Jamie Dimon should come out swinging in Senate
By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Which Jamie Dimon will appear before the Senate Banking Committee in Washington on Wednesday? The self-effacing JPMorgan boss offering apologies for his bank losing at least $2 billion on bum trades? Or the combative JPMorgan leader who just a year ago publicly challenged the chairman of the Federal Reserve over regulation? It would be best if the latter shows up.
JPMorgan should consider whale of a bonus
By Daniel Indiviglio
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
JPMorgan should consider a whale of a bonus. Not a Shamu-size payout, but rather one referencing the London trader with the marine mammal moniker who is at the center of at least $2 billion of trading losses from the bank’s chief investment office.
Groupon now needs to dig more than build
By Rob Cox
This column appears in the June 11 issue of Newsweek. The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Groupon founder Andrew Mason has built a castle. His internet coupon empire will harvest some $2.4 billion in sales this year thanks to rapid growth in its wittily-worded email offers for discount pole-dancing lessons and two-for-one chicken parmesans. Mason’s next trick needs to be digging a moat around his business. That’s arguably tougher, and means being more like online restaurant booking outfit OpenTable – or buying it.
UK bosses play dangerous game: pay me or fire me
By Christopher Hughes
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The O-word is causing friction between UK bosses and shareholders. Martin Sorrell says he was wounded by a shareholder who said the chief executive of advertising group WPP he had been behaving “as an owner”. Ivan Glasenberg, Sorrell’s counterpart at commodity trader Glencore, has come to his aid, saying it is hard to get a CEO to be entrepreneurial if they didn’t own a lot of stock.
I have worked both in industry and in brokerage, so understand both sides of the argument.
Wearing my industry hat, I would say that shareholders are just that, holders of shares. They are not owners and are not in it for the long term, but instead are there merely for as long as it takes to get a return. A reality.
Should this short-term oriented group – the majority of which have never and will never run a business – therefore control the remuneration of a CEO that has been there since the start and will probably be there until his end?
In a real sense, the only right a shareholder has is to buy or sell his shares, to vote with his feet.
Let us also not forget that the issue in question, the CEO’s remuneration, is unlikely to have a significant effect per se on the share price, which is the NPV of all future cash flows. This is therefore not really an issue of shareholder value.
However, shareholders do have an influence and, as you say, a decision was taken to go public and so to expose oneself to that environment.
Management may think that it is unfair that investors have a say over such things. In the end, however, it is management’s responsibility to communicate effectively with the investment community, and in a way that shows that the company takes shareholders seriously – not because the poor chaps might feel that they are being held for ransom, but because that is how the system works, for good or bad. Also, therefore, a reality.
(Oh dear, I have probably alienated both sides now!)
Chesapeake gets pistol-whipping from shareholders
By Robert Cyran and Christopher Swann
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
Chesapeake Energy has gotten a pistol-whipping from shareholders. The besieged U.S. gas giant’s owners voted overwhelmingly against directors who were up for re-election and the board’s executive pay plan, while favoring a slew of investor proposals to improve Chesapeake’s governance. It’s hard to see how boss Aubrey McClendon can keep running this circus.
Lululemon’s downward dog gnaws at yoga bubble
By Megan Miller
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Did Lululemon’s downward dog just take a bite out of the yoga bubble? The $9 billion producer of pricey sweatpants and other athletic apparel rattled investors’ chakras by warning of slowing sales and profit growth. Yoga may still be one of the fastest-growing exercise practices in the world, but Lululemon’s stretched valuation is predicated more on fashion than the proliferation of yogi practitioners.
Nasdaq pours gasoline on Facebook fire
By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Nasdaq boss Bob Greifeld needed to find a salve for brokers singed by his exchange’s botch-job on Facebook’s market debut. The technological meltdown on the day of the initial public offering last month may have cost clients as much as $200 million. Instead, Greifeld fanned the flames.
Google’s antitrust problem is all about privacy
By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Google’s antitrust problem is actually about privacy. They seem like separate issues – Google has argued as much – but the internet search giant’s market dominance is largely fueled by its access to users’ personal data. Limiting that could give competition a useful jolt.
BofA reject wins Fannie Mae booby prize
By Daniel Indiviglio and Agnes T. Crane
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
No good deed goes unpunished. Fannie Mae has chosen Timothy Mayopoulos, its general counsel, as its new chief executive. His promotion won’t improve already tense relations with Bank of America – the mega-bank fired him in 2008 after he questioned mounting losses. But his integrity and background make him a decent fit for the job.
Carlos Slim may drive KPN to poison
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Carlos Slim may drive KPN to poison. The Dutch telecoms group wants to dodge what it sees as a takeover-on-the-cheap from the world’s richest man. Slim is hoping to nab a near-28 percent stake at eight euros a share. KPN’s response is to wax lyrical about its standalone potential, and drop heavy hints about a possible German tie-up that’s been talked about for a decade. But counterpart Telefonica does not seem ready to trade.
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Breakingviews: Bank boss bingoMay 17 - Breakingviews editors namecheck Wells Fargo's John Stumpf, who is venturing onto the anti-regulation soapbox, and Jamie Dimon of JPMorgan, who faces a potentially contentious annual meeting.Video
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Reuters Breakingviews: Hollande gets serious on Europe - at lastMay 17 - French President Francois Hollande's plan for a centralised euro zone 'economic government' may be premature, but it has legs argues Breakingviews.Video
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Mr. Cox, your premise that JP Morgan only has to answer to its shareholders assumes 1) shareholders have any power over Morgan’s leadership, 2) JP Morgan isn’t relying on tax payer institutions to back up its risky trades (FDIC, FED, etc.), 3) that derivative trading losses are just a bank taking risk. All 3 premises are completely false.
As we know, JP MOrgan’s acquisition of Bear Stearns relied 100% on the back of the US Treasury; shareholders in today’s corporation have NO say, unless you own a block of 10% or more; and derivative trading is not banking, it is gambling. However, at least most good gamblers understand and know their odds. Jamie’s lieutenants obviously don’t.
What is remarkable is how JP MOrgan’s board has been absolutely mum on Dimon’s leadership lapse. And the board is there to protect the shareholders’ interest. Not here.
And Dimon’s premise that the regs against prop trading will kill bank profitability now ring very hallow, and US Bankcrop has shown us all how traditional banking can work and payoff shareholders very well.