In Brief: CLO Edition
2018 Jun 25
Today's Top Story
Women Make Gains on Boards
Women are gaining more seats in U.S. boardrooms, though not necessarily those with the most power, reports the Wall Street Journal (21 June, Fuhrmans). Through the end of May, women accounted for 31 percent of new board directors at the nation's 3,000 largest publicly traded companies—the highest percentage in at least a decade, according to ISS Analytics. Board recruiters say shareholder pressure coupled with the #MeToo movement is fueling some of the momentum. Female directors with experience in new technologies, e-commerce, and cybersecurity are in the highest demand. Despite the gains, though, companies have not propelled women at the same rate into boardroom leadership roles. Only 10 percent of lead independent directors are women, and 4 percent of boards are led by a woman.
PG&E to Pay for Wine Country Fires
Blamed for sparking some of the most destructive blazes in California history, Pacific Gas and Electric Co. and its parent company, PG&E Corp., will take a US$2.5 billion charge to cover expected losses from October's deadly Wine Country wildfires, reports the San Francisco Chronicle (21 June, Baker). Both firms are cautioning investors that this may be just the beginning of the financial pain. The damage charge, which is greater than PG&E Corp.'s 2017 profit of US$1.66 billion, represents just the low end of the utility's potential losses from the fires. Businesses, homeowners, and local government agencies have filed approximately 200 lawsuits seeking to hold the utility accountable for the blazes, which erupted during a powerful windstorm. Total liability estimates range as high as US$15 billion.
SEC Judges Were Appointed Unlawfully, Justices Rule
The Supreme Court ruled on Thursday that in-house judges at the U.S. Securities and Exchange Commission (SEC) had been deciding cases without constitutional authorization, reports the New York Times (22 June, Liptak). The judges were appointed by staff members rather than by the five-member commission itself, violating the Constitution's appointments clause, Justice Elena Kagan wrote for the majority in the 7-to-2 decision. The clause requires "inferior officers" to be appointed by the president, the courts, or "heads of departments." The commission itself is a "head of department," while its staff members are not. The case arose from charges that Raymond J. Lucia and his firm had made misleading presentations to prospective clients about a retirement strategy. Lucia lost before an administrative law judge and the SEC, and a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit rejected a challenge to the judge's authority. The full appeals court agreed to rehear the case, but its judges deadlocked 5 to 5.
Intel CEO Resigns Over Relationship With Employee
Intel CEO Brian Krzanich has resigned after the company learned of a "past consensual relationship" with an Intel employee, reports CNN Tech (21 June, O'Brien). A company statement issued Thursday read: "An ongoing investigation by internal and external counsel has confirmed a violation of Intel's non-fraternization policy, which applies to all managers." Intel CFO Robert Swan has agreed to serve as chief executive on an interim basis, effective immediately.
Labor and Employment
Amazon Issues Guidelines to Support Transgender Employees
Businesses have been pressured to address discrimination in the workplace, leading Amazon to issue new guidelines to support transgender employees in the U.K. The guidance includes advice for employees and managers on several issues, such as access to bathrooms and dress codes, reports the Financial Times (22 June, Bond). The Seattle-based technology group launched similar policies last year in the United States.
Amazon's Surveillance Software Contrasts With Its Privacy Stance
Although Amazon Chief Executive Jeff Bezos said he will fight investigators who try to obtain personal information from devices made by his company, Amazon is marketing face-recognition technology for uses that many believe are a threat to privacy. Face recognition allows governments and private businesses to track citizens anywhere there is a camera. There is no approval process for Amazon's facial-recognition platform Rekognition, and anyone with a credit card and an Amazon Web Services account can have it. The Orlando Police Department has conducted a pilot with Amazon using Rekognition, which was fed data from cameras owned by the department, says a spokeswoman. She said Amazon initiated the pilot. However, some Amazon investors are siding with the American Civil Liberties Union in an effort to pressure Amazon not to sell its face-recognition technology to law enforcement, reports the Wall Street Journal (21 June, Mims).
Europe Will Hit Products From U.S. With Tariffs Starting Today
European Union tariffs on American products such as motorcycles, orange juice, bourbon, and denim, will go into effect on 22 June. The tariffs are in response to the Trump administrations tariffs on steel and aluminum exports from Europe, reports CNN Money (20 June, Kottasová). "We did not want to be in this position," said EU trade official Cecilia Malmström. "The unilateral and unjustified decision of the U.S. to impose steel and aluminum tariffs on the EU means that we are left with no other choice." The European Union warned that if the trade dispute continues or is not resolved by the World Trade Organization, it could target more American exports worth around €3.7 billion (US$4.3 billion).
Brussels Probes Qatar Petroleum
As the European Commission works to remove territorial restrictions in the EU gas market, Brussels has launched an investigation against Qatar Petroleum over contracts that seem to limit buyers from selling on or diverting their cargoes to different purchasers. Qatar is the world's biggest producer of liquefied natural gas (LNG) and long-term LNG contracts have traditionally had destination restriction clauses, where the buyer is required to receive cargos at an agreed port, and barred from diverting the shipments or selling them on to other purchasers. LNG producers have faced pressure to remove fixed destination clauses, and Japan deemed these clauses illegal last year, reports the Financial Times (21 June, Terazono, Kerr).
Food and Beverage
Brazil Chicken Exports Slump on EU Ban
According to trade group ABPA, Brazilian chicken exports fell sharply in the five months through May as the world's largest exporter faced trade embargoes and a drop in sales to some countries. In April, the EU suspended imports of Brazilian meat products, which affected 20 plants in the South American nation, reports Reuters (21 June, Mano). As a result of the fall in sales, export revenue fell 12.3 percent, ABPA said. Export volumes could decline even further after an 11-day truckers strike last month crippled Brazil's roads and disrupted the flow of goods, ABPA said.
Canada Considers Tit-for-Tat in Trade Spat With U.S.
Canada is considering penalizing companies from countries that have caused it economic damage, specifically discussing changes to a multi-billion dollar fighter jet procurement process that could make it harder for a U.S. company to win the order, sources said. Still, the final decision is not expected before next year and a spokeswoman for federal Procurement Minister Carla Qualtrough—who is responsible for major purchases of military equipment—declined to comment. Defense sources have said the Royal Canadian Air Force would prefer an American-built jet, such as Boeing Co.'s F-18 Super Hornet and Lockheed Martin Corp.'s F-35 fighter, which were among the favorites to capture the contract to supply 88 planes, reports Reuters (21 June, Ljunggren). However, a change in procurement terms would give European suppliers, such as Airbus and Saab AB, more of a chance.
Supreme Court Rules States Can Force Online Retailers to Collect Sales Taxes
The U.S. Supreme court ruled Thursday that states can require online retailers to collect sales taxes, reports NBC News (21 June, Williams). The 5-4 decision broke with five decades' worth of legal rulings that prohibited states from imposing sales taxes on most purchases their residents make from out-of-state retailers. The decision was a triumph for South Dakota, which had petitioned the court to uphold its recently passed law imposing an internet sales tax.
Retail Companies Scrambling to Buy Tech Start-Ups
Tech firms are in high demand as companies are increasingly interested in deals in other industries. The consumer and retail industry has purchased the most tech firms, accounting for 32 percent of cross-sector deals involving tech, according to a report by PricewaterhouseCooper. In March, Nordstrom announced it bought BevyUp, a sales communications platform, and MessageYes, a brands-to-customer texting service, reports CNBC News (21 June, Cheng).