In Brief: CLO Edition

2018 Jul 17
Today's Top Story
Gender Diversity Progress Stalls at U.K.'s Largest Firms

New research from the Pipeline, which trains women for senior roles, found women accounted for only 16 percent of executive committees at FTSE 350 companies at mid-April this year, unchanged since 2016. The report also found that only 5 percent of U.K. executives with "profit-and-loss responsibilities"—upper-level executives who manage the company's budget—were women in 2018, a decline from 6 percent the previous year. The results have prompted questions over whether government-backed gender diversity targets, which include women making up one-third of boards and executive committees of FTSE 350 companies, can be met by the 2020 deadline. Last month, a review found that U.K. companies would need to appoint women to 40 percent of their board positions over the next two years to meet the target, reports the Financial Times (16 July, Murphy).

From "Gender Diversity Progress Stalls at U.K.'s Largest Firms"
Abstract News © 2018 Information, Inc.

Legal Actions
Kohl's Denies Shorting Assistant Store Managers on Pay

A lawsuit against Kohl's Corp. is the latest in a series of legal actions filed against retailers and other businesses over how they pay employees who carry manager titles but operate in part as rank-and-file workers. The lawsuit alleges Kohl's holds down costs by improperly barring assistant store managers from getting overtime pay, even though most of their work involves non-supervisory tasks such as unloading freight and stocking shelves, reports the Milwaukee Journal Sentinel (16 July, Romell). The plaintiffs are three former assistant managers, but attorneys for the plaintiffs want the case to be declared a collective action covering assistant managers at the more than 1,100 Kohl's stores nationwide. A Kohl's spokeswoman said the company does not comment on pending litigation; however, in court documents it denies the allegations.

From "Kohl's Denies Shorting Assistant Store Managers on Pay"
Abstract News © 2018 Information, Inc.

New Corporate Governance Code Tells Firms to Engage With Staff to Improve Trust

The Financial Reporting Council (FRC) has published a new corporate governance code in the United Kingdom with the goal of improving trust in business. According to the accountancy watchdog, the changes to the 26-year-old code include banning senior executives from selling shares awards for five years rather than the current three years and encouraging companies to improve how they engage with staff. Regarding the latter, companies are expected to either appoint a worker to their boards, nominate a non-executive director responsible for representing employees, or create a separate employee advisory council. The code is not mandatory; however, listed U.K. firms that opt out would need to explain to investors why they did so, reports BBC News (16 July). The new code will apply beginning 1 January 2019. The FRC is working on a separate corporate governance code that will apply to large privately-held businesses.

From "New Corporate Governance Code Tells Firms to Engage With Staff to Improve Trust"
Abstract News © 2018 Information, Inc.

Board/Management Relations
Thyssenkrupp Appoints Guido Kerkhoff as Interim CEO

Guido Kerkhoff has been named interim CEO at German steel firm Thyssenkrupp. Kerkhoff previously served as finance chief on the company's management board. The unanimous decision was made after the abrupt resignation of Heinrich Hiesinger from his CEO post last week. Hiesinger's unexpected exit was announced after he finalized a controversial merger of Thyssenkrupp's steel unit with Indian rival Tata Steel's European subsidiary. During his seven years at the helm, Hiesinger clashed on numerous occasions with Cevian, the Swedish investment fund that is Thyssenkrupp's second biggest shareholder, reports Xinhua News Agency (14 July).

From "Thyssenkrupp Appoints Guido Kerkhoff as Interim CEO"
Abstract News © 2018 Information, Inc.

Cryptocurrency Exchanges Are Getting Hacked Because It's Easy

There have been 56 cyberattacks directed at cryptocurrency exchanges, initial coin offerings, and other digital-currency platforms around the world since 2011, according to an analysis by London-based financial-services firm Autonomous Research. The most recent hack took place on 9 July, when hackers stole US$23.5 million worth of cryptocurrencies from an Israeli platform called Bancor. Cryptocurrency exchanges are "easy to breach, with minimum effort and expense from attackers and with maximum return on investment," says Robert Statica, president of BLAKFX, a cybersecurity firm in New York. Four of the seven hacks so far this year have been in Asia. Chainalysis, a New York-based blockchain-analytics firm, notes South Korea has been a ripe area for hackers because of the market's rapid growth in a short amount of time, reports the Wall Street Journal (16 July, Russolillo, Jeong).

From "Cryptocurrency Exchanges Are Getting Hacked Because It's Easy"
Abstract News © 2018 Information, Inc.

Deutsche Bank Reports Profits Above Market Estimates

German lender Deutsche Bank made approximately €700 million in profits in the second quarter of the year, about twice as much money as analysts expected. The surprise comes three months after Chief Executive Christian Sewing took over from Briton John Cryan. Sewing promised to cut costs faster and to reshape the firm's investment bank, reports the Financial Times (16 July, Noonan).

From "Deutsche Bank Reports Profits Above Market Estimates"
Abstract News © 2018 Information, Inc.

Miners Test Environmentally-Friendlier Ways to Dig

To satisfy customers, miners are considering new ways to make their efforts less harmful to the environment. For example, Alcoa has spent almost a decade at a site near Pittsburgh testing technology that would release oxygen instead of carbon dioxide during the smelting process, which interested Apple. "An iMac has more than half a pound of aluminum in it, so they are really interested in supporting advancement of technologies that allow them to reduce the footprint of their product," said Vincent Christ, head of the Rio Tinto and Alcoa joint venture, called Elysis. Meanwhile, Nespresso had focused on promoting how it sources its coffee when it realized customers were interested in the packaging, said Daniel Weston, who leads the unit's legal and corporate-affairs team. The company now wants to source all the aluminum for its capsules from sustainably managed operations by 2020, which includes strict limits on greenhouse-gas emissions. Still, critics say the mining industry has been slow to make changes. Rio Tinto and Alcoa's Elysis technology, if commercialized, will be the first shift in the way aluminum is made in more than a century, reports the Wall Street Journal (16 July, Hoyle).

From "Miners Test Environmentally-Friendlier Ways to Dig"
Abstract News © 2018 Information, Inc.

Microsoft President Brad Smith Calls on U.S. Government to Regulate Facial-Recognition Technology

Microsoft Corp. President Brad Smith has called for the U.S. government to regulate facial-recognition technology, an area in which many technology firms have made significant wagers. Facial-recognition technology has become deeply integrated in these companies' products, whether it is the key feature for unlocking Apple's iPhone X or identifying people in Google's photos app, reports the Wall Street Journal (13 July, Greene). Smith recently addressed the potential "sobering" uses for the technology, such as creating a database of everyone who attended a political rally. "The only effective way to manage the use of technology by a government is for the government proactively to manage this use itself," Smith wrote in a blog post. Additionally, he questioned the notion that companies can regulate themselves. Change will not occur, he concluded, if a few firms adopt new standards while others do not.

From "Microsoft President Brad Smith Calls on U.S. Government to Regulate Facial-Recognition Technology"
Abstract News © 2018 Information, Inc.

Boeing, Airbus Strain to Deliver Promised New Jets

Boeing and Airbus are struggling to deliver orders for new jets on time. Airbus has missed several deadlines for deliveries, forcing airline customers to change routes, cancel flights, or find alternatives. So far, Boeing has not missed any deliveries. However, the company is struggling with the same supplier shortfalls as Airbus, especially when it comes to engines. A demand for new aircraft has made it more challenging for jet makers to deliver planes on time to airline customers. A supply-line crunch for items including engines and wing components is now intensifying the strain, reports the Wall Street Journal (15 July, Wall, Cameron).

From "Boeing, Airbus Strain to Deliver Promised New Jets"
Abstract News © 2018 Information, Inc.

Food and Beverage
McDonald's Pulls Salads From 3,000 Locations

An outbreak of intestinal illnesses has left dozens sickened and is "likely linked" to salads at McDonald's restaurants. On 13 July, the fast-food giant announced that it was voluntarily pulling salads from nearly 3,000 eateries in 14 states, mostly in the U.S. Midwest, until it can switch to an alternative lettuce supplier. The Centers for Disease Control and Prevention has reportedly found more than 60 cases of cyclosporiasis among people located in seven states who had eaten salads at McDonald's. Health officials are investigating the outbreak, reports National Public Radio (14 July, Doubek).

From "McDonald's Pulls Salads From 3,000 Locations"
Abstract News © 2018 Information, Inc.

Former Hydro One CEO to Receive Millions From Stock Options, Pension Benefits

When Ontario Premier Doug Ford announced former Hydro One CEO Mayo Schmidt's retirement last week, he said Schmidt would receive only CA$400,000 instead of the CA$10.7 million guaranteed by his contract. However, that amount does not take into account that Schmidt will still get his stock options and other incentives granted as part of his executive compensation package. CBC Toronto calculations suggest he could end up with more than CA$5 million in stocks alone. Because Schmidt agreed to retire, he is still entitled to pension benefits and various shares in the publicly-traded utility along with the CA$400,000 lump sum. Ultimately, Schmidt could end up closer to being Hydro One's CA$10 million man, instead of the CA$6 million man Ford labelled him as during the campaign, reports CBC News (13 July, Jones).

From "Former Hydro One CEO to Receive Millions From Stock Options, Pension Benefits"
Abstract News © 2018 Information, Inc.

Corporate Social Responsibility
CVS Apologizes After Manager Calls Police on Black Customer

CVS Health has apologized to Camilla Hudson, a black customer who says a store manager called the police on her and accused her of using a fake coupon at a CVS store in Chicago. Hudson shared a video on her Facebook page of the store manager calling the authorities. Hudson claims she attempted to use a manufacturer's coupon to replace a defective product, which the manager refused to accept on the grounds it looked fraudulent. In her call to the police, the manager accused Hudson of harassment. No police action was taken. CVS has launched an investigation into the matter, reports The Hill (15 July, Anapol).

From "CVS Apologizes After Manager Calls Police on Black Customer"
Abstract News © 2018 Information, Inc.

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