In Brief: CLO Edition
2018 Jun 19
Today's Top Story
Pregnancy Discrimination Is Rampant at U.S. Companies, Review Finds
An investigation by the New York Times (17 June, Kitroeff, Silver-Greenberg) found that many of the biggest companies in the United States systematically sideline pregnant women. The companies routinely pass these women over for promotions and raises and fire them when they complain. In the corporate world, the discrimination tends to be subtle, the probe found. Pregnant women and mothers are often steered away from prestigious assignments and slighted come bonus time. Researchers note that the number of pregnancy discrimination claims filed annually with the Equal Employment Opportunity Commission has been increasing for two decades and is currently hovering near a record high. Tens of thousands of women have taken legal action alleging pregnancy discrimination at U.S. companies.
Mergers and Acquisitions
Google Bets on China's Second-Largest E-Commerce Player
Google has announced it will invest US$550 million in Chinese e-commerce company JD.com, reports CNBC News (18 June, Choudhury). The two companies said they would collaborate on the development of retail infrastructure that can better personalize the shopping experience and reduce friction in a number of markets throughout Southeast Asia. JD.com said it planned to make a selection of items available for sale in places like the United States and Europe through Google Shopping. The investment is part of Google's efforts to expand its presence in rapidly expanding Asian markets.
Bond Investors Discover Powers of Persuasion on Governance
Bond investors have long had restricted influence on companies' governance; however, some believe shifting market conditions will now give them more clout. Following the financial crisis, many equity investors ramped up their efforts to improve standards at companies, reining in excessive pay and calling for diversity on boards. Fixed income investors say they have struggled to match this, despite examining a company's governance record before investing. This is because market conditions have enabled companies to borrow cheaply, therefore limiting bond investors' clout, reports the Financial Times (17 June, Mooney). However, with interest rates rising, many investors believe they can now have more influence because lower bond prices mean companies have to work harder to attract investors.
Audi CEO Arrested for Diesel Cheating
Audi Chief Executive Rupert Stadler has been arrested for his alleged role in the Volkswagen Group's (VW) diesel cheating scandal. Stadler is the highest sitting executive to be taken into custody since the decade-long diesel cheating scandal was exposed nearly three years ago. Stadler has faced calls from minority shareholders and some analysts to step down; however, VW has defended him by extending his contract by five years and in April promoted him to head of a new "Premium" cars division, reports the Financial Times (18 June, McGee).
Researchers Find Gay Men Are Frozen Out of Top Management Spots
Researchers in Britain analyzed the responses of more than 645,000 working age adults—including more than 6,000 respondents who identify as gay, lesbian, or bisexual—to the annual U.K. Integrated Household Survey from 2009 to 2014. The analysis found that gay men are more likely to be supervisors and managers than their straight counterparts. However, gay men are far more likely (7.9 percentage points) to be stuck in low-level management jobs at the bottom of the organization chart or at smaller, less prestigious organizations. Additionally, they are significantly less likely (2.2 percentage points) than straight men to be high-level managers. The glass ceiling may lead to gay men earning less than they should, reports the Washington Post (15 June, Van Dam).
Samsung Fined for FinFet Patent Breach
According to CNet (16 June, Musil), Samsung has been ordered to pay US$400 million to the licensing arm of a South Korean university for infringing a patent related to semiconductor technology. A federal jury in Texas has ruled in favor of KAIST IP US after finding the Korean electronics giant infringed on a U.S. patent related to FinFet, a key technology in the production of processors for mobile phones. Both Qualcomm and GlobalFoundries were also found to have infringed on the patent, but they reportedly were not ordered to pay damages.
Canadian Oil-Drilling Companies Moving South of the Border
Greater work opportunities, plus the partial or full payment of moving costs, are causing Canadian oil-drilling companies to move south. At least six Alberta drilling firms are sending some of their most powerful and newest technology rigs—and sometimes crews—to the United States. Canada's energy sector is struggling to regain the activity and investment it had before the oil-price crash in 2014, reports the Toronto Globe and Mail (16 June, Cryderman).
Former Execs Face Trial Over Telecom Suicides
Didier Lombard, the former CEO of France Telecom, and six other managers will stand trial over a string of suicides among their staff in the late 2000s. According to prosecutors, all defendants presided over a culture of harassment at the firm that prompted at least 19 employees to kill themselves. The defendants deny their restructuring measures in 2006—when Lombard was trying to cut 22,000 jobs and retrain at least 10,000 workers—were to blame for the suicides. During the restructuring, some employees were transferred away from their families or left behind when offices were moved, or assigned demeaning jobs, reports BBC News (16 June).
AA Settles Airfare Collusion Lawsuit
According to the New York Daily News (16 June), American Airlines has agreed to pay US$45 million to settle a lawsuit that claims it and other major U.S. airlines colluded to drive up the price of airfares. American denied any wrongdoing in settling the case. The company issued an official statement in which it said fighting the case in court would be too costly. Earlier in the year, Southwest Airlines also reached a settlement in the case, paying US$15 million and denying any and all wrongdoing as well. The lawsuit alleges that major U.S. airlines colluded to limit capacity in order to hike ticket prices.
Didi Picks Australia for First Western Foray
Chinese ride-sharing company Didi Chuxing Technology Co., which purchased the mainland operations of Uber Technologies, said it will start offering its service in Australia on 25 June, its first venture into a Western country. The launch in Melbourne sets Didi up for a showdown with the U.S. competitor it bought out in China in exchange for a stake. Melbourne, a city of 4.5 million people, is a popular Australian entry point for companies in the so-called "sharing economy." Uber has routinely launched new offerings in the city, while several Chinese and Singapore-owned dockless bicycle rental companies have tapped Melbourne to start in Australia, reports Gadgets 360 (15 June).
Brazil Trucker Strike Hits Consumer Staples Suppliers
A trucker strike in Brazil has multinationals in the country counting the cost to their revenues. Unilever, producer of Dove soap to Magnum ice cream, was the first to quantify the damage when it warned last week that revenues in its second quarter would be slashed by €150 million. Bernstein Research predicted that among U.S. companies operating in Brazil, cosmetics group Avon, Colgate-Palmolive, Kimberly-Clark, Procter & Gamble, and PepsiCo, among others, were likely to be hardest hit, reports the Financial Times (17 June, Schipani, Daneshkhu). The strike could cost Brazil's ailing economy more than R$15.9 billion, according to the government.
Russian FirmsDitch London for Moscow
After billionaire Oleg Deripaska's En+ Group Plc was sanctioned just five months after a US$1.5 billion listing in London and Moscow, Russian companies are ditching stock listings in London and New York in favor of Moscow's revamped bourse. For example, meat producer Cherkizovo Group PJSC is mulling a Moscow share sale after it delisted from London last year, while the deputy chief executive officer of steel pipes producer TMK PJSC said he may consider a similar move in the future, reports Bloomberg (18 June, Galouchko, Fedorinova).