Tag Archives: Corporate Governance

Business, Finance, Occupation & Industry

Avon Chairman Hassan Departs Suddenly

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By 24/7 Wall St.

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In another sign that the nonexistent turnaround at Avon Products Inc. (NYSE: AVP) may be in even more trouble, its non-executive chairman, in office for only a few months, is leaving — without explanation.

Avon’s fortunes have been awful for two years, mostly because former CEO Andrea Jung ruined the company through wild expansion. Her replacement, Sheri McCoy, has done nothing to reverse the slide.

Avon announced both Chairman Fred Hassan‘s departure (he severed his relationship so sharply that he will not stay on the board) and the name of his replacement:

Fred Hassan has resigned from the Avon Board of Directors in order to focus more time on his other professional commitments. Mr. Hassan serves as a non-executive chairman of Bausch + Lomb and is a Managing Director, Partner at Warburg Pincus LLC. He also serves on the Board of Time Warner, Inc.

Doug Conant, who currently serves on the Board, has been elected to the position of non-executive Chairman. Both are effective immediately.

“Avon is a great company and I am honored to have served on the Board of Directors,” said Mr. Hassan. “However, my other professional commitments have intensified, requiring more focus. So I have decided it is in the best interest of Avon for one of my Board colleagues to take on the Chairmanship.”

If he was so honored to serve, why did he leave so quickly?

Filed under: 24/7 Wall St. Wire, Corporate Governance, Management Change Tagged: AVP

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Relational Investors LLC and CalSTRS Question Timken Board's Willingness to Act in the Best Interest

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By Business Wirevia The Motley Fool

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Relational Investors LLC and CalSTRS Question Timken Board’s Willingness to Act in the Best Interests of All Shareholders Following Meeting with Board Members


Timken Family-Influenced Board Continues to REBUT Investment Community Consensus To Separate Company’s Two Core Businesses And Eliminate The Stock’s Long-Standing “Conglomerate” Discount


Relational and CalSTRS Urge Shareholders To VOTE FOR CalSTRS’ Proxy Proposal To Unlock Shareholder Value At Timken By Separating The Company’s Steel And Bearings Businesses And Having Them Trade Independently

SAN DIEGO–(BUSINESS WIRE)– Relational Investors LLC (“Relational”) and the California State Teachers’ Retirement System (“CalSTRS”), collectively owners of 7.28% of the shares of The Timken Company (NYS: TKR) (“Timken” or “the Company”), called into question the ability of the family-influenced Board of Directors to act in the best interest of all of the Company’s shareholders following today’s meeting at the Company’s Canton, Ohio headquarters. The Board is unwilling to separate Timken’s Steel and Bearings businesses to unlock shareholder value and continues to support the Company’s “conglomerate” structure which impairs its stock price.

Anne Sheehan, director of Corporate Governance at CalSTRS, commented, “Timken’s Board invited CalSTRS to meet with representatives of management and the Board today. The meeting followed the filing of our February 27, 2013 shareholder presentation. From the outset, we have tried to work with the Board to unlock the Company’s inherent value for all shareholders through the separate public trading of Timken’s Steel and Bearings businesses. It is clear that there is consensus in the investment community supporting this initiative based on published analyst reports, calls with the Company’s investors, and Timken’s stock price. Nevertheless, the Board has consistently turned a blind eye to what the marketplace is saying.”

Ralph Whitworth, founder and principal of Relational, said, “Despite Timken‘s preempting today’s meeting with a press release yesterday, we hoped that at today’s meeting Timken’s management and Board would finally understand the powerful value proposition that flows from the overwhelmingly compelling and detailed case we have presented to create value through two separately traded companies. Instead, while the meeting was cordial, we met with the same amorphous arguments and faulty math that has characterized the company’s response all …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

EA Wants New Blood To Turn Its Ship Around

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By 24/7 Wall St.

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Electronic Arts Inc. (NASDAQ: EA) is going to see if a new Chief Executive Officer will get its growth fortunes back on track. The video game giant has now confirmed that CEO John Riccitiello will step down effective March 30. He will also lose his position as a member of the Board of Directors. Wall Street so far is glad to see the transition.

This is a move which signals that business remains challenged, and its implied guidance also confirms that. The EA board of directors has appointed Larry Probst as EA‘s executive chairman while it looks for a permanent CEO. EA has signaled that it will consider internal and external candidates and will also hire a leading executive search firm.

The company’s quote included, “We have mutually agreed that this is the right time for a leadership transition.” That might not be a firing and the departure might not be on bad terms. The flip-side is that this confirms that the company knows it will take new blood to drive initiatives in whatever form they are going to take on.

We noted that the implication is for more weakness. EA signaled that revenues and earnings for the current quarter will be at the low-end of expectations or will even fall slightly below its previously issued guidance.

Still, the stock is up on news that new blood will bring new direction for the company. EA shares closed down 0.9% at $18.71 on the day against a 52-week range of $10.77 to $19.51. Being that close to a 52-week high is very misleading. EA shares were peaking at almost $25 in 2011 and its stock was north of $50 back before the recession took hold.

EA shares are up over 3% at $19.31. A CEO has to feel bad when issuing an earnings and sales warning but thew stock rises because a new unnamed CEO will get to change things.

New blood is what this company needs. The question which remains to be answered is whether or not EA has waited too long to bring in new blood. Hopefully it doesn’t think that an out-of-favor recently fired daily deals CEO in Chicago is the answer.

Filed under: 24/7 Wall St. Wire, Activist Investor, Corporate Governance, Management Change, Media, Video Games Tagged: EA

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

STMicroelectronics Wins as Ericsson Loses in Joint Venture Wind Down

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By 24/7 Wall St.

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STMicroelectronics N.V. (NYSE: STM) is winning while Ericsson (NASDAQ: ERIC) is losing on news that the two companies have agreed to split up their unprofitable joint venture. Some assets will be taken by each company while other assets will be closed or sold.

The press release this morning from STMicroelectronics indicated an agreement on a strategic way forward for this unprofitable joint venture. That path forward is one that appears on the surface to be better for ST than for Ericsson. The plans are as follows:

  • Ericsson will take on the design, development and sales of the LTE multimode thin modem products, including 2G, 3G and 4G multimode.
  • ST will take on the existing ST-Ericsson products, other than LTE multimode thin modems, and related business, as well as certain assembly and test facilities.
  • Starting the shut down of the remaining parts of ST-Ericsson.
  • Ericsson will assume approximately 1,800 employees and contractors, with the largest concentrations in Sweden, Germany, India and China.
  • ST will assume approximately 950 employees, primarily in France and in Italy, to support ongoing business and new products development within ST.

After looking through the numbers, the problem is the losses that will absorbed. Ericsson has made provisions of for -3.3 billion Swedish kroner to cover costs related to the implementation of the strategic option. Once the multimode thin modem business has been fully integrated into Ericsson in the fourth quarter, the operation will be reported as a standalone segment, and it will generate operating losses of approximately 500 million Swedish kroner, mostly on R&D expenses.

Ericsson is down 2.8% at $12.90 for its New York ADRs, and STMicroelectronics is seeing a gain of 3.8% to $7.93 for its New York ADRs.

Filed under: 24/7 Wall St. Wire, ADR, Consumer Electronics, Corporate Governance, International Markets, Mergers & Acquisitions, Mergers and Buy Outs Tagged: ERIC, STM

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Airbus Poaches Boeing Customer; Boeing CEO Gets 20% Pay Boost

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By 24/7 Wall St.

787 With Mt Rainier in DistanceK65116

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Just when it seemed that Boeing Co. (NYSE: BA) had reached an agreement on how to fix the battery problems with its 787 Dreamliner and get off the front pages for a while, the aircraft maker loses out on a contract for 234 new planes for one of its best customers, Indonesia’s Lion Air. Last year Lion Air ordered more than 200 of Boeing’s 737 single-aisle planes in a deal worth more than $22 billion. The order for 234 planes from Airbus is valued at $24 billion.

The Airbus order was announced today, and it follows on Saturday’s announcement from Boeing that the company was so pleased with CEO Jim McNerney’s work in 2012 that it raised his compensation for the year by 20% to $27.5 million. McNerney earned $23 million in 2011.

Let’s add it up: The 787 Dreamliner, McNerney’s signature program, was three years late and billions of dollars over budget. When it finally did fly, the plane was grounded for flaws in its battery systems that caused onboard fires. That is a record that certainly deserves to be rewarded with a pay hike.

Boeing’s board apparently believes that McNerney had something to do with the company’s 2012 success. Shareholders did not share in that success, however. Boeing’s stock price rose only 2.7% in 2012 while the S&P 500 index rose 13%.

When McNerney took over as CEO in 2005, shares traded at an all-time high of more than $100 before falling to below $40 in 2009. The climb back out of that hole was mostly complete by 2010, when shares rose to near $75.

What McNerney did in 2012 was mostly not much. But given his track record, the less he does the better it is for Boeing.

We have long argued that McNerney should go, but maybe the rest of Boeing’s board ought to be shown the door as well.

Boeing’s shares are down about 1.1% in early trading this morning, at $85.48 in a 52-week range of $66.82 to $86.49.

Filed under: 24/7 Wall St. Wire, Aerospace & Defense, Compensation, Corporate Governance, Shareholder Issues Tagged: BA

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Cyprus Moves from Taxation to Theft

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By 24/7 Wall St.

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What we are seeing is in Cyprus an instance when taxation becomes theft. When depositors place money in banks, they assume that their deposits are safe as long as the banks do not implode. That is a risk in Cyprus, but depositors were not assuming that the government would hoist a “tax” upon their backs by seizing deposited assets. That is called theft, and investors now must be wondering if the great European effort to raise more funds ultimately will put risk on other deposits around the troubled spots of Europe.

As part of the condition of a eurozone bailout, Cypriot bank depositors may take a hit of close to 6 billion euros. The move sounds like it will only hit the wealthy, but it is aimed at all deposits to a degree, with a 6.75% “tax” on deposits up to 100,000 euros and a “tax” of 9.9% on deposits above the 100,000 euro balance.

When deposits in banks are taxed as a whole, that is a seizure of assets. One of the excuses we have heard is that this taxes a bunch of Russian depositors. The problem with this logic is that it hurts anyone and everyone in this tiny nation with deposits in their local banks.

European officials have tried emphasize that this is a one-time event and will not be replicated elsewhere in the eurozone. The question to ask is whether you believe it. Another question to ask is how many politicians with left-bent ideas of taxing the wealthy will look at this and think it was a good idea.

It used to be that most Americans and international investors became resentful that a nation as small as Greece could matter so much globally. Cyprus is even smaller, at only about 800,000 inhabitants and an economy of less than 20 billion euros per year. It does have a cloudy bank system that has been used by Russians and other offshore wealthy depositors.

The problem is that this effort is not targeting tax dodgers and offshore depositors. It hits everyone locally in Cyprus. This is an instance when taxation has become theft. Even if the levy gets reduced, it is still nothing short of an asset seizure.

The stock market needed a reason to sell off, and now we have one. S&P futures are down over 12 points and DJIA futures are down close to 75 points.

Filed under: 24/7 Wall St. Wire, Accounting, Banking & Finance, Bankruptcy, Bonds, Brokerage Firms, Compensation, Corporate Governance, Earnings, Economy, International Markets, Regulation

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Source: FULL ARTICLE at DailyFinance

Articles of Interest

Starbucks Shareholder Proposal Could Ban Political Contributions

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By The Huffington Post News Editors

* Shareholder proposal would ban contributions, company PAC
* Starbucks made no contributions, but reserves right to do so
* Contributions can “look like bribery,” says governance expert
By Lisa Baertlein and Ronald Grover
LOS ANGELES, March 14 (Reuters) – Starbucks Chief Executive Howard Schultz jumped into the political arena two years ago, organizing a hundred of his fellow CEOs in a pledge to forswear campaign contributions till Washington came up with a plan to fix the nation’s debt.
Now, a Starbucks investor wants Schultz to go one better by prohibiting the world’s biggest coffee chain from making any political contributions, or forming a political action committee.
Shareholders of the Seattle-based company will vote at its March 20 annual meeting on a proposal by John Harrington, who owns 800 shares, to “adopt a policy prohibiting the use of corporate funds for any political election or campaign.”
“It compromises your fiduciary responsibility because you don’t know how people are going to vote once they are elected,” Harrington, chief executive of Napa, California-based Harrington Investments, said in an interview with Reuters.
Starbucks is one of 125 companies that have faced shareholder proposals over the last two years related to political spending, according to a March 7 report by the Sustainable Investments Institute, which tracks political spending and corporate governance issues.
In votes held this year, 37 percent of VISA‘s voting shareholders and 31 percent of those of Accenture supported proposals to disclose contributions for lobbying, according to filings from both companies.
“The problem is that the closer your contributions get to someone who can help your company, the closer they look like bribery,” said University of Delaware professor Charles Elson, director of its John L. Weinberg Center for Corporate Governance. “It’s probably best for companies to just get out of it altogether.
Over the last three years, Starbucks made …read more
Source: FULL ARTICLE at Huffington Post

Business, Finance, Occupation & Industry

Facebook's Zuckerberg Tops Highest-Rated CEO List

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By 24/7 Wall St.

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Internet jobs site Glassdoor has released its list of the top 50 U.S. CEOs, based on employee feedback, for the past 12 months through February 27. The company asked the question, “Do you approve of the way your CEO is leading the company?” and received more than half a million responses.

The top-ranked chief executive officer this year is Mark Zuckerberg of Facebook Inc. (NASDAQ: FB). Others in the top five are SAP A.G. (NYSE: SAP) co-CEOs Bill McDermott and Jim Hagemann Snabe, McKinsey & Co. CEO Dominic Barton, Ernst & Young’s Jim Turley and Northwestern Mutual’s John Schlifske. Turley is the only repeater in the top five.

Last year’s top-rated CEO, Tim Cook of Apple Inc. (NASDAQ: AAPL), fell to 18th this year, although the decrease in his score was relatively small, from 97 to 93. Larry Page, CEO at Google Inc. (NASDAQ: GOOG), fell from fifth place a year ago to 11th place, but improved his score from 94 to 95.

Glassdoor’s CEO noted:

The CEOs who are most successful in gaining employee approval are those who paint a clear vision of what the company is setting out to achieve and how it’s going to get there. To be recognized by your employees as a strong leader also comes as a result of having a solid company culture that helps employees foster the skills necessary to move business forward and meet the needs of customers.

Glassdoor’s top 50 list is available here.

Filed under: 24/7 Wall St. Wire, Corporate Governance, Research Tagged: AAPL, FB, GOOG, SAP

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Help Wanted: New CEO for SandRidge Energy

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By 24/7 Wall St.

Drilling rig

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Late yesterday afternoon, the board of directors of SandRidge Energy Inc. (NYSE: SD) essentially caved in to demands from TPG-Axon Group and agreed to add four new directors named by the hedge fund to the SandRidge board effective immediately. The company’s current CEO, Tom Ward, will be retained until June 30, at which time he will either be fired or another TPG-Axon director will be appointed to the board, giving the hedge fund control of the board. It probably goes without saying that Ward will not stay on.

TPG-Axon and Mount Kellett Capital Management launched their attack on SandRidge last November, charging that the company had allowed Ward to participate in land acquisitions and sales through other companies that he either controlled or had an interest in. The SandRidge board said it had investigated the allegations many times in the company’s past and found no wrongdoing.

That is what the board of Chesapeake Energy Corp. (NYSE: CHK) said about the well participation program that it allowed CEO Aubrey McClendon to take advantage of. That did not work out too well for McClendon, who officially steps down on April Fool’s Day. Board support was not enough for Ward either.

In exchange for Ward’s ouster and the four board seats, TPG-Axon has agreed to terminate its consent solicitation and withdraw its notice of intent to nominate a slate of candidates at SandRidge’s next annual shareholders meeting.

SandRidge shares spiked in the late afternoon yesterday, but closed the day within pennies of where they started. The shares are down about 0.2% in the premarket this morning at $5.84 in a 52-week range of $4.81 to $8.57.

Filed under: 24/7 Wall St. Wire, Commodities, Corporate Governance, Management Change, Oil & Gas, Shareholder Issues Tagged: CHK, SD

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

CEO Optimism Rises for Sales and Capital Spending, but Not for Jobs

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By 24/7 Wall St.

104772810

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The Business Roundtable (BRT) released its first-quarter CEO Economic Outlook Survey for 2013, showing that average CEO economic expectations for the coming six-month period have improved for first time in four quarters. Unfortunately, CEO optimism may not translate to jobs growth yet. Chief executives are expecting higher sales and capital spending from their companies but are expecting that net hiring will remain flat.

The BRT said, “CEO economic expectations increased for the first time in four quarters. BRT CEOs also expect 2.1 percent growth for 2013, a slight increase from last quarter’s estimate of 2.0 percent.”

Jim McNerney, who is head of Boeing Co. (NYSE: BA) and the chairman of Business Roundtable, said, “The relatively smaller improvement in the outlook for hiring, however, may reflect ongoing uncertainty and a wait-and-see attitude about the business climate in the United States, as agreement on the nation’s debt and budgetary issues remains elusive.”

Today’s survey release was up in the first quarter of 2013, to 81.0 from 65.6 in the fourth quarter of last year, and is back to the its highest level since the second quarter of 2012. The current index is at about its long-term average level of 79.2.

The BRT survey was completed between February 11 and March 1, 2013, and responses were received from 144 member CEOs for a 69% participation rate in the BRT survey. Here is a snapshot:

Roundtable

Filed under: 24/7 Wall St. Wire, Corporate Governance, Economy, Jobs, Labor & Unions, Large Cap Stocks Tagged: BA

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Wall St. Magically Thinks Yum! Brands' China Woes Are History

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By 24/7 Wall St.

KFC Restaurant

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Yum! Brands Inc. (NYSE: YUM) may have saved its slide of bad news out of China with the release of its same-store sales data. On the surface it looks awful, but Wall St. works off of a relative basis, and it seems that the horrific slide may have abated from the company’s troubles in China.

A Securities and Exchange Commission filing from Monday evening said that first-quarter same-store sales declined an estimated 20% for the China Division, which includes an estimated decline of 24% at KFC and an estimated 2% at Pizza Hut Casual Dining. Yum! Brands went on to say, “Consistent with prior years, the first quarter of the China Division is two months and includes January and February results.”

That 24% sounds awful, and frankly it is. What saved the day is that the February same-store sales growth was approximately 2% for the China Division. That includes flat same-store sales at KFC and 13% growth at Pizza Hut Casual Dining. There is a caveat here around the calendar, but Wall St. is taking it to heart that maybe Yum! Brands is escaping its food quality issues in China.

As far as the caveat, Yum! Brands said, “We estimate the timing of Chinese New Year had a positive mid-teen impact on February same-store sales growth for both KFC and Pizza Hut Casual Dining, offsetting a similar negative mid-teen impact in January. For the full quarter, the Chinese New Year impact to same-store sales growth was neutral.” Yum! Brands plans to release March same-store sales for its China Division on April 10, 2013, after market hours.

Yum! Brands shares closed at $67.84 on Monday, against a 52-week range of $59.68 to $74.75, and the fast-food company’s cycle-low was just in February at the peak of the woes in China after the company admitted to misjudging the situation there. Now shares are up 5% at $71.27 as Wall St. is hoping that it also misjudged the selling pressure so far in 2013.

We have not seen any real spillover into shares of McDonald’s Corp. (NYSE: MCD) on Tuesday. It closed at $98.89 Monday and shares are down only about $0.15 after the open.

Filed under: 24/7 Wall St. Wire, Consumer Product, Corporate Governance, Food, International Markets, Retail Tagged: MCD, YUM

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Lawyers Seeking to Restore Value and Corporate Governance at Bazaarvoice, Announces Deans & Lyons La

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By Business Wirevia The Motley Fool

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Lawyers Seeking to Restore Value and Corporate Governance at Bazaarvoice, Announces Deans & Lyons Law Firm

DALLAS–(BUSINESS WIRE)– Securities lawyers at Deans & Lyons LLP are investigating the board of Bazaarvoice (NYS: BV) due to allegations that they knowingly violated antitrust law. Concerned Bazaarvoice stockholders are encouraged to contact attorney Hamilton Lindley at 877-819-8033 or hlindley@deanslyons.com about their rights and remedies.

“When the Bazaarvoice board decided to acquire PowerReviews it may have caused the company to violate federal antitrust law, thereby tainting Bazaarvoice’s business reputation in addition to opening the company up to potential economic losses from the possibility of unwinding the PowerReviews transaction,” said Hamilton Lindley, a securities lawyer with the firm. “Stockholders who purchased Bazaarvoice stock before or between May 24, 2012 and January 10, 2013 may have remedies to restore investor value at the company,” Mr. Lindley said.

Deans & Lyons has significant experience representing shareholders, at no cost to them, in securities lawsuits nationwide. Bazaarvoice stockholders—or anyone with knowledge about this situation—should contact lawyer Hamilton Lindley at hlindley@deanslyons.com or 877-819-8033 with questions or concerns.

Deans & Lyons LLP
Hamilton Lindley, 214-965-8500
Fax: 214-965-8505
Toll Free: 877-819-8033
www.deanslyons.com

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Business, Finance, Occupation & Industry

Leadership Changes at Boeing Should Include McInerny

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By 24/7 Wall St.

Boeing 737-MAX-7-8-9 Artwork

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Two key commercial airliner projects at Boeing Co. (NYSE: BA) today got new leaders. Development of the 777X project has been handed to Bob Feldman who previously led development of the 737 MAX. The 737 MAX program has been assigned to Keith Leverkuhn who had been in charge of the propulsion systems (engines) division. The engines division’s new chief will be Nicole Piasecki.

While these are all important projects for Boeing’s future, the company’s current issue with the 787’s electrical system needs immediate attention. CEO Jim McNerny has presided over the company and the 787 since 2005, with not a lot to show for his tenure but long delays, big cost overruns, and a buggy airplane.

We suggested earlier this week that Ford Motor Co. (NYSE: F) CEO Alan Mullaly, formerly the head of Boeing’s commercial aircraft division, should be on the speed dial of Kenneth Duberstein, the chairman of the company’s governance, organization, and nominating committee. Mullaly is due to retire from Ford in less than two years and Boeing could use his turnaround talents and familiarity with Boeing’s products to get the company back on track.

Boeing’s shares are trading up about 0.2% today at $81.19 in a 52-week range of $66.82 to $81.95.

Filed under: 24/7 Wall St. Wire, Aerospace, Aerospace & Defense, Corporate Governance, Management Change Tagged: BA, F

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Business, Finance, Occupation & Industry

Shareholder Attack of Smithfield Has Risks, But Merits Too (SFD, HRL, TSN)

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By 24/7 Wall St.

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Smithfield Foods Inc. (NYSE: SFD) is trading higher on word that a top shareholder called Continental Grain Co. has sent a letter urging the company to consider strategic alternatives. These alternatives include a breakup of the company into three units and include a dividend. We have just pondered whether or not there is the formation of an activist investor bubble happening or not, but either way this effort to drive Smithfield has some points which are very hard to ignore.

We cannot help but wonder if this strategy is a bit aggressive for the company if executed in full. Continental Grain owns about 6% of Smithfield, but what is interesting is that the group has recently lightened up by selling a small portion of its stake. The activist letter states:

Since the current management took over on August 31st, 2006 and through March 1, 2013, Smithfield stock has declined by 26 percent while, including dividends, Tyson Foods Inc. (NYSE: TSN) stock returned +70 percent and Hormel Foods Corporation (NYSE: HRL) returned +131 percent — a shocking divergence in shareholder return among industry competitors. During this time, Smithfield has paid no cash dividends, while Tyson has cumulatively paid $429 million and Hormel has paid $728 million.

Despite the poor performance of Smithfield stock (last year alone it was down 11 percent while the S&P was up 16 percent), management has been extremely well compensated. The CEO has received $37 million in total compensation over the past two years.

While a breakup into three units would probably unlock value, it is important to realize that the market cap here at a new 52-week high of $25.67 is only $3.57 billion. That may just unlock value to the point of irrelevance for each of the units. That being said, it is pretty unforgivable that Smithfield has not paid a dividend out to its shareholders. If the company could take away that $37 million going forward then it would have enough to pay a 1% dividend yield without dipping into other cash.

Here are the points of interest in a supplement to the SEC filing which outline Continental’s efforts.

Filed under: 24/7 Wall St. Wire, Activist Investor, Compensation, Consumer Goods, Consumer Product, Corporate Governance, Dividends & Buybacks, Food, Retail Tagged: HRL, SFD, TSN

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Strong Household Net Worth Gains, Led By Houses and Financial Assets

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By 24/7 Wall St.

Money, US, $100 bills

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A report from the Federal Reserve is signaling that US households have seen a substantial rise in their net worth. With the recession not being too long ago and with many workers still unemployed, this is great news when the news flow is still mixed to cautious on so many fronts.

Today’s report of the Flow of Funds Summary Statistics for the fourth quarter of 2012 shows that household net worth was up more than $1.1 trillion from the prior quarter to about $66.0 trillion at the end of the fourth quarter of 2012. It also shows that the value of corporate equities and mutual funds owned by households expanded by $130 billion and the value of real estate owned rose by $480 billion in the quarter.

This matters because the report on net worth is the difference between the value of households’ assets and liabilities. There are still some debt areas growing in the report. Debt of the domestic nonfinancial sectors expanded at a seasonally adjusted annual rate of 6.5% in the fourth quarter, which is 4 percentage points higher than the third quarter. Household debt rose by an annual rate of 2.5% in the fourth quarter and that is actually a contraction of 0.75%. Consumer credit rose at an annual rate of 6.5% percent.

U.S. companies are also sitting on a virtual mountain of cash. That is partly tied to corporate bonds but that figure rose to $1.79 trillion from $1.77 trillion the prior quarter.

There is a huge difference of what is happening at the federal level versus the state and local levels. State and local government debt had been flat in the third quarter but it fell by 3.75%. Washington continues in its irresponsibility trend as the federal government debt rose at an annual rate of 11.25% in the quarter. It is very hard to consider that this is good news on the Federal side, but it is the lowest growth of federal debt with a formal 10.9% growth for all of 2012, down from 11.4% debt growth in 2011, 20.2% growth in 2010, 22.7% in 2009, and 24.2% in 2008.

The total assets were not seasonally adjusted, but this grew from $78.2187 trillion in the third quarter to $79.5248 trillion in the fourth quarter. Real estate values rose from $19.4357 trillion to $19.9144 trillion. Financial assets rose from $53.6061 trillion to $54.3905 trillion.

The real household net worth figures rose from $64.8981 trillion in the third quarter up to $66.0717 trillion in the fourth quarter.

FULL DATA FROM FEDERAL RESERVE

Filed under: 24/7 Wall St. Wire, Accounting, Banking & Finance, Bankruptcy, Compensation, Consumer Product, Corporate Governance, Dividends & Buybacks, Earnings, Economy, Personal Finance Tagged: featured

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Business, Finance, Occupation & Industry

Suntech's Boardroom Turmoil

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By 24/7 Wall St.

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On Monday, the board of directors for Suntech Power Holdings Co. Ltd. (NYSE: STP) removed its founder and executive chairman, Shi Zhenrong, replacing him with another board member, Susan Wang, as executive chairman. Shi retains his board seat, for what that’s now worth.

The former chairman issued a statement last night that the board’s action was “misconceived and unlawful” and, therefore, “invalid and of no effect.” The board of directors issued a statement today saying that it is confident the move is “valid and effective under the law of the Cayman Islands,” where Suntech is incorporated.

Added to this turmoil, Suntech must come up with a way to cover a $541 million convertible bond that comes due next week. The company has not posted a profitable quarter in two years, and no end to that string is in sight. The company really has no way to repay that bond unless the cavalry rides to the rescue.

And if the cavalry does show up, it is pretty certain that Shi will not be among those saved. It was on his watch that Suntech overbuilt production capacity and fell for what the company says is a fraud involving German bonds that has cost it $680 million. Shi was replaced as Suntech’s CEO last August, following disclosure of the bond fiasco.

If Suntech is saved, it will be the Chinese government that rides to the rescue, or one of the local banks that wants to preserve the jobs the company brings to the local economy. Bridge financing could be arranged until the company could get another bond issue together. But it seems unlikely that the former chairman would be asked to stay on after his poor performance to date.

Shares of Suntech are down more than 4% at $1.16, in a 52-week range of $0.71 to $3.68. Most of the other Chinese solar makers are trading up today. Suntech’s problems are its own.

Filed under: 24/7 Wall St. Wire, Alternative Energy, Corporate Governance, Green Biz, Management Change, Shareholder Issues, Technology, Technology Companies Tagged: STP

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Business, Finance, Occupation & Industry

21 Reasons No One May Be Selling J.C. Penney Stock

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By 24/7 Wall St.

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CNBC reported a rumor that a block of J.C. Penney Co. Inc. (NYSE: JPC) stock was for sale, with the transaction represented by Deutsche Bank. The Wall Street Journal claims the seller is Vornado Realty Trust. Its chief, Steve Roth, sits on the J.C. Penney board. But the facts have not been confirmed and may be wrong for several reasons.

The first set of potential mistakes centers around which shareholder may be the seller. Apparently seven shareholders have enough stock to dump the 10 million shares in question. These include Vornado, Pershing Square — which is J.C. Penney’s largest shareholder and a firm controlled by J.C. Penney board member Bill Ackman — and Dodge & Cox. Under any circumstance, it would be odd that a board member, in this case Roth, would so publicly break with the company and continue to be a board member.

What also may or may not be true is the price at which the shares are being sold. Media reports put that amount at $16.40 to $16.60 a share. That number could be off for a number of reasons, not the least of which that J.C. Penney shares dropped below $16 after hours yesterday. If Vornado, or any other shareholder, wants to dump a large block, it will not be at $16.60

Finally, Deutsche Bank may not represent the seller of the shares. Journalists covering the rumor may have missed the fact that several investment banks have may have joined in an effort to peddle the shares. Or, if the shares are not for sale, no investment bank is involved at all.

The J.C. Penney rumor is similar to others that race around Wall St. fueled by the media. News outlets want to be early to market with “news” which, in the haste, may turn out to be no story at all. Perhaps some portion of the story is correct, but most of the facts are not.

Filed under: 24/7 Wall St. Wire, Corporate Governance, Rumors Tagged: JCP

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SEC Filing: Schulze Bid Hopes Fading Away

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By 24/7 Wall St.

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Richard Schulze has filed a statement with the Securities and Exchange Commission that basically confirms that he is not going to make a new big for shares of Best Buy Co. (NYSE: BBY). The filing says that the company’s new plan deserves a chance and that the company should be able to implement its plan. Thursday marked the end of a bid review period and that time has come and gone.

Best Buy shares are up 1.5% at $16.66 against a 52-week range of $11.20 to $27.95. The long and short is that Best Buy is going to likely have to fend for itself. Schulze’s filing shows that no determination has been made, which to us is the telegraph that he was not able to pony up the adequate financial backing from the private equity firms to do a deal. Best Buy‘s market cap is over $5.6 billion, but there are too many shareholders who are buried in “long and wrong” trades from prices even much higher than what have been seen in the last year.

The full amended 13D filing SEC Filing says,

Over the course of the past several months, Mr. Schulze facilitated various offers that would have resulted in the investment of new equity into the Company by up to three leading private equity firms. In connection with such investments, it was contemplated that each private equity firm would be provided a board seat and that Mr. Schulze would nominate two directors to the Company’s board of directors. In addition to their capital, Mr. Schulze believed that the private equity firms would add significant expertise, talent and experience to the Company’s board of directors, which would assist the Company in returning to its position of market leadership.

In the end, the Company determined not to accept the terms offered by the private equity investors for their investment. Mr. Schulze believes, however, that the Company deserves a chance to implement its own plan. No one is more interested in the success of the Company than Mr. Schulze.

Mr. Schulze has not made any determination as to whether or not he will exercise his right to appoint his own two nominees to the Company’s board of directors.

Filed under: 24/7 Wall St. Wire, Consumer Electronics, Corporate Governance, Mergers & Acquisitions, Mergers and Buy Outs, Private Equity, Retail Tagged: BBY

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Banks Hopeful for Dividend Hikes and Stocks Buybacks

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By 24/7 Wall St.

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In the coming weeks, the financial sector may move from worrying about the spending sequestration to the coming stress tests of the 19 major banks in the United States. We recently covered the Seven Safest Banks in America for 2013 and that list may get to be expanded handily in 2014 after the result of the stress tests.

At issue is that the banks are expected to pass these tests. If so, there is going to be one serious advantage that has not been there in years. That will come from returning capital to the shareholders. Companies like Bank of America Corp. (NYSE: BAC) and Citigroup Inc. (NYSE: C) have such low dividend yields that they might as well not be counted as dividend payers at all. Some of the banks likely will be freed up to begin returning capital via higher dividends and common stock buybacks.

Bank of America Corp. (NYSE: BAC) has a yield of only 0.36% and Citigroup Inc. (NYSE: C) yields only 0.1%. Our take is that Bank of America may get to increase its payout before Citigroup, but that may be solely due to management remaining the same. There are still many pending legal cases against Bank of America from borrowers and from various government agencies and trading partners. If these banks are not allowed to lift their dividends this year, then we almost certainly would expect that to take place in 2014.

Here are some other banks that may have a shot at dividend hikes or resuming some share repurchase programs:

  • Regions Financial Corp. (NYSE: RF) has a $10.8 billion market cap and only a 0.52% dividend yield. Regions cut the payout from $0.38 to $0.10 in 2008, and then in 2009 it cut that payout from $0.10 all the way down to only $0.01 per share per quarter.
  • SunTrust Banks Inc. (NYSE: STI) has a $14.7 billion market cap and only a 0.72% dividend yield. This bank raised its payout to $0.05 per share quarter from $0.01 in mid-2011, but that has been static ever since at the one-penny level.
  • Zions Bancorp. (NASDAQ: ZION) has a $4.4 billion market cap and only a 0.17% dividend yield. This dividend fell from $0.43 to $0.32 per share per quarter very briefly in 2008 and then down to $0.04 for two quarters before the dividend fell down to $0.01 per share quarter, where it has been since mid-2009.

The good news is that most banks are expected to pass the stress tests. The bad news is that merely passing a stress test does not come with assurances that the Federal Reserve will allow these banks to automatically hike dividends and begin repurchasing common stock.

Filed under: 24/7 Wall St. Wire, Banking & Finance, Corporate Governance, Dividends & Buybacks, Regulation Tagged: BAC, C, RF, STI, ZION

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Business, Finance, Occupation & Industry

Walmart Administrative Officer Resigns

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By 24/7 Wall St.

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Wal-Mart Stores Inc.’s (NYSE: WMT) chief administrative officer has left the retailer suddenly. Tom Mars was general counsel during a period (2002 to 2009) when the retailer allegedly bribed Mexican authorities to give preferential treatment on the locations and building of stores.

According to The Wall Street Journal:

In a 2005 email memo to Chief Executive Michael Duke, Mr. Mars wrote, “The attached memorandum summarizes an interview conducted with a former WalMex in-house lawyer. The lawyer asserts in some detail the alleged corruption by various WalMex associates, including senior people. You’ll want to read this. I’m available to discuss next steps. PS: Welcome to Wal-Mart International.”

Now the pressure to resign moves to Duke.

Walmart shares are thus far inactive in premarket trading, but closed at $71.66 yesterday. The 52-week range is $57.18 to $77.60.

Filed under: 24/7 Wall St. Wire, Corporate Governance, Management Change, Retail Tagged: WMT

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