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Some interesting stats about America's corporate giants

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giant

My friends at Fortune published the 61st annual edition of the Fortune 500 list today, with the actual issue hitting newsstands on Monday.

From the press release, some interesting stats about America’s corporate giants:

The Fortune 500 companies earned a combined total revenue of $12.5 trillion in 2014, up 2.6% from last year and an all-time high. The total market value for the Fortune 500 hit $17.4 trillion (as of 3/31/15), setting an all-time record for worth and marking an increase of 7.7% over the previous year. This year’s Fortune500 companies also employ more people than ever, with 26.8 million total employees. Profits decreased 12.6% over the previous year, falling below the trillion dollar mark at a combined total of $945 billion.]

FORTUNE 500 TOP 10 LIST:
1. Wal-Mart Stores
2. Exxon Mobil
3. Chevron
4. Berkshire Hathaway
5. Apple
6. General Motors
7. Phillips 66
8. General Electric
9. Ford Motor
10. CVS Health

Walmart takes the top spot for the third year in a row and the eleventh time ever. Only three companies have held the no. 1 spot on the Fortune 500 since its creation in 1955: General Motors, Exxon Mobil and Walmart. No. 5 Apple boasts both the biggest profits of any company on the list ($39.5 billion) and the highest market value (more than $700 billion).

  • Facebook jumps nearly 100 spots — from #341 to #242 — to crack the top 250 in just its third year on the list.
  • New York is the state with the most companies on the list with 55, followed by Texas with 54 and California with 53.
  • 19 companies make their debut on this year’s list including Salesforce.com, Netflix, Expedia and News Corp.
  • CVS Health makes the top ten for the first time.
  • 57 of the companies have been on the list since its inception in 1955 including Exxon Mobil, Chevron, Proctor & Gamble, PepsiCo and Hershey.
  • 26 companies have been displaced from the list, including Coach, Medtronic and Mylan.
  • Energy Future Holdings lost the most money of any company from the previous year with a decrease of $6.4 billion; Caesars Entertainment, Sears and Target also among the top 10 money losers.

***

Check out the link below as the list and related articles hit the site:
http://fortune.com/fortune500/

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These countries worry Corporate America the most

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corporate american flag

So how much exactly are the largest US corporations, those in the S&P 500, worried about Greece? The horrific damage that a Grexit might do to the EU economy, global financial markets, the euro, and even, it seems, the survival of the species?

You’d think they’d be quaking in their boots, given the mutual extortion racket carried out via the media through leaks, rumors, and contradictory announcements. You’d think they’d be fretting over every final-final-final-last-chance-deadline for Greece to accept the fine print that comes with more money that will eventually be extracted from strung-out taxpayers in other countries. You’d think US corporations, at a minimum, would start blaming Greece and its side effects for things gone wrong. So…

“One way to gauge the level of concern about the situation in Greece is to see how many S&P 500 companies mentioned Greece relative to other countries during recent earnings conference calls,” FactSet said in its latest Earnings Insight. And so it combed through the 21 earnings conference calls held since June 1 by S&P 500 companies – a decent sample – and searched for 50 foreign countries, including Greece.

Turns out, “Greece has not been mentioned in any of the earnings calls.” Instead, there were some other winners, based on the percentage of companies that mentioned these countries:

Countries that worry S&P 500 companies

No. 1: Australia has been getting hammered by a resource bust that includes oil, LNG, and iron ore. There is a tremendous housing bubble in Sydney, Melbourne, and some other cities, accompanied by a mortgage debt boom. The banks that funded it all are heavily exposed. The loans that the Big Four Australian banks – ANZ, Commonwealth, National Australia Bank, and Westpac – have on their books exceed 210% of Australia’s GDP. If a portion of these loans curdle, either due to the ongoing resource bust, or due to a potential housing bust, or both, these banks would not only be too big to fail, but too big to save for Australia [How Australia’s Big 4 Banks Can Sink the Entire Economy].

No. 2: China has entered a hard landing [“China Momentum Indicator” at Hard-Landing Level]. Its stock markets, after skyrocketing for a year despite economic thunderheads all around, have been crashing with relentless brutality. The Shanghai Composite Index plunged 19% over the last ten trading days, the Shenzhen Composite 20%. And the ChiNext Index, where startups perform their miracles, has plummeted 27% from its high on June 3.

A lot of “wealth” that the stock-market insanity had created over the past year got destroyed unceremoniously. Chinese stock markets – like most stock markets these days – are not connected to the real economy or businesses. They’re a separate machine where people go to gamble and have fun. But the “wealth effect” does impact the economy, and so does the effect when it all unwinds. Short-seller Muddy Waters, days before all heck broke loose, had warned that Chinese stocks are the “Largest Pump-and-Dump in History.”

So “buy the dip?” Maybe not. Morgan Stanley warns: “In fact, we think the balance of probabilities is that the top for the cycle of Shanghai, Shenzhen, and Chinext has now taken place.” The report pointed at four factors – “a) increased equity supply, b) continued weak earnings growth in the context of economic deceleration, c) high valuations, and d) very high margin debt to free float market capitalization” – that could hammer the markets down another 30% over the next 12 months.

No. 3: Canada is running at a bifurcated or even trifurcated economy. Its oil patch, particularly the province Alberta, and the oil capital Calgary are getting whacked by the oil price plunge and its side effects. As I wrote earlier today, economists worry – but don’t see the signs yet – of “full-fledged contagion to the rest of the country” [Canada’s Oil Patch Goes Into Convulsions, Business Confidence Plunges to Financial Crisis Lows].

On the other side of Canada’s bifurcated economy, Vancouver and Toronto are on top of an exciting housing bubble of enormous proportions. The banks are up to the gills into it, though this time it’s different, because when it all implodes, it won’t impact the banks much because Canadian households, despite their dizzying debt-to-income ratio, aren’t going to just let go of their mortgages, like many US borrowers did during the housing bust. They’ll keep making their payments, no matter what.

Oh, and the incredible condo bubble in Toronto? Unsold new condos have spiked to an all-time record, while the industry pretends to be in denial [Toronto’s Epic Condo Bubble Suddenly Turns into Condo Glut].

And that India and Japan are on the same level of concern with our corporate heroes as Canada makes us worry even more about Canada.

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Sorry, having one woman on your board doesn't make your company gender diverse

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black sheep

Having women on corporate boards doesn't make them diverse. 

It's just not enough.

Corporate boards can't really claim gender diversity — that is, gender diversity that works — until they have three women. And there are very few boards out there that meet that standard. 

The Huffington Post's Emily Peck has a new analysis out, which shows that just over 20% of corporations in the Nasdaq 100 meet the three-woman standard.

Peck was prompted to do the analysis after former Quiksilver board member Liz Dolan wrote about her negative experiences as the token woman on that company's board in Fortune Magazine earlier in June.

"What I learned is that even when a woman earns a seat at the table, the men can put you in a soundproof booth," Dolan writes.

Why is three women the standard? Research shows that three is the minimum threshold for women to be seen as directors doing their jobs, rather than just token women who are not to be taken seriously. 

Here's an excerpt from the Harvard Business Review, back in 2006: 

A clear shift occurs when boards have three or more women. At that critical mass, our research shows, women tend to be regarded by other board members not as “female directors” but simply as directors, and they don’t report being isolated or ignored. Three women or more can also change the dynamic on an average-size board. As one woman director said, “The competition to get your voice heard is over. It’s a supportive dynamic—less combative, more collaborative. You can see the guys decompress from their normal very aggressive style.”

Commitment to diversity doesn't stop at one hire. The real takeaway from this HBR piece is that it's really hard for women to contribute much unless their presence is normalized. And the presence of a woman will never be normalized if she is the only one (or even one of a pair) in a room full of (generally white) men.  

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Female CFOs are making more money than their male counterparts

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This photo provided by Gilead Sciences shows Robin Washington. Compensation for female chief financial officers at S&P 500 companies in 2014 outpaced that of their male counterparts, according to an analysis by executive compensation firm Equilar and the Associated Press. It follows a similar trend seen with female CEOs in recent years. The one top-paid female CFOs includes Washington of Gilead Sciences at .2 million.   (Gilead Sciences via AP)

Women may be badly outnumbered in the top ranks of corporate America, but at least they aren't underpaid.

Compensation for female chief financial officers at S&P 500 companies last year outpaced that of their male counterparts, according to an analysis by executive compensation firm Equilar and the Associated Press. It follows a similar trend seen with female CEOs in recent years.

The median pay for female CFOs last year rose nearly 11 percent to $3.32 million. Male CFO pay rose 7 percent, to $3.3 million. This follows several years of steady gains for both sexes.

The gains, for both men and women, are in part a result of the expansion of the CFO role to include far more responsibility and visibility.

"The CFO is no longer a bean counter," said Josh Crist, managing director at executive search firm Crist Kolder Associates.

Companies and shareholders became more focused on financial security and regulation after the financial crisis, and corporate finance began to play a bigger role in company strategy, according to Gregg Passin, a compensation expert at consulting firm Mercer.

Ruth Porat, became one of the most powerful women on Wall Street while helping steer Morgan Stanley, one of the nation's biggest investment banks, through the aftermath of the financial crisis. She topped the list of highest paid female CFOs with her $14.4 million pay package from Morgan Stanley for the 2014 fiscal year.

Google has since lured her away with a pay deal worth $70 million. Investors have warmly welcomed her arrival at Google, where she is expected to bring some financial discipline to what some consider their free-spending ways.

The increased responsibility and visibility has helped some women CFOs rise even further, to CEO. Indra Nooyi, CEO of PepsiCo and Lynn Good, CEO of Duke Energy are both former CFOs.

"It's a unique position that has the ability to contribute to day-to-day operations but also on long-term strategic planning," Good said. She called the CFO position "a critical training ground" for aspiring CEOs.

Ruth PoratThe other top-paid female CFOs, after Porat, include Marianne Lake of JPMorgan Chase, whose compensation package is valued at $9.1 million, Catherine Lesjak of Hewlett-Packard at $8 million, Sharon McCollam at Best Buy at $7 million and Robin Washington of Gilead Sciences at $6.2 million. This ranking reflects only the companies where the CFOs who have served two consecutive years in their particular position.

To calculate pay, Equilar adds salary, bonus, perks, stock awards, stock option awards and other pay components. To determine what stock and option awards are worth, Equilar uses the value of an award on the day it is granted, as shown in a company's proxy statement.

The high median pay for female CFOs is partly a result of sample size — there were only 60 female CFOs at the S&P 500 companies that qualified for inclusion in the study during the last fiscal year, compared with 437 men, according to Equilar.

It is also a factor in female CEO pay. Median CEO pay for women was $15.9 million last year, according to an analysis done earlier this year by Equilar and the AP, compared with $10.4 million for male CEOs. There were just 17 female CEOs, however.

The small group of women in these important roles tended to be focused at the largest companies, where pay is higher. Crist said that he expects more women to take on CFO duties in years ahead but the pay range will broaden as more women join smaller companies.

He notes that women have historically been underrepresented in finance overall. That is changing, and helping fuel this shift at the top. Younger women are getting better opportunities at entry levels and these lead to better opportunities down the line.

A Crist Kolder study found that the percentage of female CEOs and CFOs has hit an all-time in 2015. Of the 672 Fortune 500 and S&P 500 companies evaluated, nearly 5 percent had female CEOs and 13 percent had female CFOs.

"It's a heck of a trend," he said. "It has been predominantly white male centric forever."

 

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HEY, CORPORATIONS: Pay. Your. People. More. Money!

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american flag onsie cowboys bike desert

Everyone's freaking out about a global economic slowdown.

It's a crisis where no one has — or is using — their cash to buy all the stuff we sell to each other around the world.

The thing is, there's a clear solution to this problem!

American corporations, which are sitting on a $1.8 trillion pile of cash they don't know what to do with, need to raise wages, and American consumers need to start spending more money.

You see, what the world is missing is demand. The more people with purchasing power, the more demand we have.

I'm not saying companies should raise wages because it's "fair." Business people hate that word.

I'm saying companies should do it because what they've been doing with their cash — stock buybacks at a record rate— clearly hasn't been doing anything to help kick the economy into the gear it needs to be be in.

I'm saying that companies should raise wages because the global economy — the market itself — is calling for it.

How do I know this? A couple of key things are tipping me off.

Why we need it

Christine Lagarde, head of the International Monetary Fund, has said that global growth will be "disappointing" this year. Countries like Brazil, Nigeria, and South Africa, which used the last decade's commodities boom to turn poor citizens into consumers, are going into deep recessions.

janet yellenHere in the US, Federal Reserve Chair Janet Yellen has said that she's watching global demand and international markets to figure out whether or not to hike interest rates.

The big tell, though, is China's slowdown and the volatility coming out of that.

The markets have been getting totally rocked by the depreciation of the Chinese yuan. No one explains it as well as economist Michael Pettis. In a recent post on his site, he went through everything that's challenging the Chinese economy. Chief among these issues is debt and overcapacity.

In short, the second-largest economy in the world has a ton of stuff no one wants to buy. Meanwhile, the debt collectors are calling.

What China needs, Pettis argues, is debt-free demand. But "in a world in which demand is likely to remain weak for many years, the external sector is unlikely to provide sufficient additional demand," he wrote.

In plain English: China needs somebody to buy all of its goods.

But it's not just China. All the demand-hungry countries around the world are going to be looking to the US consumer for a bailout. That could set off a dangerous competition to make goods cheap around the world.

From Pettis:

The biggest risk created by the weaker RMB [Chinese yuan], as I see it however, is not a Chinese risk but rather a global one. The rest of the world may view recent Chinese RMB weakness as a signal for a new round of competitive devaluations. I have already said that I expect 2016 to be another bad year for trade, and I am worried that it seems as if every major economy in the world has implicitly decided to use US demand to bail out its own faltering economy. This will very likely derail the US recovery in 2016 or 2017 unless the US, too, decides to step in and intervene in trade. If that happened, of course, the impact on Europe and China would be terrible, but it seems to me a matter purely of logic that if the hard commodity and energy exporters are nearing the limits of their absorption capacity, either the major surplus nations or the US are going to have to absorb a bigger share of the demand deficiency created in Europe, China, and Japan.

With higher wages, the American consumer has more money to spend. It becomes a bigger sponge for all this output.

To be sure, Americans have more money in their pockets due to falling energy prices. The problem is that they're saving it, according to Kathy Jones, Charles Schwab's chief strategist on credit markets. Behavioral economists will tell you that this is because paying less at the pump doesn't make Americans feel like they have more money, so it doesn't change their behavior.

But you know what does make people feel richer, though? A raise, baby.

Why we don't have to just sit around and wait for it

Supply-side economic theory, dating back to French 19th-century economist Jean Baptiste's A Treatise on Political Economy, says that supply creates demand. When a product is made, the cost to make that product — paying workers, investment in production, etc. — creates a market where that product can be sold.

Of course, there are distortions, and economist Pettis explains the one that we're dealing with right now:

[I]nstitutional distortions can force agents into systematic misalignments of supply and demand (mainly by changing incentives for political reasons) that can get very deep and can persist for very long periods.

Basically, something about the incentivization for companies to create products through a process that spurs adequate demand has been distorted. We can argue about how it happened all we want, but the point is that these things don't always just take care of themselves, and the solution in our current case is really just getting more people to spend money.

Do we have to wait for the slog-through of a significant global-economic slowdown to force us into action? Looks like it, unfortunately.

Why we still won't do it anyway

It's not hard to surmise that the government won't be enacting legislation that entices corporate America to raise wages anytime soon. Beside the fact that it's hard to do, 2016 is also an election year, and wages have become a political issue.

fight for 15 minimum wage

Corporations also probably won't do it on their own because, with few exceptions, corporate America has a knee-jerk reaction to what it should do with excess cash. It's automatic if you watch channels like CNBC or Bloomberg TV, or read op-eds in The Wall Street Journal.

"What do you do with excess cash?"

"Return it to shareholders."

This idea has become dogma since the 1980s. Some people even think that companies have a legal requirement to uphold the rights of shareholders over workers or anyone else. That's just untrue.

The real trick is that as the global economy slows down, corporations get more conservative and cut jobs. They don't raise wages despite the fact that a good pay hike would help ignite the global economy.

Companies can put capital to work in the economy in the form of buybacks — mostly what happens — dividends, or whatever you like. But nothing will get the American consumer going like a good old-fashioned raise. It's what the Federal Reserve has had its eye on ever since interest rates went to zero. It's the sign that everything is going to be OK. And wage growth is happening, albeit slowly. It's just that this global slowdown isn't waiting for it.

And we don't have to, either. But we act like we have to wait for wage growth to happen magically. We don't.

Human beings are not just victims of the market — we are actors in it. When we see it moving in an ugly direction, we should do everything we can to push it away. As a country, Americans accept that government has the responsibility to do that — to enact policies that ensure growth. The private sector should also take responsibility for that, though, and not just wait for a market heading to hell to force them to do it. It will ultimately help them anyway.

Be proactive.

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Here's what stands in the way of Trump's bid to shake up corporate America

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FILE - In this Tuesday, March 15, 2016, file photo, Republican presidential candidate Donald Trump speaks to supporters at his primary election night event at his Mar-a-Lago Club in Palm Beach, Fla. Trump is railing about what’s wrong in corporate America as he woos voters fed up with the status quo. He is blasting drugmaker Pfizer’s tax-saving plan to move its headquarters overseas, refusing to eat Oreo cookies made in Mexico and vowing to get Apple to make iPhones in the U.S. His tirades about unfair competition, tax evasion and lost jobs trumpet a familiar tune, but going further than many others running for president have dared. (AP Photo/Gerald Herbert, File)

NEW YORK (AP) — Donald Trump's railing about what's wrong in corporate America goes further than the typical political populism: He vows to rewrite trade deals, tax imports and punish U.S. companies. And he's naming names.

He is blasting Ford for beefing up operations abroad. He's refusing to eat Oreo cookies that may soon be made in Mexico and is vowing to get Apple to make iPhones in the U.S.

"You know, our companies are leaving our country rapidly," the GOP front-runner said in Palm Beach, Florida, after winning the state's Republican primary on Tuesday. "And frankly, I'm disgusted."

Politicians and others have long laid into U.S. companies for shifting headquarters and production abroad and for stockpiling cash in foreign subsidiaries. But changing some of the trade and taxes rules behind such corporate moves are beyond the authority of the president and, experts say, are not so easy to do — at least not without big consequences.

Here's a look at Trump's statements on what's ailing big U.S. companies, and his proposed fixes:

Overseas Production

Trump pledged to give up Oreos after Nabisco's parent, Mondelez International, said it would replace nine production lines in Chicago with four in Mexico. He said he would demand that United Technologies reverse a decision to move two of its Carrier heating and ventilating parts plants in Indiana to Mexico, eliminating 2,100 U.S. jobs. He has criticized Ford since last summer after the company said it planned to invest $2.5 billion in engine and transmission plants in Mexico.

Other candidates have criticized the trade deals that facilitate some of these corporate moves, but Trump has gone further. He's threatened to slap a 45 percent tariff on Chinese imports. He's threatened to tax auto parts and other equipment made in Mexico. He also wants to scrap the North American Free Trade Agreement struck with Mexico and Canada in 1994. His view: The U.S. hasn't gotten enough concessions in negotiations, and American jobs have been lost and wages hammered as a result.

"We're being killed on trade — absolutely destroyed," Trump says.oreos

The U.S. has long been open economy, and specific trade deals like NAFTA have not had a major effect on jobs, economists say. The huge wage gap between the U.S. and developing countries and the increasing use of machines to replace workers have had a far bigger impact.

What's more, Trump's threats could throw the international trading system into chaos. Levying tariffs would probably require congressional approval and could set off a tit-for-tat trade war, an ironic development since it's the U.S. that pushed for open trade over the years.

United Technologies declined to comment on Trump's comments. Mondelez said it is investing in U.S. plants, as well as the new one in Mexico, and that Oreos will continue to be made in the U.S. Ford, which employs 6,000 people in Mexico compared to about 80,000 workers in the U.S., said in a statement that it is "deeply invested in the U.S. and has been for more than a century."

Moving headquarters abroad

Trump vowed after his Super Tuesday victories, "we're not going to be losing our companies," if he becomes president. He criticized politicians for not fixing a tax code that he says drives companies abroad and mentioned drugmaker Pfizer, which plans to move its headquarters to Ireland after merging with Allergan, a company based there.

Pfizer's plan is known as a "tax inversion," a maneuver that allows a company to change its tax jurisdiction to a country where rates are lower. U.S.-based companies claim they are at a disadvantage because the U.S. taxes their profits made both in America and in other countries. By contrast, companies based elsewhere generally pay taxes only on profits made in each country where they operate.

Trump has proposed lowering the nominal top corporate rate in the U.S. to 15 percent from its current rate of about 35 percent. Most companies pay less than the top rate because of various credits and deductions. The drug industry, for example, pays a tax rate of about 20 percent, according to experts.

Either way, those rates are far above those in some other countries. Ireland's rate, for example, is 12 percent, according to the Americans for Tax Fairness consumer group.

The Obama administration has tried to slow the pace of inversions by tightening foreign-ownership requirements, but the administration has said that only Congress, not the president, can change the tax code to put an end to practice.

"The movement of company headquarters overseas is a symptom," not the disease, said Mark Vitner, senior economist at Wells Fargo Securities. "The disease is we have an outdated tax code."

Pfizer declined to comment.

Overseas profits

Trump has vented at U.S. lawmakers for not providing corporate America with incentives to bring home more of their enormous and growing amount of cash held abroad.

By the end of last year, the 500 largest U.S. companies had stashed about $2.4 trillion in foreign subsidiaries and bank accounts, according to an analysis of corporate financial statements by the research group Citizens for Tax Justice.

The report estimated that the companies would be facing a collective tax bill of nearly $700 billion if all the money were pulled out of the foreign accounts and brought back to the U.S., or "repatriated."

Trump's frustration is shared by Apple CEO Tim Cook, who lambasted the U.S. tax code as something "made for the industrial age, not the digital age."

"It's awful for America," Cook told "60 Minutes" during an interview aired in December.

Tim Cook New

As the world's most profitable company, Apple has accumulated by far the largest hoard of foreign cash — $200 billion. That's enough to pay for a new iPhone 6S for more than 300 million people, or nearly the entire U.S. population.

Cook has estimated that Apple would lose about 40 percent, or $80 billion, of its foreign cash to federal and state taxes if all that money were brought back to the U.S. Trump has proposed lowering taxes on repatriated cash to a one-time 10 percent to get companies like Apple to bring more of it home.

David Kotok, chief executive at money management firm Cumberland Advisors, thinks Trump is right about the need overhaul the tax code to stop the shift of cash and headquarters abroad. But he's worried about rewriting trade deals, noting that Americans benefit from, among other things, low prices on goods made abroad.

"When you scrutinize trade agreements, are we really getting killed?" Kotok said. "Do you want to take the price increase and force it on U.S. consumers?"

___

Liedtke reported from San Francisco. AP business writers Dee-Ann Durbin in Detroit and Candice Choi in New York contributed to this report.

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THEN AND NOW: The first offices of the world's biggest tech companies, where billion-dollar ideas were hatched

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German tourists, Facebook headquarters

Some of the biggest tech companies today were originally founded in garages and dorm rooms across the country.

A new set of GIFs from the Cove, an office space sharing company, morphs the "then" pictures of tech companies' humble beginnings into their new headquarters of today.

Cove made the GIFs to remind their members many companies that started small have reached great success, explains Kat Haselkorn, a member of Cove's marketing team, to Tech Insider. 

"Even when you're starting small or working remotely there's so much you can do and you can really grow into a huge global brand," she explains.

Check out what some of the world's largest companies looked like when they started out below:

Amazon

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THEN: Jeff Bezos started the online book selling company in his garage outside of Seattle in 1995

NOW: Today, Amazon is the largest internet retailer in the country, with its headquarters in Seattle, Washington. 



Apple

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THEN: Three friends — Steve Jobs, Steve Wozniak, and Ronald Wayne — started the company in 1976 in the garage of Jobs' childhood home in Los Altos.

NOW: Apple has grown to be one of the world's largest companies and has revolutionized personal technology. The company's Apple Campus is now based in Cupertino, California.



Facebook

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THEN: Mark Zuckerberg started Facebook in 2004 out of his Harvard dorm room in Cambridge, Massachusetts. 

NOW: Over one billion people now use Facebook. It's headquartered in Menlo Park California. Zuckerberg is still the CEO. 



See the rest of the story at Business Insider

This plan to fix corporate America is very rich coming from Jamie Dimon

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jamie dimon

On Thursday, numerous CEOs including Warren Buffett of Berkshire Hathaway, Mary Barra of General Motors, and Larry Fink of BlackRock all got together and signed a letter listing a bunch of ways to improve corporate governance in America.

JPMorgan CEO Jamie Dimon also signed the letter, which is odd, since the very first suggestion is:

  1. Boards of directors should be truly independent from the company and meet without the CEO present on a regular basis.

In an interview with CNBC after the letter was published, Buffett said Dimon was the one who rallied him to the cause about a year ago. And that's weird.

Here's why: Dimon is both the CEO and the chairman of JPMorgan, and that's not an accident. Through the years Dimon has fought hard to maintain complete control of his massive international corporation. That is what makes suggestion No. 1 so very interesting.

Do as I say, not as I do

I think you'll all recall the so-called London Whale, the 2012 JPMorgan trading disaster that blew a $6 billion hole in the bank's balance sheet. Heads rolled, including that of chief investment officer Ina Drew. Dimon was forced to head down to Washington and explain to Congress how one trader could lose so much money in his house.

It was a very public, very embarrassing display of arrogance and mismanagement, and shareholders were rightfully angry. That is why shareholders at JPMorgan's 2013 shareholder meeting took up the unthinkable: They considered whether to split the roles of CEO and chairman of the board at the bank.

Dimon was furious. He threatened to abandon the bank entirely if he lost control of the board.

But he didn't. Dimon went to war, and he won. The Wall Street Journal crowned him on its pages, and a year later he was telling his peers that his reign over JPMorgan would continue for at least five more years.

JPMorgan did not immediately respond to an email requesting comment; this post will be updated if we hear back.

To be sure, Dimon helped JPMorgan through one of the most dangerous times in the history of American capitalism. He has the respect of Wall Street and Washington, and perhaps because of that he thinks of himself as the exception to this new rule he is suggesting.

And maybe he is. But acting above the fray will not instill confidence in his fellow CEOs who may, unlike him, be mere mortals.

Instead, they will be sitting in their C-suites rolling their eyes and thinking, "You first, Jamie."

SEE ALSO: American companies have developed a very particular disease — and CEOs hate the cure

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5 ways my corporate job helped me start my own business

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Stephanie Abrams Cartin Headshot

Five years ago, I quit my cushy corporate job, which I was actually happy doing, to start my own company.

My business partner and I quit our jobs on the same day and launched ourselves into the wonderfully stressful world of startups.

We took all the advice we could from anywhere we could get it, but what we found most helpful in the end were actually the experiences we had from working in corporate America.

Now, I'm not saying if you've been thinking of starting your own business, you should dive in head first and quit your job tomorrow. But isn't it nice to know you could?

Since I have gone through the late nights, the headaches, and the breakdowns that all come with starting your own business, I thought I'd share my experience.

Now every industry is different, and this list isn't the end-all, be-all of successfully running your own company, but these five tips from my years in corporate America that are certainly helpful to keep in mind when you start your own business.

1. Create a positive value-driven culture

You've heard the phrase before. It's one you hate for its overuse but love for all its meaningful glory: company culture. It's the key to the success of a company. Creating a positive atmosphere and establishing a company with values reflect your own will draw in the right crowd. Establishing your company's mission, purpose, and values early on will help draw in employees that will stick around.

My partner and I call our team a family, and with good reason. We work hard to keep our employees happy, have implemented certain strategies to bring our team closer together, and have seen nothing but positive results from doing so. Think about it this way: If you create an environment where you'd be excited to come into work each day, your employees will feel the same way.

Both my and my partner's previous companies managed to create a familial feel at large corporations, which was something we always appreciated. We knew early on that this was something we wanted to bring to our business.

2. Be proactive, not reactive

One thing that major corporations always do well is knowing when to plan and think ahead. Learning to be proactive rather than reactive is key to preparing for bumps on the road to success.

It's always better to implement a rule or regulation before you need it. Training yourself to be ahead of the curve in order to see issues before they arise will help you develop a plan to prevent problems before they happen, rather than working backwards to try and fix something that's already broken.

If you implement a rule after seeing an issue within your company, your employees may view the rule as a punishment. Instead, seek out possible problems and work to prevent them.

flatiron

3. Invest in your employees

We put a great deal of effort into hiring the right people. We want our employees here for the long haul, so we seek talent, ambition, and drive. Something we learned from working at big companies was that finding the right people will make your job much easier.

If you commit the time and money into finding employees who share your company's values, they will work hard and support your mission.

Equally important is investing in your team. Our employees know that we have an open-door policy, so they can always come directly to us if they ever have an issue or want to talk about their role in the company. One thing that we found is beneficial from working at a smaller startup is the opportunity it brings every employee.

In our office, we want our team to feel empowered. If there's a position that doesn't exist yet that someone is interested in pursuing, we want to make adjustments to help that employee work where they want. Investing in your employees and their strengths is just as important as hiring the right people.

4. There is always room for change: Learn to adapt

Large corporations often have a hard time adapting to change within their industry. Because the industry we work in moves so quickly and changes all the time, I have found that being able to adapt to change is necessary to keeping up.

Without change, you're always going to be left behind. Large corporations have so many levels that ideas need to pass through in order to implement change. I saw this in my corporate experience and knew that I didn't want this to be an issue when launching my own business. The industry I worked in was so static that nothing ever changed, and that can get old fast.

Learning to be open to change, even welcoming it, may be hard at first, but being able to move things around when needed will make your work much easier. Your employees will also appreciate your willingness to adapt, and your clients will see that you are flexible.

5. Build and maintain real relationships

Networking is the key to finding success with your startup. In any business, you have to be able to sell yourself and relate to people. People always need to like you.

Sometimes people are thrown off by the facelessness of major corporations. Clients want to work with teams they feel comfortable with and not feel intimidated by a powerful corporate name. Having real relationships with real people is necessary for your business to succeed.

Our clients decide to work with us because they genuinely like us and know that our mission is true. They recognize that our passion is real. People want to work with people, not corporations. Working to build and maintain relationships within your industry will yield positive results for both you and your network.

Stephanie Abrams Cartin is the co-founder and CEO of Socialfly, a social media marketing and influencer agency. Stephanie is also the co-author of "Like, Love, Follow," the female entrepreneur’s guide for using social media to grow their business.

SEE ALSO: 8 ways you're making a bad impression without realizing it

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Trump wants to hand corporate America a sweet tax deal — but it doesn't look like CEOs will share the wealth

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donald trump cookies

Donald Trump wants to reform America's corporate tax system and give companies a sweeter deal that encourage them to bring profits home, instead of stashing them overseas. 

Once some of this $2.6 trillion is back onshore, it could fuel investment and expansion and hiring and acquisitions in the United States.  

But corporate America may not be interested in sharing its new tax break with the rest of the country.

Instead, Goldman Sachs is predicting that the companies in the S&P 500 Index — the 500 biggest public companies in America — will spend a record amount of money on stock buybacks next year. 

From the report:

In 2017, for only the second time in 20 years, repurchases will account for the largest share of cash use by S&P 500 companies.

Total capital usage will increase by 12% to $2.6 trillion with 52% allocated to investing for growth (capex, R&D, and cash M&A) and 48% to returning to shareholders.

Quick recap: in a stock buyback, companies buy their own shares from the public markets using their own cash. Buybacks serve a specific purpose: they make a company's earnings look better without them having to actually be better. They can — though they haven't much lately — help bolster a company's stock price.

The sacrifice here, though, is that the money spent on buybacks is not being spent on building new factories, raising wages, hiring workers or growing the business. 

Trump's tax plan is to lower the overall corporate rate to 15% from 35%. It will also lower the tax rate on profits stashed overseas to 10%, which can be paid over 10 years. 

The repatriation could lead to a 30% surge in buybacks by the S&P 500 companies, Goldman says. Without tax reform, the increase would be closer to 5%. 

In other words, a fat chunk of the money companies are going to bring home is going to go right back to people who own stocks, which is to say, not to investment in the overall economy and the people who work in it. Simply put, buybacks invest in stock prices, but not in America.

To be fair, we should note that it's not all going to buybacks. Goldman says about half will go to more productive uses — like cash acquisition, research & development, and capital expenditures. These will increase by 5% to 7%, the bank predicts. But repurchases will trump any one of these other uses in terms of size. 

statutory corporate tax rates chart

The other thing this tells us

In the wake of Trump's election to President of the United States the stock market has rallied to all-time highs. While some think this is a signal Trump will be great for corporate America, this rush to buybacks tells us a different story.

Buybacks are generally used as a way to invest cash when the economy is uncertain. CEOs don't want to invest in say, a new factory, if they think the economy is about to slow down. They also don't want to just sit on cash and watch inflation erode its value, so they turn to buybacks.

The fact that Goldman says companies are about to spend a ton of money that way next year tells us that they're worried about economic growth and profits.

And they have plenty of reason to worry too. Earnings have been on the decline for years, and next year's outlook isn't much better. Plus, borrowing costs are going up, not just because the Federal Reserve will likely raise interest rates, but also because markets are anticipating that Trump will throw money at a stimulus package, resulting in inflation. His tough stance on trade is also inflationary, according to analysts at Deutsche Bank.

See, one thing is giving corporate America a tax break and saying "have at it." Another thing is creating an economic environment where corporations feel secure enough to invest. Obviously the idea of a Trump presidency, though it has boosted stocks in the extremely near-term, isn't making companies feel secure into 2017. 

Thanks to buybacks, though, that doesn't mean their stocks will go down substantially at the outset. It just means they won't be investing as much in the things that actually make America great — research and development, capital expenditures, and higher wages.

Listen to BI's Linette Lopez and Josh Barro talk Trump trade policy on their podcast, Hard Pass.

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SEE ALSO: If Steve Bannon is serious, Trump's infrastructure plan is going to be a disaster

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Trump's tax plan could knee-cap a bunch of huge companies

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paul ryan donald trump mike pence melania trump

The stock market has staged a glorious rally since Donald Trump won the US presidential election last month, and analyst after analyst says that it is, in part, because of the promise of a lowered tax rate on corporations.

Trump and House Speaker Paul Ryan (R-WI) both have plans that would lower the corporate tax rate from 35% (where it has been sitting since John F Kennedy was president) to 15% (Trump's plan) or 20% (Ryan's).

This sounds wonderful, but there's some fine print. Not all companies are going to have their taxes lowered.

Depending on a couple factors, some companies could see their tax rate shoot up. One of those companies is former Wall Street darling and current Wall Street headache, Valeant Pharmaceuticals. We'll get to that in a moment. 

Ideologically, Ryan's plan has always intended to ensure that big corporations and small businesses pay the same rate. To do that, he wants to eliminate a bunch of special preferences and loopholes, like enhanced deductions and tax credits, that big companies get in order to pay for the lowered rate.

Trump's plan includes a bunch of the same changes.

You're special

The special preference we're talking about here is the deduction for net interest on future loans. Its existence makes it super attractive for companies to do inversions — that is to say, technically move their residence out of the United States.

Once a company moves, of course, it pays a lower tax rate. Then, quite often, it places its foreign debt into a US held entity. That debt can then be deducted from US profits through the net interest deduction.

The practice is called earnings stripping.

The Senate had a hearing about this last year, and Jim Koch, the founder of Boston Beer Company (they make Sam Adams) explained the debacle really well [emphasis ours]:

It is not uncommon for me to receive visits from investment bankers interested in facilitating the sale or merger of Boston Beer Company to foreign ownership. One of the principal financial benefits of such transaction is the ability to reduce the tax rate we currently pay. We are vulnerable because we currently report all of our income in the United States and pay a tax rate of about 38% on that income.

Under foreign ownership, that rate, I am told, would be reduced to the range of 25-30% through various practices like expatriation of intellectual property,earnings stripping and strategic use of debt, offshoring of services, and transfer pricing.

That means that a dollar of pre-tax earnings is worth about sixty two cents under American ownership but about seventy two cents under foreign ownership. To put it another way, Boston Beer Company is worth 16% more to a foreign owner simply because of the current US corporate tax structure.  

The Obama Administration, after failing to close this loophole through policy, tried to tackle it through the Treasury by creating a rule that classifies a portion of debt held in US companies as equity.

The problem is, Obama's rule will only bring in between between $461 million and $600 million annually from 6,300 companies. That means it collects less than $100,000 per company for only the top 0.01%.

This is chump change. Koch told Congress that "companies are saving millions or even hundreds of million of dollars through complex tax planning every year." 

And more importantly, it's not a solution, especially not if the overall tax rate is going to be lowered by 15%.

"This sets up the possibility that further offsets will be required," wrote analysts at Morgan Stanley in a recent note, "meaning investors who benefit from tax preference items should not be complacent... Consider, for example, that limits on interest deductibility may already be in play, given that limiting interest deductibility is the third largest corporate deduction at $455 billion."

I repeat, this deduction costs us $455 billion.

The Trump/Ryan plan, however, would write the elimination (or at least significant limitation) of this deduction into code. That's where certain kinds of companies will start feeling the pain. The trade off here is that foreign profits wouldn't be taxed at all, removing the incentive for companies to horde cash overseas.

Stripping for cash

So, you may be asking yourself — what kind of company would get crushed by this kind of policy change?

I submit you the multi-billion dollar international drugmaker Valeant Pharmaceuticals. Years ago the company did a corporate inversion by acquiring Canada's Biovail in order to pay a lower tax rate. It also has subsidiaries in Ireland, Luxembourg and Switzerland, which all have lower tax rates. The US, however, remains its largest market.

Over the years, it has used this situation to pay a tax rate of about 4% on its income. It did this, in part, by taking a $16.5 billion loan from its Luxembourg subsidiary and putting it in its US subsidiary.

According to documents viewed by the WSJ, that means the company will save over $560 million over the next five years.

The US government, naturally, has been upset about this. Former CFO Howard Schiller testified at the same hearing as Koch, but unlike Koch, he was on the defensive.

"Valeant does not take into account tax synergies in either identifying or pricing potential acquisition targets," he said. "We do not value proposed transactions based on the ability to achieve tax synergies and we do not pay higher prices to the sellers based on our ability to achieve tax synergies. "

However, former CEO Michael Pearson touted the company's low tax rate as a selling point when the company was making a hostile bid for Allergan. 

"No other potential acquirer of Allergan has the operational and tax synergies that we have,” he said in an October 2014 letter to Allergan, announcing plans to raise its bid. (Allergan eventually slipped through Valeant's fingers.)

valeant ackman pearson

This feature of Valeant's business would vanish if the net interest deduction were eliminated. That means  the company — which paid a tax bill of $76.9 million on over $1.5 billion of operating income last year — would see that bill rise substantially. In the same year, Valeant was holding just under $600 million in cash.

This is perilous for a company that has seen its market cap fall from over $40 billion to around $4.6 billion over the last year. Accusations of fraud and drug price gouging have sent investors fleeing from the company, and it's holding over $30 billion in debt. The company's annual report cites that debt (and any reduction in cash flow hampering its ability to pay it) as a risk. 

From the report:

Our ability to satisfy our debt obligations will depend principally upon our future operating performance. As a result, prevailing economic conditions and financial, business and other factors, many of which are beyond our control, may affect our ability to make payments on our  debt.  If  we  do  not  generate  sufficient  cash  flow  to  satisfy our  debt  service  obligations,  we  may  have  to  undertake  alternative  financing  plans,  such  as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital.

Valeant is not the only company that could get hit if the interest deduction is eliminated. There are a number of companies with this structure, including Mylan, the now infamous maker of EpiPen medication.

There's no telling how Congress will handle these companies once new legislation is passed and there's a transitional phase as American companies adjust. It could grandfather the debt that's already in the country and chalk these stripped earnings up to a loss in terms of tax revenue. It could also phase in this debt gradually.

Or, if Congress wants to be petty about this, it can single out companies that have inverted for punishment. Hating inverters is a bipartisan pastime in Washington, so experts tell Business Insider that this is definitely not out of the realm of possibility.

Punishing perceived tax dodgers makes politicians look good to their constituents and could possibly bring in much-needed revenue.

Check out this handy infographic of inverted companies from the Democrats on the House Ways and Means Committee back in 2014.

corporate inversions 

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Jamie Dimon needs to stop gaslighting America

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Jamie Dimon

  • Jamie Dimon says American companies need tax cuts to be competitive.
  • They don't. If they did, they wouldn't have so much cash to blow on executive compensation and financial engineering.

Jamie Dimon, the CEO of JPMorgan Chase — the biggest bank in America — needs to stop gaslighting the entire country.

For quarter after quarter — just as he did on Tuesday — he has joined with other CEOs of the Business Roundtable (which is exactly what it sounds like) and insisted that the US tax system is the single biggest disadvantage they face in the global market.

This is nonsense. CEOs like to point out that the corporate tax rate in America is 35%, or "the highest statutory corporate income tax rate among developed nations."

But huge companies like Dimon's JP Morgan don't pay that rate. In fact, from 2008 to 2015 JP Morgan paid an effective tax rate of 15.6% according to research from the Institute of Policy Studies (ISP), a progressive think tank. Thirty-five percent isn't the real story here, and it's not what's stopping multi-national CEOs like Dimon from killing it on the world stage.

Americans can sense this. According to Pew Research 62% of Americans don't think corporations pay their fair share. Gaslighting occurs when one person manipulates another person into questioning their own sanity. That's what's happening here.

Dimon and his fellow CEOs would have us believe that they would do more if they paid less. Before you believe that, though, consider what they do with the system they have.

Sorry, Jamie, but no.

Not only did JP Morgan pay a 15.6% tax rate from 2008-2015, but also during that time the company took $22.2 billion in tax subsidies from the government. That's in the ISP report too.

From 2008-2016 the company laid off almost 27,000 people, during that same period Dimon's compensation hit over $27 million — a 39% pay raise. Now, to be fair, a lot of that compensation is in stock.

On the other hand, to be fair, I should note that JP Morgan bought back $37.8 billion in stock during that period, which had to help Dimon and other executives at the company quite a bit.

What I'm saying here is, it's not as if the company is stretched for cash. It's not as if JP Morgan's US tax burden is making it impossible for the company to do business around the world. If it were, it could've taken some of that cash it used for buybacks — essentially propping up its stock price for investors — and put it somewhere else.

Now, I pick on Dimon even though a bunch of other companies are doing this stuff. A few weeks ago I pointed out that current Secretary of State Rex Tillerson played the same games when he was CEO of Exxon Mobil. 

From 2008-2016, when he was CEO of ExxonMobil, the company paid a rate of 13.6%. It also fired a third of its workers around the world. Meanwhile, it spent $146 billion on stock buybacks and gave Tillerson a 22% pay raise over the period, ultimately paying him $27.4 million in 2016. 

In fact, the ISP was able to find 92 public companies that pay a 20% tax rate because there are a lot of loopholes in the system that allow them to do so.

"Our calculations have revealed that the 92 firms in our sample had median job growth during this period of negative 0.74 percent, compared to the 6 percent job-growth rate of U.S. private sector firms as a whole," said the report. "The 48 tax-avoiding firms in our sample that cut jobs downsized by a combined total of 483,000 positions."

Talking loud

But Dimon is getting picked on today because he is so vocal about fixing America. He likes to talk about policy and the future and economic growth.

Some economists worry that CEOs like him aren't putting their money where their mouths are. Take, for example, a recent survey of execs by  MIT- Boston Consulting Group survey. Almost 85% agreed that artificial intelligence (AI) will give their companies an edge in the future.

However, less than 35% of them have any strategy in place for how to use AI. That means they're not investing in it, they're just kind of dreaming and wondering about it. Apparently, there are competing investment interests and there's pushback from other parts of the business and concerns about security and talent and so forth.

In short, it costs money and it's risky. But isn't managing that correctly what the private sector is supposed to be rewarded for?

Doing nothing

This is an issue that William Lazonick, an economics professor at UMass Lowell, described in his 2012 paper, "The Financialization of the US Corporation: What Has Been Lost, and How Can It Be Regained."

In it, he pointed out that the private sector often calls on the government to invest in innovation rather than using its own cash. Back in 2010 the American Energy Innovation Council — which includes executives from Microsoft, Bank of America, and other massive companies — called on the government to increase its investment in alternative energy from $5 billion to $16 billion annually.

Of course, seven of the companies on the council had spent $228 billion from 2000-2010 on stock buybacks. Combine what Dimon's worried with what corporate America actually uses its cash for and, you'd think that stock buybacks equal competitiveness. They don't. They equal more compensation for executives.

So no. America is not crazy. Corporations are doing just fine. They do not desperately need tax relief. If they did, they wouldn't have cash lying around to pay themselves so richly. Stop gaslighting, Jamie.

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GM is shaking down South Korea's taxpayers

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general motors headquarters detroit

  • The South Korean government owns 17% of GM Korea, and may have to reach into its wallet for $1 billion.
  • The plant has lost money, with production now down 44%.
  • General Motors wants South Korea to give the location tax breaks, in return for over $2 billion of debt to be converted into equity.


It follows the playbook: It started on February 12, when General Motors announced the “first step” in the “necessary restructuring” of its GM Korea unit. It would “cease production” and shut down its factory in Gunsan “by the end of May 2018.” The “next steps” would affect the three remaining plants, whose fate would be decided “by the end of February.”

Here’s the verbalization of the shakedown:

The company has proposed to its key stakeholders — including its labor union, the South Korean Government and key GM Korea shareholders — a concrete plan to stay in the country and turn the business around that requires the full support of all parties. The proposal includes significant product-related investments in South Korea and would preserve thousands of jobs.

The Korean government, via its Korea Development Bank, already owns 17% of GM Korea. But that isn’t enough. Now it’s going to have to pull out its wallet again (GM’s main Chinese partner, SAIC Motor Corp, owns 6%. GM owns 77%).

GM Korea employs about 16,000 people. Many more jobs depend on the industries that support and supply GM Korea’s four manufacturing plants. Some of those secondary and tertiary jobs would be threatened. In total, the four GM Korea plants support about 200,000 jobs, GM says in the press release to make sure the government fully understands the magnitude of the threat.

But GM Korea has been losing money. Production has plunged 44% from 943,000 vehicles in 2007 (when it was still called GM Daewoo) to 524,000 vehicles in 2017. In 2017, GM exported 392,000 of these vehicles to other countries, including the US.

With this announcement, GM had the South Korean government’s attention. The extortion effort has been displayed in the media across the world. So the negotiations commenced and led all the way to the top of the government – in order to make the business profitable, GM President Dan Ammann told Reuters, adding, “Time is short and everyone must move with urgency.”

In other words, how much money would the Korean government be willing to pay directly via a cash infusion and indirectly via tax deals?

Now apparently a deal is being worked out, according to Reuters based on what “four sources with direct knowledge of the matter” had said who didn’t want to be named “due to the sensitivity of the subject” – because all this is carried out at all levels, including leaks to the media. Here are some elements of the deal that emerged today:

  • GM wants $1 billion from the government to recapitalize GM Korea.
  • GM wants its GM Korea sites designated as special foreign investment zones to make GM Korea eligible for tax breaks for seven years.
  • In return, GM offered to convert $2.2 billion of troubled GM Korea’s debt into equity.

And this is wandering up the political pyramid.

Today, Barry Engle, GM executive VP and president of GM International, discussed the restructuring and aid package with a government task force headed by a ruling party lawmaker from Bupyeong, where GM Korea largest plant is located. The threat in GM’s announcement was that the fate of this plant would have to be decided “by the end of February.”

Engle told Reuters that he’s “encouraged by the discussions” and is “optimistic” that “an outcome” can be achieved that would keep GM in Korea. As Reuters puts it, “He declined to comment further on the discussions between GM and the South Korean government.”

But the government is talking, according to Reuters:

Kim Sung-tae, a South Korean lawmaker, said Engle had told lawmakers that GM Korea planned to produce two new models.

Kang Hoon-sik, a spokesperson for the ruling party, told reporters that Engle said that GM Korea would try to maintain production of around 500,000 vehicles a year.

Finance Minister Kim Dong-yeon told reporters today that the government would “closely consult with GM to normalize its management,” and that thorough due diligence on the company should come first before a decision is made on financial backing.

The presidential office of South Korea said today that it would designate Gunsan an employment “crisis zone.” This would allow the government to offer laid-off workers some financial support, such as cheap loans.

Officials at the Korea Development Bank (which already owns 17% of GM Korea) complained that GM Korea has not shared sufficient information about its finances or the cause of its losses.

A government official who didn’t want to be named told Reuters, “They have requested for help, and a thorough audit of the situation is among many preconditions before any public funds can be set aside.”

Unnamed government officials said today that financial support to GM Korea will depend on GM’s willingness to commit to new investment in the remaining operations.

An unnamed government official said that GM hasn’t filed an official application to get the GM Korea sites designated as foreign investment zones, but it was “testing waters” to check the possibility.

[Update Feb 21Trade Minister Paik Un-gyu told lawmakers that the government has asked for an audit into GM’s “opaque” management in Korea, Reuters reported. “By opaque we mean the high rate of profits to raw material costs, interest payments regarding loans and unfair financial support made to GM’s headquarters,” said Paik Un-gyu, adding that taxpayers’ money would not be wasted in government efforts to deal with the GM issue.]

GM wants to lower its costs in South Korea to get to “a viable cost structure,” as GM President Ammann put it. These cost reductions are going to be obtained from various “stakeholders,” including largely the Korean taxpayer.

GM is going to produce its vehicles somewhere. It’s just a matter of where it can do so at the lowest cost, including the greatest amount of subsidies. Over the years, GM has used this tactic to offshore much of its manufacturing operations from the US.

This is the same extortion principle that large corporations use with municipalities, states, provinces, and countries around the world, either to locate to those locations, or if they’re already there, to not close their shop. It’s a well-oiled machine that works – with taxpayers, who have no say whatsoever in this, always footing the bill.

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The 10 Biggest Corporate Disasters Of 2014

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uber protest

Some of 2013's biggest business fails left American consumers scratching their heads. Remember founder Chip Wilson's comment during a TV interview that "some women's bodies just actually don't work" with Lululemon pants?

Just when we thought it couldn't get worse than that, 2014 was another year with its fair share of gaffes and meltdowns from some of the most iconic brands and people in the business world that left us wondering, "What were they thinking?" 

Some of this year's most disastrous corporate incidents led to terminations and bankruptcy, while others included public statements that were just too offensive and boneheaded to overlook.

Here are the 10 biggest failures of 2014 (in chronological order): 

Dumb Starbucks's short shelf-life

Nathan Fielder, the host of Comedy Central's Nathan for You, generated international media attention in February by opening Los Angeles-based Dumb Starbucks, a parody of the national coffee chain. Shortly after announcing the planned opening of a new Dumb Starbucks in Brooklyn, New York, however, Fielder received a visit from the local health inspector, who shuttered Dumb Starbucks because it lacked proper permits. Like many PR stunts, these 15 minutes of fame were really just a waste of everybody's time.

Donald Sterling's racist comments

Former Los Angeles Clippers owner Donald Sterling earned the rare distinction of being unanimously voted out of the National Basketball League by his fellow owners in April after an audio recording of him making racist remarks was leaked to the media. No apologies could undo this PR catastrophe, as Sterling has been banned from the NBA for life.

Vibram's questionable claims

Vibram, which makes the FiveFingers running shoe, waved the white flag following a two-year legal battle in May, agreeing to pay $3.75 million to settle a lawsuit over false claims the company made about the health benefits of its footwear. Vibram had stated that its "barefoot sports shoes" could minimize foot injuries and help strengthen muscles. The science backing up these claims, however, was nowhere to be found. Some consumers who purchased the shoes were entitled to a partial refund. 

Dov Charney's ungraceful exit

After a decade of sexual harassment allegations against American Apparel founder and CEO Dov Charney, the company's board voted in June to remove him from his position. The last straw for Charney reportedly came when an internal investigation found he had let an employee post nude photos of a former colleague and used company money for his personal use.  

Amazon's smartphone flop

Amazon began selling its own smartphone, the Fire, in late July, but failed to entice anywhere near the number of customers it had hoped would be interested in the mobile device. The company took a $170 million write-down during the third quarter of 2014, much of it attributed to unsold Fire smartphones, Amazon announced in October, a month after the online retailer dropped the price of the phone with a two-year contract from $199 to just 99 cents. The company reported it had roughly $83 million worth of unsold Fire inventory as of the end of the third quarter. 

Satya Nadella's troubling career advice 

In October, during an interview at the Grace Hopper Celebration of Women in Computing, Microsoft CEO Satya Nadella said it would be "good karma" for women not to ask for a raise, but rather, to trust that "the system will actually give you the right raises as you go along." Nadella later apologized for the boneheaded remarks in a memo to Microsoft employees. 

Uber's proposed smear campaign

Following a string of PR blunders, Uber dug itself into perhaps its deepest hole yet in November when senior vice president of business Emil Michael floated the idea of formally allocating company funds to dig up dirt on journalists who criticize the company. Buzzfeed broke the story of Michael's remarks, which were followed quickly by an apology. Though Michael referred to his comments as "wrong no matter the circumstance," he managed to sneak in some additional criticism of journalists, calling recent media reports on Uber "sensationalistic."

Aereo's bankruptcy

In November, five months after the U.S. Supreme Court ruled that TV-streaming company Aereo's service violated copyright law, the three-year-old company filed for bankruptcy. "The U.S. Supreme Court decision effectively changed the laws that had governed Aereo's technology, creating regulatory and legal uncertainty. And while our team has focused its energies on exploring every path forward available to us, without that clarity, the challenges have proven too difficult to overcome," Aereo CEO Chet Kanojia wrote in a letter to customers.

Sony's hack job

Sony Pictures was hit with an unprecedented cyberattack in November that revealed a trove of highly sensitive information about unreleased movies and nearly 50,000 current and former employees, including financial data. Mounted by a group calling itself Guardians of Peace, the attack revealed that Sony had been storing thousands of emails, passwords, and Social Security numbers on an unencrypted server.

The New Republic's mass resignations

Earlier this month, not long after hiring former Yahoo executive Guy Vidra as its chief executive, The New Republic lost Frank Foer, its longtime editor, and more than two dozen other senior staffers, all of whom followed Foer out the door. The resignations were attributed to widespread disagreement with the editorial vision and direction of the publication under owner Chris Hughes, a co-founder of Facebook who took control of TNR in 2012. Hughes and Vidra had reportedly set a new strategy for the century-old company, which they said they would position it as a "vertically integrated digital media company."

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6 Lessons You Learn From Navigating Corporate America

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businessman 50s illustration

While corporations don't have the sex appeal of startups, they employ a lot of us.

As the Washington Post has reported, 65% of the jobs created since 1990 have come from companies with more than 500 employees.

That invites a question: How does one navigate corporate life?

A recent Quora thread tackled that question.

Here are the takeaways. 

Focus on production, not effort.

Working an insane number of hours isn't a ticket up the corporate ladder. 

"Results are what matter," warns user Nick Simon — it's not about how "hard" of a worker you are.

"Putting in long hours doesn't make you a good employee," he adds. "It makes you an inefficient employee."

For greater efficiency, consult Warren Buffett.

Don't hate on people.

"Never ever speak foul about anybody behind their back," said user Aveek Roy Chowdhury. "Even to the best of people. Even the walls have eyes and ears. They also have limbs to kick some sense into you!"

Put another way: You're the master of what you don't say, you're the slave of what you do

Study the people that succeed.

Management might earnestly proclaim that teamwork and dedication are what get you ahead. 

But you're more cunning than that.

"Look at the employees who are successful, who get the recognition, who rise quickly — they represent what the company is looking for," says user Rob Pawlikowski."What do they do that you can do?" 

Keep improving, on purpose.

Psychologists have discovered lots about biases.

One of the biggest takeaways: We're not very good at knowing what we're not good at.

Thus the need to talk your boss. 

"Take feedback from your supervisor on your soft skills like communication, leadership, teamwork," says Arif Nezami."Your supervisor knows best your strengths and weaknesses. Know them and work towards them."

The best venue for such a conversation? Mega VC Ben Horowitz recommends the one-on-one meeting

Gather transferable skills. 

You're not going to be at this job forever.

Day to day, keep your next step in mind. 

"The important thing for you is to learn skills that make you valuable for your next job," says Nate Doromal. "Take some time everyday to learn something new and challenging. If you aren't doing this, then you are at risk of becoming a dinosaur." 

To know what skills to develop, consider the eleven qualities Google desires.

Make friends.

"Make as many friends as possible," says user Wisnu Nugroho."They will always come in handy. Always." 

While some grumps will recommend that you isolate yourself from your peers, decades of organizational psych research suggests that continually growing quality relationships is required for advancing to the top

SEE ALSO: 58 Cognitive Biases That Screw Up Everything We Do

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The craziest thing about this legendary singing, anti-corporate preacher is that he isn't real

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Reverend Billy Illustration_02On the rainy night before Thanksgiving, a man in the black and white outfit of a minister stood shouting in front of the Ferguson, Missouri police department, at the heart of widespread protests over the police killing of an unarmed black 18-year-old named Michael Brown.

“Ten, 20 years from now, when your children are grown up, you will remember this as a turning point in American history! We are here. The bulls--- stops here. We’re not afraid! We’re not afraid!"

The man, known as Reverend Billy, spoke with an intensity that held the attention of sign-toting protesters and stone-faced National Guardsmen.

“It is no accident that actions are taking place in 37 states at the present time," he said. "The murder of Michael Brown is in all of us."

Behind Reverend Billy was his choir, a set of performers and activists known as The Church of Stop Shopping, who channeled the locals' energy by singing civil rights protest standards and echoing his declarations to the crowd.

At 64 years old, this is Reverend Billy's life. He, the Church, and his wife, director Savitri Durkee, protest everything from consumerism to fracking to race relations and spend their days disrupting the businesses of JPMorgan Chase, Disney, Starbucks, and the half-dozen other corporations he’s singled out as the destroyers of America and Planet Earth. He’s gained a following that is at once fervently spiritual and radically political. When there is a cause or an injustice that needs protesting, from New York to California, he’s there preaching, demonstrating, and, on more than 50 occasions, getting arrested.

As impressive as he is, however, perhaps the most remarkable thing about this activist legend is that he isn’t real, or at least he didn’t used to be. In fact, Reverend Billy was created two decades ago as performance art by a middle-aged theater producer named William Talen, who plays the preacher; but, over time, the character has become all-consuming and powerful.

A Calvinist kid goes rogue

revbill3Talen was born in Minnesota, where his parents practiced Calvinism, a branch of Protestant Christianity marked by strict adherence to the Bible. Talen has said Calvinists “try to regiment every part of life.” His father was a local banker for farmers in the area. Talen had little interest in religion or business, preferring hobbies like birding, cello, writing, and — somewhat scandalously — contemporary music and dancing.

By his teens, Talen’s family had moved to Green Bay, Wisconsin, putting them near the Packers during coach Vince Lombardi’s legendary tenure. Talen wasn’t supposed to watch, though, because the games were on Sundays. He did anyway, sneaking into his parents’ garage to watch on a tiny television in the bitter cold. In high school, he took a class withCharles Gaines, the novelist, who was a creative writing teacher at the time. The student became close to Gaines and his wife, Patricia, who was a painter and a sculptor.

“Bill was attracted to our very unconventional life,” Gaines recalled. “We formed a bond immediately.”

Gaines described the young Talen as “bright, high energy, extremely kinetic, and obsessed with himself.”

Talen stayed in touch with Gaines when his mentor moved to New Hampshire, and it wasn’t long before the teenager hit the road himself.

Talenhitchhiked from truck stop to truck stop, worked on ranches until the proprietors kicked him out, and even worked as a street barker for a New Orleans strip club. He enrolled for a short time at the University of Wisconsin, before transferring to Franconia College in New Hampshire, because the school was known for its avant garde approach to education and because Gaines lived nearby. After college, he hitchhiked up and down the East Coast as a vagabond poet before moving to California to immerse himself in the Beat scene in Bolinas. He drifted in and out of homelessness for a time, before becoming part of folk singer Rosalie Sorrels’ inner circle. Finally, he settled in the Bay Area and became a theater producer, writer, actor, and radio host.

Those wild years would be enough for most people, but he was just getting started.

The creation of Reverend Billy

In the early ‘90s, Talen ran the Life On The Water theater in San Francisco with a few fellow dramatists, where he produced the plays of local playwrights and, once a year, one of his own. After the performance of his play about an architect dealing with yuppie guilt, Talen was approached by a theater producer andformer Episcopalian reverend named Sidney Lanier, a cousin of playwright Tennessee Williams.

Lanier thought Talen was more of a preacher than an actor. He said Talen could become “a new kind of American preacher,” one who said what needed to be said.

Talen, then in his 40s, was in a self-described midlife crisis. He began studying with Lanier, analyzing as many ancient religious readings, evangelical sermons, and popular films as he could manage to try to create his new kind of preacher. Here is one of the first attempts at the character:

In 1993, Talen relocated to Manhattan, where he waited tables and worked at Lanier’s church, St Clement’s, while the two worked on finding a message for their preacher.

Talen found it outside his door in Hell’s Kitchen. Manhattan was changing all around him. Then-Mayor Rudy Giulianiwas implementing a harsh “Quality of Life” program, targeting low-level crimes like panhandling, jaywalking, graffiti, and public drinking, in an effort to clean up the city. Meanwhile, corporations like Starbucks and Disney were taking over Manhattan, displacing old businesses, opening chain stores, and threatening the gritty, authentic city he loved. In 1997, he began hauling a makeshift pulpit to Times Square and shouting his new theology over the din of other shouters: sideshow characters, theater and comedy club promoters, actual preachers.

While Talen was always unpredictable, even his old mentor Gaines found the new direction unusual.

“He wasn’t politically active, as far as I remember,” Gaines said. “To me, his political activity was an outgrowth of the persona of Reverend Billy. He had to start believing in things, espousing things, taking positions for the character to exist. Causes accrued naturally around the persona. The more he did it, the more natural it became. There’s no doubt now that he is devoted to those beliefs.”

“Watching what happened in Times Square — with the corporations and chain stores moving in — changed him,” said Forbes writer Monte Burke, who has known Talen for decades.

The message of Reverend Billy was simple.

“Disney was the devil,” Talen explained. “Mickey Mouse was the anti-Christ. The sin was Disney’s sweatshop labor.”

Disney represented a bigger phenomenon in America for Talen. In his eyes, Disney’s films and musicals monopolized US culture, while its stores displaced small businesses and exploited sweatshop workers. Talen’s distaste for Disney peaked when he first went inside the Times Square Disney Store. Visiting for story research, Talen couldn’t contain himself. He bought a Mickey Mouse doll, held it over his head, and began preaching. Talen was arrested, he says, and handcuffed to the Mickey Mouse doll.

The arrest furthered Talen’s resolve to continue his Disney Store preaching in the following years. His exploits got him interviews on local television, a regular 90-second sermon on NPR,features in independent documentaries, and a following of theater people, activists, academics, and upset New Yorkers. Talen soon branded them The Church of Stop Shopping.rev billy times square

Talen fuses with Reverend Billy

Talen began to formalize the church by the year 2000, with the church’s choirperforming regularly at Manhattan theater the Culture Project.

That year Talen met Savitri Durkee, who managed the Culture Project then. Disenchanted with the elitist arts scene in New York, Durkee gravitated towards Talen’s direct approach. She took over direction of the Church and the two became involved romantically, marrying in 2002. Talen’s show initially offended Durkee.

“I was shocked that someone was co-opting religious imagery,” she said. “It wasn’t satirical. It was stranger than that. He was saying exactly what he meant at a time when artists were taught to be indirect. He was saying things that mattered ..."

Under Durkee’s direction, Reverend Billy and the Church became more elaborate and more structured. Talen became a community leader in the midtown neighborhood known as Hell’s Kitchen, protesting unwelcome changes like a new Starbucks, working to unionize local workers, and protecting a community garden.

The role of Reverend Billy took on added significance after 9/11, when the congregants who used him to fuel their outrage instead looked to him to grieve.

"People poured in,” Talen said. "We were well-known enough at that point that people trusted us to run a fellowship. We grieved together. We cried together. We helped each other get through a traumatic event."

Talen became what he had long pretended to be: a spiritual leader. The responsibility drained the televangelist satire that had been the source of Reverend Billy’s creation.

"At that point, I became Reverend Billy. I became fused with the character. Since then, I've married people, buried people. You're standing there hugging the parents of someone who passed away or something — pastoring is not easy. It's surprisingly powerful,” Talen told the A.V. Club in 2007.

Here is Talen preaching in Union Square just after 9/11:

A radical who’s focused on the present

When I asked Talen about these early days on a blustery evening in November, he gave me as short a summary as possible, even after a couple glasses of red wine. Talen was focused on the sordid present and the bleak future.

“I want to speak to you radically. If we stated to you what we believe, we would be seen as full of common sense and scandalous at the same time,” Talen said, before launching into one of his trademark tirades.

“Here is what is killing us. The 8,000 invisible, unregulated chemicals of Monsanto, Syngenta, Bayer, Dow, Dupont, Cargill, BASF; the factory farms, the pesticide-drenching GMO companies. Companies like Starbucks kill people in the Global South through their land grabs, resource grabs, and factory farming. These companies are killing us."

Soon he switched gears to talk about Ferguson, Missouri, police violence, and the American justice system: "Ferguson is a white, racist, militarized Southern police force in a slave state. You’ve got a white police force and a majority black community. It’s black and white.”

revbill4After a few minutes, he segued into a tirade against consumerism and gentrification and environmental destruction.

The marketing [in the US] has gotten more and more aggressive. You must have straight teeth, beautiful clothes, a big house, a beautiful lady. There is the constant threat that you won’t be successful. It’s violent. It’s ongoing ... We’ve long argued that rampant consumerism is a source of violence and racism. This year, everybody gets what we’ve been saying [because of Ferguson]. It’s gratifying, but sad on another level,” he said.

For Talen, in his infinite reserve of passion and outrage, nearly every cause is linked.

He told me in his sincerest tone: “Right now, activists talk about Human Rights and Earth Rights. They split themselves up into hundreds of different self-righteous cults. It’s all the same thing. We have to protect the rights of people and we have to protect the rights of the Earth. I’m trying to find a word to describe one thing that all of us can fight for.”

It’s hard not to get sucked in by Talen’s charisma and enthusiasm. It’s no wonder the man attracted a congregation with only an ideology, an operatic voice, and a red Village Voice distribution box used as a pulpit. 

Talen’s endgame

reverend billy michael brownToday, Talen leads the Church of Stop Shopping’s 50 performing members in protests around the country, like in Ferguson, where Talen and a group of 25 held a vigil for Michael Brown, led a Thanksgiving protest at agricultural giant Monsanto, and joined community leader “Mama Cat” Daniels in cooking and performing at a Thanksgiving Dinner for protesters.

Talen’s group also puts on shows, like “The Monsanto Is The Devil” show I saw at at Joe’s Pub, an offshoot of the The Public Theater. In that performance, Reverend Billy introduced the packed show like a church service, shouting “Welcome to Church!” The choir sang two sets of songs with names like “Climate Change Blues,” “Cops and Bankers,” and “Revolution,” before the Reverend delivered an energetic sermon. Impromptu dance routines broke out during and between songs. The Reverend “canonized” a new saint, as he always does — the Ferguson protester who threw paint on NYPD Commissioner Bill Bratton. He even put Joe’s Pub on notice, singing, “We got no minimum. You don’t have to buy any drinks. Stop shopping!”

choirshow3But Stop Shopping goes beyond protests.

“It really is a church,” said music director Nehemiah Luckett, who is the son of a Methodist pastor. “They are committed to supporting each other to become better people. The more I got to know them, the more I thought that a lot of churches could learn a lot from the group.”

That sense of community may be what has kept Talen and Durkee around for so long.

“If you’ve been an activist for any amount of time, you abandon any concept of success. You fail all the time,” Durkee said.

During nearly every conversation we had, Talen insisted the “plight of the Earth” requires our urgent attention and that things are going downhill — fast.

“If you look at the Earth and you ask regular people, ‘Will we make it? Will we change soon enough [to stop climate change]’ They’ll say no,” Talen said. “Corporations and politicians will say yes we will. But nothing’s changing,”

Still, some might question whether Talen’s tactics do anything but annoy people. But Talen calls these acts transformative, as they raise awareness, make people question conventional beliefs, and motivate others to push for change.

“Politicians eventually find their way to effective social movements,” Talen said, “because so many people become convinced that politicians and businessmen have no choice but to listen.” 

revbilly5Even when he's beat, he refuses to quit

Several weeks ago, Talen was at it again. Standing in the lobby of Grand Central, he shouted hoarsely to a crowd carrying black signs emblazoned with Michael Brown, Eric Garner, and others killed by police violence. Protesters had held a vigil for the previous 18 hours.

“It looks as if our brothers and sisters in uniform are tightening their surrounding of the names of these victims, of these heroes, of these children, of these fathers and mothers!” said Talen, as he gestured wildly at the 10 or 20 policemen standing a few yards off. “What they are doing goes right to the heart of the uprising that started with Michael Brown. Black lives matter! Black lives matter! Black lives matter!”

Within minutes of speaking, the police moved in on Talen, picking up signs off the ground and breaking up the protest. Talen was arrested without ceremony.

revbillyarrestTalen was placed in jail alone for 24 hours. Within days of his release, heannounced a $500,000 lawsuit against the MTA for falsely accusing him of attacking police officers during the arrest.

This is what a living legend looks like, and he’s becoming more real every day.

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Watch the CEO of Howard Hughes Corp sing a duet with Vanessa Williams

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A swanky party hosted by Boys & Girls Harbor in New York City brought together some big names from the arts, entertainment and finance industries on Wednesday night. The 2015 Salute to Achievement event featured Bill Ackman, famed architect Frank Gehry, music executive Lyor Cohen and film producer Steve Tisch – along with Gwyneth Paltrow, Jennifer Hudson and others. 

The highlight of the night might be when Howard Hughes Corp CEO David R. Weinreb performed this duet of the jazz classic "On A Clear Day" with Grammy-nominated singer and former Miss America, Vanessa Williams.

On its website, Boys & Girls Harbor says its mission is to "empower children and their families to become full, productive participants in society through educational, cultural enrichment."

Video credit: The Howard Hughes Corporation

SEE ALSO: Forbes thinks Bill Ackman might be the next Warren Buffett

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Higher wages are here and there's nothing corporate America can do to stop it (ROST)

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Ross Stores

Wage growth is here.

In February, Ross Stores, a discount apparel retailer with a market cap of $20.5 billion, said it was expecting more wage pressures in 2015.

On the company's earnings call Thursday, COO Michael O'Sullivan said the company will raise workers' minimum wages to $9 an hour in the second quarter.

During the call, a Morgan Stanley analyst asked whether it's possible that the company's minimum wage climbs even higher in 2016. Here's what Ross' CFO Michael Hartshorn had to say (emphasis added):

"As we've said before, though, we expect wage rates are going to move up over the next few years. I think you're seeing that in the press almost every day. So it's certainly something that we expect that we're going to be talking more about as we get into our budget for 2016 and our longer term plans and certainly when we talk about our earnings guidance next February, my guess it will be part of that discussion too."

What Hartshorn is saying is: Wage pressure is here; everyone's talking about it; there's nothing we can do about it, and we're going to respond appropriately.

And this chart is why:

quits

The quits rate comes from the monthly JOLTS report, which tallies the number of job openings in the economy. 

As the chart shows, the quits rate in the retail industry — and the entire labor market — has trended higher through the recovery, and is at the highest levels in several years. 

The high quits rate indicates that employers are under more pressure to retain their best staff members, who are increasingly more willing to leave their current job for a better-paying one.

And this move from Ross makes it just the latest big retailer to say it will raise wages for its workers.

This week, we saw hundreds of McDonald's employees protest for a $15/hour minimum wage and better working conditions during the company's annual meeting. Last month, McDonald's announced a 10% raise for workers in restaurants it owns, though this will impact only around 10% of all McDonald's locations. 

But these increases do not go unnoticed. 

On Friday, Federal Reserve chair Janet Yellen acknowledged that while the overall pace of wage growth has been disappointing so far, positive wage signs are appearing more and more frequently, saying:

Nationally, there are at least some encouraging signs of a pickup so far this year. The fact that some large companies, such as Wal-Mart and Target, have announced wage increases for their employees also might be a sign that larger wage gains are on the horizon.

And while increased wages could be pressuring the bottom line for some companies, according to Morgan Stanley, this trend of higher wages is good for everyone. 

In a note about Ross on Friday, analysts Lorraine Hutchinson and Heather Balsky wrote (emphasis added):

Ross should also be able to use cost reductions and productivity enhancements to offset some of the various regional minimum wage increases anticipated in coming years, including an increase to $10 in 2016 in California. Wage inflation is not all bad news for Ross as it should be a positive for increased discretionary spending across the middle income consumer.

Earlier, we highlighted eight charts from Deutsche Bank's Torsten Sløk showing wage trends including rising bonuses, and a surge in the employment cost index.

And as we've moved through the spring, more and more companies have said the same thing: Higher wages are here. 

SEE ALSO: Why Warren Buffett thinks a $15 minimum wage will 'reduce employment in a major way, crushing many workers'

DON'T MISS The minimum wage around the world

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Some interesting stats about America's corporate giants

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giant

My friends at Fortune published the 61st annual edition of the Fortune 500 list today, with the actual issue hitting newsstands on Monday.

From the press release, some interesting stats about America’s corporate giants:

The Fortune 500 companies earned a combined total revenue of $12.5 trillion in 2014, up 2.6% from last year and an all-time high. The total market value for the Fortune 500 hit $17.4 trillion (as of 3/31/15), setting an all-time record for worth and marking an increase of 7.7% over the previous year. This year’s Fortune500 companies also employ more people than ever, with 26.8 million total employees. Profits decreased 12.6% over the previous year, falling below the trillion dollar mark at a combined total of $945 billion.]

FORTUNE 500 TOP 10 LIST:
1. Wal-Mart Stores
2. Exxon Mobil
3. Chevron
4. Berkshire Hathaway
5. Apple
6. General Motors
7. Phillips 66
8. General Electric
9. Ford Motor
10. CVS Health

Walmart takes the top spot for the third year in a row and the eleventh time ever. Only three companies have held the no. 1 spot on the Fortune 500 since its creation in 1955: General Motors, Exxon Mobil and Walmart. No. 5 Apple boasts both the biggest profits of any company on the list ($39.5 billion) and the highest market value (more than $700 billion).

  • Facebook jumps nearly 100 spots — from #341 to #242 — to crack the top 250 in just its third year on the list.
  • New York is the state with the most companies on the list with 55, followed by Texas with 54 and California with 53.
  • 19 companies make their debut on this year’s list including Salesforce.com, Netflix, Expedia and News Corp.
  • CVS Health makes the top ten for the first time.
  • 57 of the companies have been on the list since its inception in 1955 including Exxon Mobil, Chevron, Proctor & Gamble, PepsiCo and Hershey.
  • 26 companies have been displaced from the list, including Coach, Medtronic and Mylan.
  • Energy Future Holdings lost the most money of any company from the previous year with a decrease of $6.4 billion; Caesars Entertainment, Sears and Target also among the top 10 money losers.

***

Check out the link below as the list and related articles hit the site:
http://fortune.com/fortune500/

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These countries worry Corporate America the most

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corporate american flag

So how much exactly are the largest US corporations, those in the S&P 500, worried about Greece? The horrific damage that a Grexit might do to the EU economy, global financial markets, the euro, and even, it seems, the survival of the species?

You’d think they’d be quaking in their boots, given the mutual extortion racket carried out via the media through leaks, rumors, and contradictory announcements. You’d think they’d be fretting over every final-final-final-last-chance-deadline for Greece to accept the fine print that comes with more money that will eventually be extracted from strung-out taxpayers in other countries. You’d think US corporations, at a minimum, would start blaming Greece and its side effects for things gone wrong. So…

“One way to gauge the level of concern about the situation in Greece is to see how many S&P 500 companies mentioned Greece relative to other countries during recent earnings conference calls,” FactSet said in its latest Earnings Insight. And so it combed through the 21 earnings conference calls held since June 1 by S&P 500 companies – a decent sample – and searched for 50 foreign countries, including Greece.

Turns out, “Greece has not been mentioned in any of the earnings calls.” Instead, there were some other winners, based on the percentage of companies that mentioned these countries:

Countries that worry S&P 500 companies

No. 1: Australia has been getting hammered by a resource bust that includes oil, LNG, and iron ore. There is a tremendous housing bubble in Sydney, Melbourne, and some other cities, accompanied by a mortgage debt boom. The banks that funded it all are heavily exposed. The loans that the Big Four Australian banks – ANZ, Commonwealth, National Australia Bank, and Westpac – have on their books exceed 210% of Australia’s GDP. If a portion of these loans curdle, either due to the ongoing resource bust, or due to a potential housing bust, or both, these banks would not only be too big to fail, but too big to save for Australia [How Australia’s Big 4 Banks Can Sink the Entire Economy].

No. 2: China has entered a hard landing [“China Momentum Indicator” at Hard-Landing Level]. Its stock markets, after skyrocketing for a year despite economic thunderheads all around, have been crashing with relentless brutality. The Shanghai Composite Index plunged 19% over the last ten trading days, the Shenzhen Composite 20%. And the ChiNext Index, where startups perform their miracles, has plummeted 27% from its high on June 3.

A lot of “wealth” that the stock-market insanity had created over the past year got destroyed unceremoniously. Chinese stock markets – like most stock markets these days – are not connected to the real economy or businesses. They’re a separate machine where people go to gamble and have fun. But the “wealth effect” does impact the economy, and so does the effect when it all unwinds. Short-seller Muddy Waters, days before all heck broke loose, had warned that Chinese stocks are the “Largest Pump-and-Dump in History.”

So “buy the dip?” Maybe not. Morgan Stanley warns: “In fact, we think the balance of probabilities is that the top for the cycle of Shanghai, Shenzhen, and Chinext has now taken place.” The report pointed at four factors – “a) increased equity supply, b) continued weak earnings growth in the context of economic deceleration, c) high valuations, and d) very high margin debt to free float market capitalization” – that could hammer the markets down another 30% over the next 12 months.

No. 3: Canada is running at a bifurcated or even trifurcated economy. Its oil patch, particularly the province Alberta, and the oil capital Calgary are getting whacked by the oil price plunge and its side effects. As I wrote earlier today, economists worry – but don’t see the signs yet – of “full-fledged contagion to the rest of the country” [Canada’s Oil Patch Goes Into Convulsions, Business Confidence Plunges to Financial Crisis Lows].

On the other side of Canada’s bifurcated economy, Vancouver and Toronto are on top of an exciting housing bubble of enormous proportions. The banks are up to the gills into it, though this time it’s different, because when it all implodes, it won’t impact the banks much because Canadian households, despite their dizzying debt-to-income ratio, aren’t going to just let go of their mortgages, like many US borrowers did during the housing bust. They’ll keep making their payments, no matter what.

Oh, and the incredible condo bubble in Toronto? Unsold new condos have spiked to an all-time record, while the industry pretends to be in denial [Toronto’s Epic Condo Bubble Suddenly Turns into Condo Glut].

And that India and Japan are on the same level of concern with our corporate heroes as Canada makes us worry even more about Canada.

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