars in Iraq and Afghanistan, and Vietnam veterans needing more care as they age.

The directive announced Saturday should make it easier for veterans to get medical care at non-VA facilities, according to an agency spokeswoman.

The VA spent about $4.8 billion last year on medical care at non-VA hospitals and clinics, spokeswoman Victoria Dillon said. That amounts to about 10 percent of health care costs for the Veterans Health Administration, the agency's health care arm.

It was not clear how much the new initiative would cost, Dillon said.

Rep. Jeff Miller, R-Fla., chairman of the House Veterans' Affairs Committee, welcomed Shinseki's announcement but questioned why it took so long. Reports about the veterans at the Phoenix hospital surfaced more than a month ago.

"You've got an entrenched bureaucracy that exists out there that is not held accountable, that is shooting for goals, goals that are not helping the veterans," Miller said Sunday.

Sen. Bernie Sanders, I-Vt., chairman of the Senate Veterans Affair Committee, said: "I think it's unfair to blame Shinseki for all the problems. Can he do better? Yes."

Sen. John McCain, R-Ariz., has called for the VA to allow more veterans to receive medical care at private hospitals. House Minority Leader Nancy Pelosi, D-Calif., said this past week that she was open to the idea of medical care at private hospitals.

Miller and Sanders made their comments on CNN's "State of the Union."

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Follow Matthew Daly: https://twitter.com/MatthewDalyWDC

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