2019年11月4日 星期一

DealBook: McDonald’s Fires C.E.O. Over Relationship With Employee

Steve Easterbrook's behavior violated company policy. "I agree with the board that it is time for me to move on," he said in an email to employees.
November 4, 2019
Good morning. Just in: Apple announced that it would spend $2.5 billion to help address the housing availability and affordability crisis in California. This year’s DealBook Summit will feature speakers including Bill Gates, Hillary Clinton, Ginni Rometty of IBM and the Instagram co-founder Kevin Systrom. Apply to attend here. (Was this email forwarded to you? Sign up here.)
Steve Easterbrook
Steve Easterbrook  Alyssa Schukar/Associated Press
McDonald’s fires its C.E.O.
Steve Easterbrook was fired as chief executive, the fast-food chain announced yesterday, after he engaged in a consensual relationship with an employee that violated company policy, David Yaffe-Bellany of the NYT reports.
“This was a mistake,” Mr. Easterbrook wrote in an email to employees. “Given the values of the company, I agree with the board that it is time for me to move on.”
Mr. Easterbrook was widely credited with turning around McDonald’s. The 52-year-old, who previously ran the company’s British business, emphasized technological innovation, striking delivery deals with third-party apps like Uber Eats and DoorDash, and acquiring smaller companies that specialize in machine learning and artificial intelligence.
During his tenure, the company’s shares nearly doubled in value but traffic to U.S. restaurants has continued to stagnate. He will be replaced by Chris Kempczinski, who most recently served as president of McDonald’s USA.
Mr. Easterbrook’s departure is the latest challenge for the company as it races to keep up with changes reverberating through the food industry.
More corporate struggles: Under Armour confirmed on Sunday evening that it was assisting federal investigations into its accounting practices. The sportswear giant is scheduled to report its third-quarter earnings early Monday.
Today’s DealBook Briefing was written by Andrew Ross Sorkin, Gregory Schmidt and Jamie Condliffe.
Tanks at a Saudi Aramco plant in Abqaiq, Saudi Arabia.
Tanks at a Saudi Aramco plant in Abqaiq, Saudi Arabia.  Maxim Shemetov/Reuters
Saudi Aramco announces its I.P.O.
It’s been a long time coming, but Saudi Arabia’s giant state-owned oil producer announced plans yesterday to go public in what could be the largest initial stock offering ever, Michael de la Merced and Stanley Reed of the NYT report.
The announcement was light on details, but here’s what we know so far:
• Aramco will sell an unspecified percentage of its shares on the Saudi stock exchange, the Tadawul.
• Trading is expected to begin next month, though Aramco did not specify a date.
Investors may value Aramco at around $1.5 trillion, bankers have told the Saudi government, according to people briefed on the matter. Even though that would produce the biggest initial public offering ever, it would still fall short of Prince Mohammed bin Salman’s vision of Aramco being valued at $2 trillion — and would pull in less money than he had hoped for his plans to overhaul the nation’s economy.
Concerns have been mounting among investors about the company, despite its being probably the world’s most profitable enterprise. Some people worry about how Aramco has recovered from a drone and missile attack in September; others question the future of fossil fuels. And investment in Saudi Arabia has generally been tempered since the killing of the Saudi dissident Jamal Khashoggi last year.
“The shares will succumb to market forces in the end,” Chris Hughes of Bloomberg Opinion writes, “which will decide whether Aramco’s relative financial strength counts for more than its very different strategic, governance and geopolitical profile compared to the existing listed oil majors.”
More: New oil supplies from Brazil, Canada, Guyana and Norway may add to a glut, posing a threat to producers in Saudi Arabia, Russia and the United States.
Elizabeth Warren
Elizabeth Warren  Eric Thayer/Reuters
Elizabeth Warren’s $20.5 trillion health care bill
The Democratic presidential candidate on Friday laid out details about how she would pay for her “Medicare for all” plan, an expansive transformation of the nation’s health care system. And then, as the weekend wore on, she seemed to muddle her message.
She initially proposed huge tax increases on businesses and wealthy Americans to help cover the $20.5 trillion cost of the plan.
But on Saturday night, she presented a narrower description of who would face higher taxes. “It doesn’t raise taxes on anybody but billionaires,” she told reporters in Iowa.
When asked about Ms. Warren’s comments, a spokeswoman for her campaign acknowledged that taxes would increase for the top 1 percent but said that Ms. Warren had been referring to her wealth tax proposal when she said taxes would increase only for billionaires.
Ms. Warren’s “Medicare for all” proposal is the most prominent example of how the Democratic Party is moving toward ambitious efforts to redistribute wealth and expand the government’s role in the economy, Jim Tankersley of the NYT writes.
But while she’s tried to address the problem of how to pay for it, another issue — people’s anxiety about being forced into a new insurance plan — still looms.
Milking the E.U. for millions
Europe’s farm program, a system that was instrumental in forming the European Union, is now being exploited by the same antidemocratic forces of oligarchs and populists that threaten the bloc from within, an NYT investigation has found.
The investigation uncovered a deliberately opaque subsidy system that grossly undermines the bloc’s environmental goals and is warped by corruption and self-dealing. Here are five takeaways from the report by Selam Gebrekidan, Matt Apuzzo and Benjamin Novak:
• The farm subsidies that helped form the basis for the modern E.U. today underwrite a sort of modern feudalism in which small farmers are beholden to politically connected land barons.
• The E.U. provides $65 billion to farmers every year. It’s the largest line item in the bloc’s budget and one of the biggest subsidy programs in the world.
• The centerpiece of the program is that people get paid based on how much land they farm. The system is supposed to help hard-working farmers and to stabilize Europe’s food supply.
• But in former Soviet bloc countries, where the government owned lots of farmland, leaders like Hungary’s prime minister, Viktor Orban, have auctioned off land to political allies and family members. And the subsidies follow the land.
• A company formed by the Czech prime minister, Andrej Babis, collected at least $42 million in subsidies last year.
Boeing 737 Max planes in Moses Lake, Wash.
Boeing 737 Max planes in Moses Lake, Wash.  Lindsey Wasson/Reuters
Charging Boeing over the 737 crashes could be tough
Federal prosecutors may struggle to mount a criminal case against Boeing or its employees over the safety of its 737 Max jet, Andrew Tangel, Jacob Gershman and Andy Pasztor of the WSJ report.
A criminal inquiry into Boeing is underway at the Justice Department. It started after Lion Air Flight 610 crashed in Indonesia in 2018, and continued after the Ethiopian Airlines Flight 302 disaster in Ethiopia.
But parlaying that into a criminal case will be difficult:
• “To bring a successful criminal case against Boeing itself, prosecutors would have to show that executives repeatedly concealed or ignored the 737 Max’s engineering problems, experts said,” according to Mr. Tangel, Mr. Gershman and Mr. Pasztor.
• Also, “a corporate indictment and potentially huge sanctions must be balanced against the economic and national security risks of incapacitating the country’s second-biggest defense contractor.”
“What investigators scrutinize is the conduct, its duration, possible motives, roles and knowledge of the actors, and evidence of concealment to determine whether the conduct is an aberration or systemic,” Jacob Frenkel, a white-collar defense lawyer in Washington, told the WSJ.
But federal prosecutors could negotiate sanctions, say, or secure a plea in lieu of an indictment.
The new crisis response: Split C.E.O. and chairman roles
Boeing did it. Wells Fargo did it. Nike and Under Armour, too. And AT&T plans to do it in the near future. The companies have all chosen to separate the role of C.E.O. and chairman in the wake of crises or shareholder pressure — a phenomenon that is now at record levels, according to Thomas Gryta and Theo Francis of the WSJ.
The split is supposed to maximize accountability. “Traditionally, the C.E.O. oversees the daily operations of the company as the top manager, while the chairman heads the board, which oversees management,” Mr. Gryta and Mr. Francis write. “Combining both jobs concentrates power by essentially making the C.E.O. their own boss.”
The trend also follows the 2010 signing of the Dodd-Frank Act, which required companies to disclose and explain their chairman-C.E.O. structure.
“It’s low-hanging fruit to appease the shareholders,” Rosanna Landis-Weaver, a program manager at As You Sow, a nonprofit investor advocacy group, told the WSJ.
Elon Musk
Elon Musk  Michael Nagle for The New York Times
Elon Musk quits Twitter — for now
The Tesla C.E.O. has a checkered history on Twitter, but it still came as a shock on Friday when he announced that he was taking a break from the social network.
“Not sure about good of Twitter,” he said in one tweet, before following up with: “Going offline.”
Mr. Musk’s tweeting embroiled Tesla in a securities fraud lawsuit last year, after he announced that he was “considering taking Tesla private at $420. Funding secured.” The tweet sent Tesla’s stock soaring; securities regulators said the message was misleading and had disrupted the Nasdaq. Tesla settled the lawsuit, while Mr. Musk paid a $20 million fine and relinquished his chairmanship of Tesla for three years. He also agreed to have his tweets vetted.
But this could be short-lived. Mr. Musk said in June that he had deleted his Twitter account, though he remained active after the post.
More: The National Highway Traffic Safety Administration is investigating Tesla batteries after a number of the vehicles that use them spontaneously burst into flames.
Revolving door
Gary Jones, the president of the United Automobile Workers union, which is under investigation over allegations of financial wrongdoing, is taking a leave of absence.
KPMG will cull a 10th of its British-based partners by Christmas after a review of individual performance, the latest in a series of measures to overhaul the Big Four firm.
Regulators are pressing Deutsche Bank’s boss, Christian Sewing, to give up his dual role as chief executive and investment bank head.
The last remaining journalist from a staff of more than 20 at the popular sports website Deadspin resigned on Friday.
WeWork plans to outsource cleaning and maintenance roles in the first wave of big staff cuts, according to leaked emails.
The speed read
• Google plans to buy Fitbit, the maker of fitness-tracking devices, in a $2.1 billion deal that closes the gap with Apple in the growing market for wearable electronics. (NYT)
• The Committee on Foreign Investment in the U.S. has opened a national security investigation into the acquisition of Musical.ly, the American company that became TikTok, by the Chinese company ByteDance. Also: How Silicon Valley is fighting back against TikTok. (Reuters, NYT)
• Barneys, felled by bankruptcy, was sold for parts on Friday, with Authentic Brands taking control of its name. (NYT)
• The White House economic adviser Larry Kudlow said that the Trump administration would look “very, very carefully” at the planned merger between Fiat Chrysler and Peugeot’s owner, PSA. (Reuters)
• The private equity firm Silver Lake Partners is reportedly looking to acquire major stakes in the New York Knicks and New York Rangers. (New York Post)
Trump impeachment inquiry
• The whistle-blower who touched off the impeachment inquiry into President Trump’s effort to pressure Ukraine to investigate his political rivals is willing to answer House Republicans’ written questions, his lawyers said. (NYT)
• Representative Adam Schiff, who leads the impeachment inquiry into Mr. Trump, has become a Rorschach test for American politics: He’ll either save the republic, or destroy it. (NYT)
• Republicans are firming up opposition to the House impeachment investigation, while support is growing among Democrats for removing Mr. Trump from office, a new poll found. (WSJ)
• Lawmakers leading the impeachment inquiry have scheduled another round of testimony this week, but several White House witnesses plan to defy them and others could follow suit. (Reuters)
• The president suggested that Republicans should release their own transcripts of interviews in the House’s impeachment inquiry. (The Hill)
Politics and policy
• President Trump’s tweeting transformed how he exerted power, leaving the White House and Twitter to grapple over whether, and how, to rein it in. (NYT)
• Mr. Trump lashed out at Gov. Gavin Newsom of California in a series of tweets in which he threatened to cut funding for the wildfires that have engulfed the state. (Axios)
• Activists in Hong Kong are trying hard to draw the U.S. into their movement. (NYT)
• Prime Minister Boris Johnson apologized for missing his Brexit deadline. (AP)
• President Trump suggested that Mr. Johnson should join forces with the Brexit Party leader, Nigel Farage. (Reuters)
• Commerce Secretary Wilbur Ross suggested that the U.S. could reach a “phase one” trade deal with China this month. He also said that licenses for American companies to sell components to Huawei were coming “very shortly.” (Bloomberg)
• The World Trade Organization has allowed China to impose sanctions on up to $3.6 billion of American goods in a six-year fight between the countries over cheap Chinese products. (NYT)
• How Dara Khosrowshahi, Uber’s C.E.O., is pushing employees to do more with less and to perform better to help the company regain its edge. (NYT)
• The U.S. government reportedly pushed Taiwan to restrict its biggest chip maker, TSMC, from producing semiconductors for Huawei. Taiwan’s government denied the claim. (FT, Bloomberg)
• China has effectively banned the sale of e-cigarettes. (NYT)
Best of the rest
• Alcohol breath tests, a linchpin of the criminal justice system, are often unreliable. (NYT)
• A push to raise the minimum wage may be stalling at the federal level, but many cities are trying their best to make it happen. (NYT)
• California’s governor said that the state was determined to reshape PG&E, even if it required a public takeover. (NYT)
Stocks rose on Friday after a strong jobs report, and stronger-than-expected earnings results were also pulling the markets up. (NYT, WSJ)
• How Walmart has taken pains to alienate as few customers as possible while taking stands on contentious issues. (NYT)
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