NEWS MONEY SPORTS SEC shines light on CEO pay, bonuses LIFE AUTOS TRAVEL
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USA TODAY - L awrence J ournal -W orld THURSDAY, APRIL 30, 2015
Proposal would make it easier to see if pay matches performance Kevin McCoy and Gary Strauss USA TODAY
Shareholders at publicly traded companies could soon have new data to help decide whether corporate executives deserved higher salaries, bonuses and other compensation awards. By a 3-2 vote, the Securities and Exchange Commission on Wednesday approved a “pay vs. performance” proposal aimed at enabling invesMONEYLINE
tors to determine actual compensation paid to chief executives, see whether the pay aligns with company performance and make comparisons with data from other firms. The approval sets the stage for a 60-day public comment period that could lead to revisions before a vote on final enactment. “Having a description of how the executive compensation actually paid relates to the financial performance of the company can assist shareholders in assessing a company’s executive compensation practices and policies,” said SEC Chair Mary Jo White, who joined the majority vote. Companies are already required to detail pay and shareholder return in annual filings. But in proxy statements that can run 100 pages or longer, determining executive pay and its link
ANDREW HARRER, BLOOMBERG
Mary Jo White, chair of the Securities and Exchange Commission, joined the majority vote.
In proxy statements, determining executive pay and its link to shareholder return is often difficult even for seasoned investors.
to shareholder return is often difficult even for seasoned investors. The SEC proposal, required under the 2010 Dodd-Frank financial reform act, would require publicly held companies to include tables in annual proxies disclosing total compensation, annual total shareholder return and shareholder return based on a company’s peer group. The disclosure would apply to all companies other than foreign private issuers, registered investment firms and emerging growth firms. Small firms would be covered by scaled-down disclosure requirements. Proxy reports would have to include a table disclosing: uExecutive compensation actually paid to the principal executive officer and the average compensation for other named executive officers.
FIRST-QUARTER SLUMPS
An unexpectedly weak report Wednesday morning on U.S. economic growth in the first quarter unsettled U.S. and world financial markets throughout the day as investors tried to guess how the new data might influence the Federal Reserve’s plans for starting to raise interest rates this year. Percentage change in U.S. gross domestic product from preceding quarter, at a seasonally adjusted rate, and other results:
1.7%
-1.5%
2.3%
2.7%
-2.1%
0.2%
CHIP SOMODEVILLA, GETTY IMAGES
BERNANKE JOINS PIMCO AS SENIOR ADVISER Bond powerhouse PIMCO has hired former Federal Reserve chairman Ben Bernanke as a senior adviser, the firm said in a release Wednesday. Bernanke served as Fed chairman from February 2006 through February 2014, and his tenure spanned the biggest financial crisis since the Great Depression.
YAHOO CEO GETS 69% RAISE TO $42 MILLION FOR 2014 Yahoo’s revenue fell 1.3% last year, but CEO Marissa Mayer pulled down a 69% raise, bringing her total compensation for 2014 to $42 million and making her the best-paid female exec in the S&P 500. She got $1 million in salary. Stock and option awards heaped on an additional $40 million. DOW JONES INDUSTRIAL AVG. 9:30 a.m.
18,110
18,050 18,000 17,950 17,900
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-74.61
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WEDNESDAY MARKETS INDEX
Nasdaq composite S&P 500 T- note, 10-year yield Oil, light sweet crude Euro (dollars per euro) Yen per dollar
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5023.64 2106.85 2.04% $58.59 $1.1114 119.01
y 31.78 y 7.91 x 0.04 x 1.65 x 0.0135 x 0.14
SOURCES USA TODAY RESEARCH, MARKETWATCH.COM
uUSA MARKETS, inside
USA SNAPSHOTS©
Average CD yields As of Wednesday: 6-month
This week Last week Year ago 0.16% 0.16% 0.14% 1-year
This week Last week Year ago 0.27% 0.27% 0.24% 21⁄2-year
This week Last week Year ago 0.45% 0.44% 0.38% 5-year
This week Last week Year ago 0.89% 0.88% 0.80% Find more interest rates at rates.usatoday.com. Source Bankrate.com JAE YANG AND VERONICA BRAVO, USA TODAY
DOLLAR VS. EURO Value of one euro to one dollar: April 27: 1.09 April 28: 1.10 April 29: 1.12
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DOW JONES IND. AVERAGE April 24: 18080.14 April 27: 18037.97 April 28: 18110.14 April 29: 18035.53
GEORGE PETRAS, USA TODAY
Wendy’s, the nation’s No. 3 burger chain and widely recognized for its history of trend-setting products, begins next week to add organic tea to its permanent menu. Specifically, it’s an exclusive brew from Honest Tea: Honest Tropical Green Tea.
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GDP CHANGE, PREVIOUS QTR. Seasonally adjusted, annual rate: Q4 2014: 2.2% Q1 2015 forecast: 1% Q1 2015 actual: 0.2%
10-YEAR TREASURY YIELDS April 24: 1.91% April 27: 1.92% April 28: 2.00% April 29: 2.04%
Sources Commerce Department, FactSet
WENDY’S ROLLING OUT AN EXCLUSIVE ORGANIC TEA
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uTotal shareholder return on an annual basis. uTotal shareholder return of firms in the peer group companies identify in their filings. The requirements would be phased-in over time. Ultimately, companies would be required to disclose information for the last five fiscal years. Smaller firms would be required to provide data for the last three years. Commissioners Daniel Gallagher and Michael Piwowar voted against the proposal. They said the SEC should focus on more pressing financial oversight priorities first and avoid intruding in corporate governance. Commissioners Luis Aguilar and Kara Stein, who joined White in voting yes, said the proposal would enable shareholders to make more informed investing decisions.
GDP growth was substantially less than expected Paul Davidson USA TODAY
The economy slowed significantly in the first quarter as cold weather, a strong dollar and shipping snags dampened activity, raising questions about the strength of an expected rebound in the remainder of 2015. Gross domestic product — the value of goods and services produced in the U.S. — expanded at a seasonally adjusted annual rate of 0.2% in the January-March period, the Commerce Department said Wednesday. That’s down from 2.2% in the fourth quarter. The report was the government’s first estimate of firstquarter GDP. Two revised estimates will be published in May and June based on more complete data. First-quarter growth was substantially less than the 1% expected by economists surveyed by Action Economics. Analysts say the slowdown largely reflects temporary factors, such as harsh winter weather and a labor dispute at West Coast ports that delayed deliveries to factories and retailers. Other economic headwinds could linger, including a strong dollar that’s making U.S. goods more expensive for foreign buyers and a pullback in energy
U.S. ECONOMY GREW AN ANEMIC 0.2% company investment amid a plunge in oil prices. “The slowdown in growth was a little greater than expected and it raises the question whether this was just a normal first-quarter pause or a real slowing in activity,” economist Joel Naroff of Naroff Economic Advisors wrote in a note to clients. Business investment, for example, fell 3.4% after increasing 4.4% in the previous quarter as the muscular greenback dented manufacturers’ sales. Spending on non-residential structures plunged 23.1%, in large part a consequence of the oil price slump, as energy companies sharply reduced the number of oil drilling rigs. And equipment outlays, a closely watched measure of capital spending, rose just 0.1%. Exports dropped 7.2% as manufacturers lost sales to other countries with more favorable currency exchange rates. That compares with a 4.5% increase last quarter. Consumer spending, which makes up more than two-thirds of economic activity, also stum-
“The slowdown ... raises the question whether this was just a normal first-quarter pause or a real slowing in activity.” Economist Joel Naroff of Naroff Economic Advisors
bled, growing 1.9% down from 4.4% in the fourth quarter. Rough weather kept many shoppers at home. And government spending declined 0.8%, with defense and state and local outlays all falling. Jim O’Sullivan, chief U.S. economist of High Frequency Economics, expects a healthy rebound in the current quarter as mild weather and still-low gas prices coax consumers to malls and highways. Encouraging retail sales in March already have hinted at an upturn. O’Sullivan says such catch-up effects should spur 4% growth in the current quarter. But Doug Handler, chief U.S.
economist of IHS Global Insight, says oil rig counts likely have continued to drop in the current quarter. And surprisingly strong business stockpiling last quarter will likely mean a sharp downturn in coming months. “The anticipated second-quarter rebound will still occur, but it will be far more muted than originally anticipated,” Handler wrote in a note to clients. Also expected to persist are the negative effects of the strong dollar on exports, says economist Michael Gapen of Barclays Capital. He expects the economy to grow 2.6% this year, in line with last year’s showing but short of the 3%-plus pace that many economists predicted several months ago in anticipation of a breakout year in a generally sluggish six-year-old recovery. Bernard Baumohl, chief global economist of the Economic Outlook Group, has a far more upbeat view. He notes that U.S. payrolls jumped by 591,000 the first three months of the year, up from 579,000 in the same period in 2014, and low inflation has boosted consumer purchasing power despite modest wage gains. Baumohl, meanwhile, sees the housing market as a potential B12 shot for the economy. The National Association of Realtors, he notes, recently announced that pending home sales soared to a 22-month high in March. “The first quarter is over. The factors that led to its anemic performance are now history,” Baumohl says.
Salesforce.com booms on report of takeover Deal would be biggest ever for software firm Jessica Guynn USA TODAY
Shares of Salesforce.com soared to a record high on a report that the cloud-computing company has hired financial advisers to field takeover inquiries. Salesforce.com closed up 12% to $74.65 and continued to climb in extended trading Wednesday after Bloomberg reported that the company was approached by a potential suitor. The report did SAN FRANCISCO
not name the suitor. “The space is set to be consolidated, and I think the street has been waiting for the game-changer acquisition,” said FBR Capital Markets analyst Daniel Ives. Wall Street may long for this kind of mega acquisition, but analysts remain skeptical because of the massive price tag. Salesforce.com is up 26% for the year and 47% in the past 12 months. The company has a market value of nearly $50 billion, said S&P Capital IQ analyst Scott Kessler. That would make a takeover the largest ever of a software company. “It would definitely be pretty significant,” Kessler said. “Obviously, at that size, there are
JACK GRUBER, USA TODAY
Salesforce.com, led by chief executive Marc Benioff, has a market value of nearly $50 billion.
only a handful of companies that could presumably do something along those lines.” That prompted speculation that Oracle, Microsoft or SAP could be among the companies vying for Salesforce.com.
That would represent an aggressive push into cloud computing for these giants. Each already has its own customer relationship management software, but they lag behind Salesforce.com in market share, according to research firm Gartner. UBS analyst Brent Thill says there is a “low likelihood” of a deal at this scale. And, Thill added, there’s little incentive for Salesforce.com to sell. “Usually when you sell, you have run out of runway,” he said. “They haven’t run out of runway.” Trading was briefly halted in Salesforce.com CRM because of stock volatility. Salesforce.com declined to comment.