– The Wall Street Journal reported that Hubert Joly will step aside as Best Buy’s CEO having led the turnaround of the electronics retailer, which many had thought would suffer the same fate as other big-box chains facing challenges from Amazon. In June, Joly will hand over to CFO Corie Barry, who will be one of the few women and one of the youngest to lead an S&P 500 company. Joly will serve as executive chair and remain an employee.
– German prosecutors charged former Volkswagen CEO Martin Winterkorn with fraud over diesel emissions, CNN reported. Prosecutors said Winterkorn was one of five people indicted in a case related to the company’s diesel emissions-cheating scandal. Winterkorn has been accused of a particularly serious fraud, according to a statement from prosecutors. He was also charged with embezzlement and violating competition law.
Prosecutors allege Winterkorn was aware that diesel emissions were being manipulated as early as 2014 but failed to inform authorities and customers. Volkswagen admitted the following year to cheating on clean air rules with software that made emissions look less toxic than they really were.
Volkswagen declined to comment on the charges, describing them as a private matter. A lawyer for Winterkorn said he would be able to comment on the charges only when he had read the full indictment.
– According to The New York Times, insurers have since 2017 been applying the so-called ‘war exclusion’ – which protects them from being saddled with costs related to damage from war – to avoid paying out on claims from companies related to cyber-attacks. In the same way that insurers wouldn’t be liable if a bomb blew up a corporate building during an armed conflict, they claim not to be responsible when a state-backed hack strikes a computer network. Disputes over this stance are now playing out in court. The litigation will set a precedent about who pays when businesses are hit by a cyber-attack blamed on a foreign government.
– The WSJ reported that Uber Technologies disclosed an investigation into allegations of improper payments made in Indonesia and potentially three other countries. The company said in a regulatory filing that it received requests from the US Department of Justice (DoJ) in 2017 about an investigation into allegations of payments to police in Indonesia and potential improper payments in other countries, including Malaysia, China and India.
Uber in the filing said it is co-operating with prosecutors. ‘If we are determined to have violated the FCPA or similar laws, we may be subject to criminal sanctions and other liabilities, which would adversely affect our business, financial condition and operating results,’ the company stated.
Details of the probe were disclosed in documents that declared the company’s intention to go public. An Uber spokesperson declined to comment beyond the regulatory document. A DoJ spokesperson declined to comment.
– Starboard Value CEO Jeffrey Smith said his activist investor firm has a stake in $7 billion automobile auction house KAR Auction Services, CNBC reported. Smith emphasized the importance of the planned spin-off of the Insurance Auto Auctions (IAA) business from KAR Auction Services as a key value catalyst not yet appreciated by the market.
KAR announced last year that it would be splitting into two public companies, with IAA to become a separate company. IAA, which claims a sizable market share in the salvage auction services industry, typically auctions cars that are totaled or have very high mileage.
– The Financial Times looked at some of the details emerging in proxy filings for the first full year since the SEC required US companies to disclose the relationship between their CEO’s compensation and that of their median employee, providing fuel for those seeking to curb executive pay. The median CEO pay ratio for 2018 was 254:1, according to an analysis by Equilar, up from 235:1 in 2017 when only two thirds of the companies it tracks disclosed such figures.
The ratio has attracted attention from labor unions, activists and politicians at the beginning of a 2020 election season in which several Democrats are campaigning on taming corporate excesses and reducing inequality.
– Reuters reported that Hong Kong Airlines, partially owned by China’s HNA Group, faced uncertainty after Hou Wei disputed a decision that removed him as chair and said he was still in charge of the airline. Former Hong Kong Airlines director Zhong Guosong said on Tuesday he had been appointed chair after a shareholder meeting where he and Chinese private equity firm Frontier Investment Partner, who together control about 61 percent of the shares, voted in additional board members, including Zhong as chair.
Hou, referring to himself as chair of the airline, challenged the decision to remove him. In an internal letter sent to employees and shown to Reuters by Hong Kong Airlines, he said the board changes were a result of a shareholder dispute and would not have any impact on the company’s operations.
Hong Kong Airlines Consultation Service Co, which Zhong controls, and Frontier responded by saying that the April 16 meeting was conducted legitimately under proper procedures supported by multiple legal opinions. HNA declined to comment.
– Apple and Qualcomm agreed to dismiss all litigation between the two companies around the world and reached a new license agreement, ending a long-brewing legal battle over how royalties are collected on innovations in smartphone technology, the WSJ said.
The settlement, which came hours after opening arguments in a trial between the companies started, includes an undisclosed payment from Apple to Qualcomm. The companies also said in a joint statement that they had reached a six-year license agreement and a multi-year deal for Qualcomm to supply Apple with modem chips.
Apple and Qualcomm spokespeople declined to comment beyond the companies’ joint statement.
– CNN reported that the Weather Channel was taken off the air Thursday morning by what it said was a malicious software attack on the network. The network's morning show was unable to go on air and instead viewers saw taped programming. The network issued a statement saying that federal law enforcement is actively investigating the issue, and apologizing for any inconvenience to viewers.
– Investment firm Blackstone will become a corporation in July, moving away from its status as a publicly traded partnership, according to CNBC. Becoming a corporation will allow ‘double the number of people’ who are able to buy Blackstone’s stock, CEO Stephen Schwarzman said. The publicly-traded partnership status has been ‘very irksome’ because it disqualifies Blackstone from ‘being able to be owned by a huge number of potential buyers,’ he added.
– According to Reuters, Japanese toilet maker Lixil Group’s CEO Yoichiro Ushioda will resign next month, in a rare victory for activist minority shareholders who had demanded that he step down. Ushioda, who hails from one of the company’s founding families, said he was resigning as chief executive and chair of the board. Four investment firms last month called for Ushioda to leave the company’s board along with the company’s COO, Hirokazu Yamanashi. The investors said their appointment last year after the previous CEO’s resignation raised concerns about due diligence and corporate governance.
The shareholders had called for an extraordinary shareholders’ meeting to vote out Ushioda and Yamanashi from the board. Lixil has said the meeting would be held in the latter half of May, adding on Thursday that Ushioda and Yamanashi had requested that to be halted.
– The WSJ reported that Sears Holding sued Eddie Lampert, his hedge fund firm ESL Investment and various directors of ESL and Sears, accusing them of siphoning away billions of dollars’ worth of assets as the company made huge losses.
The lawsuit, filed by the team winding down the shell of Sears left behind in bankruptcy court following Lampert’s purchase of the retailer’s assets, alleges that he and the company’s board directed Sears’s executives to produce positive financial projections predicting a big turnaround while the company accumulated over $7 billion in losses from 2011 to 2014. These alleged bad-faith financial projections paved the way for the transfer of five major assets worth over $2 billion to Lampert and other ESL directors, according to the lawsuit.
In addition to Lampert, the lawsuit names as defendants US Treasury secretary Steven Mnuchin, a former investor and executive at ESL, and Kunal Kamlani – an executive at Lampert’s hedge fund firm - as well as Bruce Berkowitz of Fairholme Capital Management, a major Sears shareholder and lender.
Representatives for Lampert, Kamlani and ESL weren’t immediately available for comment. Representatives for Mnuchin and Fairholme didn’t immediately respond to requests for comment.
– Reuters reported that US banking regulators proposed a rule that would allow custody banks to exclude deposits with central banks from a tougher capital requirement. The relief, which was prescribed by a bank deregulation bill passed by Congress in May, would apply to Bank of New York Mellon, Northern Trust and State Street as firms ‘predominantly engaged in custody, safekeeping and asset servicing activities.’
Ben Maiden
Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...
