An experienced board member is out
McDonald’s, the world’s largest restaurant chain, today announces a significant change to its board of directors as the company grapples with inflation, war in Europe and tensions with franchisees. Sheila Penrose will retire after more than 15 years and will be joined by three new executives: Marriott International’s Anthony Capuano, Johnson & Johnson’s Jennifer Taubert and Salesforce’s Amy Weaver.
Penrose’s departure is likely to raise questions on Wall Street About billionaire Carl Icahn’s failed attempts to oust him and another director from the series’ board this spring. A McDonald’s spokeswoman told DealBook that Penrose’s departure was unrelated.
Summary of the Icahn Battle. Earlier this year, Icahn launched a campaign to replace McDonald’s sources and pushed for the removal of Penrose, who chaired it, and Richard Lenny, Hershey’s former CEO. McDonald’s won the competition by force; Ikan received only 1 percent of the vote. And Penrose received the support of about 95 percent of voting shareholders. McDonald’s President Enrique Hernandez Jr. praised his tenure, saying he has overseen “significant progress” by the chain on “climate, responsible sourcing and diversity, equity and inclusion goals.” McDonald’s has yet to select its successor as sustainability leader.
Where its board of directors is. Last year, some shareholders voted against two board members, including Hernandez, over the way CEO Steve Easterbrook was fired in 2019; All members were eventually re-elected. The new directors have experience in areas where the series hopes to advance: rompedis J&K’s global president of pharmaceuticals, which focuses on global healthcare, McDonald’s is under pressure to offer healthier products; capuano, CEO of Marriott, has extensive franchising and hospitality experience; and weaverSalesforce’s CFO adds digital skills as McDonald’s focuses on its online loyalty program.
What’s going on here
Walmart extends abortion insurance to employees. The country’s biggest retailer said its health plan would pay for abortions in more circumstances, as well as travel expenses. It’s the latest example of corporate giants adapting to the changing legal landscape for abortion rights.
Tesla raises the price for fully autonomous driving again. Elon Musk tweeted last night that the electric carmaker’s software will cost $15,000 starting next month, up 25 percent. It’s the second price hike this year for the facility under investigation by federal and state agencies following drive-mode accidents.
European natural gas prices have risen on fears of Russian supplies. Natural gas futures contracts rose 16 percent after Moscow closed the Nord Stream pipeline for three days for repairs later this month. The news raised new doubts that Germany, Europe’s largest Russian gas customer, would have enough energy for the winter.
China cut lending rates to help a slowing economy. The country’s central bank cut its five-year interest rate, which affects Chinese mortgage holders, by 0.15 percentage points to 4.3 percent. She hopes the move will help construction and real estate companies as well as drought and high temperatures that have hit China’s huge industrial sector.
Meme stock traders are testing bold new options
The meme stock chaos returned with a vengeance last week. But don’t confuse this period of hectic trading with the event that shook markets a year ago.
A big shift: Crude meme stockpickers are increasingly turning to highly speculative options trading, which intimidates some market observers. A year ago, a robust house trader might have cashed or “yolo-ed” their incentive check to buy cryptocurrencies or shares of a stock like Buzzy SPAC or Gamestop.
“Now a lot of them are playing with options. For them it’s like a lottery ticket, even if they don’t know how the options market works,” Arnaud Wagner, founder of Iceberg Research, an activist short selling firm, told DealBook.Breakout Point, the social movement all about equities. Follows the media frenzy, also tracks more chatter about options trading among meme traders, and sees overall meme stock chatter as lower than last year’s volume.
Options trading is considered risky as you can lose money if you don’t have a betStill, it has become a popular method among traders trying to ride the meme stock. For example, Robinhood offers its customers commission-free options trading. However, the trading app warns that it “involves significant risks and may not be suitable for all clients.” Robinhood says it screens individual accounts before giving them options trading opportunities.
Concerned about inexperienced day traders, Arnaud said he would like more regulatory oversight in this corner of the market. The SEC has cracked down on individual traders who use options contracts to defraud other meme stock investors, but has yet to make any major changes to trading rules.
Aug. 22, 2022 at 7:00 a.m. ET
“I’m an American. I believe it’s the duty of these organizations to try and bring the country a little closer together, rather than endlessly exploiting the differences.
– on “Cable Cowboy” John Malone Civil duty of cable news organizations,
Dispute over Supreme Court: “Every company should be watching”
After a transformative tenure filled with controversial decisions, the Supreme Court is taking a break. But prosecutors are already working on the next potential blunder that could redefine the powers of Washington’s key regulators. It is based on two cases involving the FTC and the SEC, which will be dealt with together. The question revolves around whether people and businesses can fight the government in court while administrators fight them, or whether they should wait until the administrative process is complete to claim constitutional violations.
If the challenges are allowed, law enforcement agencies could face lawsuits challenging their authority. Some could eventually go to the Supreme Court. “Every company should be aware of this,” John Leibovitz, a former FTC chairman, told DealBook.
Why are we investigating this matter? The FTC challenged a 2018 merger between body camera developer Axon Enterprise and struggling competitor Vievu. In 2020, Exxon sued on constitutional grounds after the FTC initiated the case. The Ninth Circuit Court of Appeals in California found that Exxon could not take action against the FTC while the case was pending. But the Louisiana Fifth Circuit Court of Appeals went the other way. This made possible a lawsuit filed by Michelle Cochran, an accountant who faced SEC filing in 2016.
Hearings scheduled for November will consider whether Congress wanted district courts to rule constitutional challenges to a commission’s “structure, procedure and existence” while the administrative process was pending.
Exxon’s CEO said the company is suing to protect companies that couldn’t afford to fight. “Faced with abuse by the administrative state, my company has decided to sue,” CEO Rick Smith wrote in The Wall Street Journal in 2020. He argued that the FTC was not an impartial arbiter because it served as the prosecutor, judge, and jury. , and that deferring constitutional challenges until a case is decided only exacerbates injustice. In an amicus brief filed in May, the US Chamber of Commerce cited the “costly” and “existential threats” that such “unconstitutionally structured procedures” pose to companies.
The government’s counter-argument: anarchy in the courts. In an August letter, the attorney general warned that an Exxon victory could wreak havoc on the legal system and lead to a spate of lawsuits aimed at thwarting the government. But Exxon’s complaints about an interventionist “administrative state” should ring familiar and could find sympathetic listeners among judges, in words shown in a recent decision limiting the Environmental Protection Agency’s powers. Is. (Notably, Exxon’s attorney, Paul Clement, is an acquaintance who won a gun law case in June that prompted his former employers, Kirkland and Ellis, to take oaths in Second Amendment cases. Clement parted ways with the firm. Let’s reconcile his own .)
Why bank CEOs are nervous
JPMorgan Chase CEO Jamie Dimon put the likelihood of a recession at 90 percent in a recent leaked conversation with top clients. But Bruce Kasman, the bank’s chief economist, put that risk at a maximum of 40 percent. “I don’t think that’s a likely scenario,” Kasman said.
Dimon isn’t the only CEO of a major bank with more recession than economists on his payroll. Goldman Sachs’ David Solomon and Morgan Stanley’s James Gorman put the prospect of a recession significantly higher than the top economists they employ.
What are top Wall Street pundits seeing that economists might be missing? One possibility: Before the 2008 financial crisis, many big banks took large write-downs on home loans before many economists could calculate them in their models. now concerns of some observersy The same could happen in the corporate bond market, causing banks to lose if the Fed hikes rates.
Banks have already announced write-downs on their leveraged loan portfolio. Last month, Bank of America announced a $320 million loss on leveraged loans. Citi and Wells Fargo also announced loan losses of more than $100 million each. Meanwhile, JPMorgan added $1.1 billion in loan loss provisions last quarter, mostly to cover consumer loans.
Businesses have more debt than ever before. Last month, S&P Global Ratings reported that more than 9 percent of underrated companies appeared distressed, up from just 4 percent a month earlier.
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