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OAKLAND, Calif. — The coronavirus pandemic has gutted the so-called sharing economy. Its most valuable companies, which started the year by promising that they would soon become profitable, now say consumer demand has all but vanished. It is not likely to return anytime soon. In earnings reports this week, Uber and Lyft disclosed the depth of the financial damage. The companies said their ride-hailing businesses all but collapsed in March, the last month of the first quarter, as shelter-in-place orders spread through Europe and the United States. The red ink extends beyond ride hailing. The home-sharing company Airbnb, which investors valued at $31 billion, had planned to go public this year. Instead, the company has slashed costs and raised emergency funding, and on Tuesday it laid off 1,900 employees, about 25 percent of its staff. It also reduced its revenue forecast for this year to half of what it brought in last year.
Renewable energy in the U.S. has beaten coal as the country's leading electricity source for a record 40 days. The record, reported by the Institute for Energy Economics & Financial Analysis (IEEFA) Monday based on U.S. Energy Information Administration (EIA) data, far surpasses the previous record of nine days during April 2019. It suggests that the falling energy demand due to coronavirus lockdowns could lead renewables to generate more electricity than coal overall for the first time this year. "IEEFA had forecasted that power generation from renewables would likely surpass coal-fired generation in 2021, an important milestone in the energy transition that is well underway," the group wrote. "But in the first quarter of 2020, renewable generation unexpectedly exceeded coal, and with this strong performance continuing in the second quarter, there is an increasing chance that the milestone could occur this year."
Three Silicon Valley firms, Cooley being one, have submitted a rulemaking petition to the SEC asking the SEC to amend Rules 11 and 302 of Reg S-T to allow the use of electronic signatures in SEC filings. Although the staff has granted some flexibility in connection with retention of manual signatures in its Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns, the petition contends that, given current health and safety requirements, “obtaining and retaining manual signatures in compliance with the Staff Statement remains a significant logistical burden.” [...] The petition observes that e-signatures are routinely used for any number of actions under the Delaware General Corporation Law, as well as multi-billion dollar corporate and commercial transactions.
Companies should expect auditors to look more closely at their ability to remain going concerns, even if their recent annual reports gave a healthier impression. The number of going-concern filings, which can flag survival problems at a company, is currently at a 10-year low, according to the research firm Audit Analytics. Just 20 companies had received going-concern audit opinions as of May 3 this year, based on the end of the company’s fiscal year, down from 41 in 2019 thus far. Those warnings on a company’s likelihood to remain in business for the next 12 months are typically made when it files its annual report. But this year at many companies that financial assessment may have occurred before the coronavirus laid waste to the economy.
Events expected to play out in the Chinese economy over the next several years have been compressed into a short few months. Over the last few months, COVID-19 has spread across the world, uniting humanity in a shared experience that has highlighted the vulnerability of our societies. As the first country to grapple with the crisis, China has been on the frontlines both of post-COVID-19 economic recovery, and of the societal changes the pandemic has precipitated. [...] As that recovery takes shape, several important shifts in the makeup of China’s economic landscape have already become apparent. COVID-19 has accelerated preexisting trends, ushering in the arrival of a future we were likely already on track to realize. In this report, we discuss five trends shaping the Chinese economy that have been accelerated, or “fast-forwarded,” as a result of the onset of the COVID-19 crisis.
The coronavirus (COVID-19) pandemic and the ensuing market uncertainty, as well as recently enacted legislation, have upended the compensation and benefit programs of many companies. This is the fifth memorandum in a series of client memoranda that we are preparing regarding how companies may wish to consider addressing their compensation programs in this context.[1] The recent market volatility has disrupted many companies’ day-to-day operations resulting in economic hardship that has caused companies to consider or implement various measures to reduce personnel costs, including pay cuts, furloughs and/or layoffs. When implementing such personnel cost-cutting measures, a number of companies have reduced executive pay,[2] including reductions in base salary and bonus opportunities,[3] and some have also reduced director retainers. This memorandum summarizes the actions that a number of companies have already taken and provides guidance for companies considering reductions in executive or director pay.[4]
If hubris were a commodity you could bottle and sell, Adam Neumann would have zero trouble making the $3 billion over which he’s suing Japan’s second-richest man. Few tech-era founders traveled from hero to zero faster or more spectacularly than Neumann of WeWork infamy. You know the story: charismatic pitchman sells an old-economy office-leasing business as some Amazon.com-like disruptor, bamboozling billions out of Silicon Valley’s biggest benefactors. Among them: SoftBank titan Masayoshi Son, whose $100 billion Vision Fund remade the global venture capital game. Neumann reportedly called Son a “Jedi” who “has lots of superpowers.” Turns out, it was Neumann who was playing mind tricks.
Bombardier a subi une perte de 200 millions $ US au premier trimestre de 2020, comparativement à un gain de 239 millions à pareille date l’an dernier, et a accueilli un nouvel investissement de 386 millions $ US de la Caisse de dépôt. Bien que la multinationale québécoise ait vu ses revenus progresser de 5 % pour atteindre 3,7 milliards, une part importante de ces nouvelles entrées de fonds provenait de projets peu ou pas rentables, ce qui a nui à sa marge bénéficiaire, explique-t-elle. La pandémie a aussi eu son effet sur les résultats financiers du trimestre conclu le 31 mars. Bombardier estime qu’elle a eu un impact négatif de 600 à 800 millions $US sur ses liquidités, principalement à cause de son « incapacité à livrer des avions après que le gouvernement a imposé des restrictions de voyage, les interruptions temporaires de la production dans plusieurs installations importantes et une baisse plus importante que prévu des nouvelles commandes attendues à la fois par Aviation et par Transport ».
he COVID-19 pandemic is taking a terrible toll in human life and in the livelihoods of millions the world over. As people and institutions struggle to contain the spread of the virus, the measures necessarily imposed have caused major economic disruptions. Every industry has been affected, and banking is no exception. Capital, profit-and-loss, and liquidity positions have been hit very hard. One consequence has been that banks’ models have broken down across their business. The flaws have put the reliability of these models in doubt and suggest that they cannot be trusted to help banks navigate through the crisis.
Delaware’s success in attracting corporate formations is well known, but explanations for it vary. In a recent paper, I test these explanations as well as the reasons for Delaware’s success in attracting other types of business formation I find evidence consistent with Delaware’s making a credible commitment to creating quality corporate law, particularly through its judiciary, and this commitment extends to LLCs and other organizational forms. These results provide insight into why Delaware leads corporate formations, how that lead expands to related organizational forms, and how the future of state competition for organizational formations might unfold.
Facebook on Wednesday appointed 20 people from around the world to serve on what will effectively be the social media network’s “Supreme Court” for speech, issuing rulings on what kind of posts will be allowed and what should be taken down. The list includes nine law professors, a Nobel Peace Prize laureate from Yemen, journalists, free speech advocates and a writer from the libertarian Cato Institute. Absent, however, was any prominent expert in studying disinformation. Facebook has struggled to contain state-based manipulation efforts as well as hoaxes on subjects like false cures and gun violence.
Samsung’s de facto leader Lee Jae-yong said he doesn’t intend to pass down management of the South Korean conglomerate to his children, trying to put recent scandals behind him and the company by vowing to end a dynastic pattern of family control. Apologizing for several “shortcomings” at Samsung—including a bribery scandal for which he remains on trial and Samsung executives’ efforts to quash unions among its employees—the embattled scion, 51, said he had been weighing the decision for some time. He also promised employees would be able to unionize, bargain collectively and engage in peaceful assembly. Mr. Lee’s remarks signify that Samsung—and possibly other South Korean conglomerates—will be run by professional managers, picked on their talent rather than their bloodline. Harvard-educated and trilingual, Mr. Lee doesn’t run day-to-day operations, though all major decisions, such as big investments or acquisitions, require his blessing.
California sued Uber Technologies Inc. UBER and Lyft Inc. for allegedly misclassifying their drivers as independent contractors instead of employees, a move that intensifies a battle between the ride-hailing giants and their home state. California, which is suing the companies under authority granted by a new state law, said the decision to classify drivers as contractors has deprived them of rights such as paid sick leave and unemployment insurance. “We believe it’s time for all workers to be treated fairly,” California Attorney General Xavier Becerra said Tuesday. “Innovation, regardless of what Uber and Lyft tell you, doesn’t require these companies to mistreat their workers.” [...] Many drivers have talked about the conundrum they face: Drive and risk getting sick, or stay home and don’t get paid.
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Neiman Marcus Group filed for bankruptcy protection on Thursday, marking one of the highest-profile collapses yet among retailers forced to temporarily close stores in response to the COVID-19 pandemic. The U.S. luxury department store chain filed for bankruptcy in a federal court in Houston, and said it had reached agreement with creditors for $675 million of debtor-in-possession financing to aid operations while it attempts to reorganize. The Dallas-based retailer plans to cede control to creditors in exchange for eliminating $4 billion of debt. Its debt currently totals about $5 billion. Reuters earlier reported that the company was preparing to file for bankruptcy within days. The company expects to emerge from Chapter 11 proceedings in early fall with a $750 million package from creditors that provided its initial bankruptcy loan.
As COVID-19 continues to disrupt every aspect of our lives, companies are taking swift actions to determine and mitigate the risks posed by the new “normal.” Directors have a critical role in helping their companies maneuver through these challenging times. Although management is charged with managing the day-to-day operations of the company, directors are responsible for its oversight and should be mindful of their fiduciary duties in that role. Directors have a duty of care to make well-informed decisions and a duty of loyalty to act and make decisions in the best interest of the company’s stockholders. Directors are afforded substantial protection against liability for their business decisions, but the widespread and quickly developing risks posed by the COVID-19 pandemic underscore the importance of the board’s active engagement.
Corporate stewardship holds great promise for the improvement of shareholder engagement and the encouragement of more responsible and long-term oriented value creation. Many countries have now adopted a best practice code for the stewardship role of institutional investors and asset managers, following the UK example. Yet the EU’s largest economy remains surprisingly reluctant to join in the merry go-round. Lawmakers and regulators in Germany have been sitting on the fence on the issue during the past several years, hesitating on what to do. Most saliently, Germany has refused to adopt an official stewardship code, and the recent reform of the European Shareholder Rights Directive (SRD II) that is promoting similar long-term engagement policies at the EU level is eyed with some suspicion.
The following extensive comments were submitted by William Lazonick, Professor in Economics, Co-Director of Center for Industrial Competitiveness, in response to my review of Predatory Value Extraction. This is dialogue a reviewer can only dream of, especially after already recieving a response from co-auther Jang-Sup Shin. More such exchanges with Shin, Lazonick, and others interested in the topics of their book — and possible collaboration — could help realize the changes needed to move from corporate models focused on predatory value extraction to more innovative value added models leading to more widespread sustainable prosperity.
For nearly 90 years, scholars have debated whether the sole purpose of the business corporation is to maximize profits. This debate has been reframed over the past 50 years and now seems to have settled on a middle ground: Corporate social responsibility (CSR) and profitability can coexist as corporate goals. The question, though, is what is the appropriate balance between the two? In a new article, available here, I explore the role of state corporate law and federal securities law in answering that question. So far, the Securities and Exchange Commission and the courts have made only limited progress in embracing corporate social responsibility’s role in securities law compliance. The time has come for the SEC to take a more meaningful role in promoting CSR and environmental social governance (ESG) disclosures.
MONTREAL -- SNC-Lavalin Group Inc. will be free to pull up stakes from Montreal — the seat of its operations for more than a century — come 2024, along the lines of a "Plan B" it submitted to federal prosecutors in 2018. Shareholders voted Thursday to maintain a bylaw provision that allows the engineering firm to move to another province. The company is tethered to Montreal for the next four years through the strings attached to a $1.5-billion loan from Quebec's pension fund manager that allowed SNC to acquire British competitor WS Atkins in 2017. When that loan is repaid, the terms expire, unmooring the company. Underscoring SNC's open horizon was the rejection by shareholders of a proposal from Montreal-based investor rights group MEDAC at the company's annual general meeting Thursday.
Call it Cirque Lite. Quebecor Inc. executives are reaching out to institutional investors this week to make the business case for taking over the Cirque du Soleil, a deal with a public profile that far exceeds its potential financial impact. While the two iconic Quebec companies have personal conflicts – Cirque chair Mitch Garber took pot shots at Quebecor chief executive officer Pierre Karl Péladeau in the past – the Montreal-based telecom company is taking pains to explain a global entertainment brand is up for grabs at a bargain price. [...] Mr. Péladeau is offering a made-in-Quebec financial solution to the Cirque’s woes that plays to the province’s justified pride in a billion-dollar business founded by street performers on stilts. According to Quebecor chief financial officer Hugues Simard, the plan starts with scaling back 13 Cirque travelling shows that play in arenas or under massive tents, and 21 productions mounted under affiliated brands, such as Blue Man Group. The shows break even at the best of times, according to Quebecor, and these clearly are not the best of times.
To rebuild trust in businesses amidst concerns of excessive executive remuneration following the global financial crisis, ‘say on pay’ reforms have been introduced in many major jurisdictions, most notably in the US under the Dodd-Frank Act in 2011 (OECD 2019). Singapore and Hong Kong, however, have bucked the international trend of allowing shareholders a binding or advisory vote on the remuneration of corporate executives. In Singapore and Hong Kong, ‘say on pay’ has either been rejected or ignored in the latest round of reforms to the corporate governance codes. This is despite studies which have found that Singapore and Hong Kong have the highest executive pay in Asia, with base salaries for top executives rising to more than 25% higher than their US counterparts. In 2016, for every US$100 that top executives in the US earned in base salary, their counterparts in Singapore and Hong Kong made US$132 and US$128 respectively.
Following news reports about executives selling shares in their corporations to avoid losses due to the pandemic, we take a closer look at insider trades and find that net insider purchases have been positive in February and March, revealing corporate optimism, not pessimism. Our findings are a reminder that not all burning questions about the impact of the pandemic can or should be answered right now. Accurate answers rely on good data, but good data are hard to come by. One reason is that we are measuring some things for the first time, such as the true death toll of the coronavirus. Another reason is that we simply do not have clean data yet.
Shopify Inc. passed Royal Bank of Canada as the country’s most valuable company on Wednesday after the Ottawa retail software provider posted stronger-than-expected first-quarter results, joining other e-commerce giants that have had a similar lift as shoppers do more buying online during the pandemic. Shopify, whose platform is used by more than one million merchants to sell products online and in stores, saw its market capitalization top $121.2-billion on Wednesday, passing RBC at $120.5-billion. The shares rose 6.9 per cent after the company posted US$470-million in revenue in the quarter ended March 31, up 47 per cent from the same period a year ago and well above analyst expectations.
By pressuring companies to put ‘sustainability’ before profit, they hurt pensioners, small investors, and all those who depend on a robust economy. Many years ago now, Milton Friedman explained something that should never have needed explaining, when, writing for the New York Times Magazine, he reminded his readers what —and whom — a company is meant to be for: In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to [the] basic rules of . . . society, both those embodied in law and those embodied in ethical custom. . . .
The COVID-19 challenge is unprecedented, both for the economy and for aspects of the legal system. Law-firm leaders must prepare for a wide range of scenarios, the likelihood of which will depend on the effectiveness of both public-health- and economic-policy interventions. This article highlights five lessons from previous downturns, outlines potential implications for client demand across practice areas and sectors, and suggests priority areas of focus for law-firm leaders. The most effective firms will manage with a “through-cycle” mindset, giving appropriate attention to near-term pressures while laying the groundwork for long-term success.
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