Pressure is rising on Bank of America to re-separate the roles of Chairman and CEO. The proxy advisory firm ISS joined the battle Friday, adding its voice to those saying the bank would benefit from an independent chairman. Shareholders will vote on the matter September 22.
The pressure to separate the two positions is rooted in good governance. But while it is standard practice elsewhere in the world, American CEOs continue to view the chairman’s title as a prize to be coveted. About half the CEOs at big U.S. companies hold both titles — down from two thirds a decade ago.
Does it matter? Boards of directors need strong leadership, That can come from a lead independent director as well as from an independent chairman. But at a time when public concern about the accountability of big corporations is on the rise (anyone out there listening to Bernie Sanders and Donald Trump?), a clear separation makes sense. It’s probably time for the folks at the top to stop fighting the trend.
More news below.
• Uber raises money for China expansion
Car-sharing startup Uber has raised $1.2 billion in new funding to invest in the company’s China operations, a round that was led by Chinese search giant Baidu and values Uber’s subsidiary at $8 billion. In a speech delivered on Tuesday, Uber CEO Travis Kalanick said the company would enter 100 more Chinese cities over the next year, doubling a prior goal set just three months ago. The push comes as Uber faces stiff competition from a larger local rival, Didi Kuaidi.
• Glencore promises to cut debt
Switzerland-based mining company Glencore has outlined a handful of plans to cut debt and raise cash, promising to sell assets, suspend some of its copper production operations, and stop dividend payments until further notice. Bloomberg described the moves as “unprecedented” for Glencore CEO Ivan Glasenberg, who has run the company almost single handedly for 15 years. The fresh approach, Bloomberg reports, was trigged by investor bearishness on commodity prices, talk that surprised the company’s management.
• BofA wants to keep CEO’s dual role
Bank of America is stepping up efforts to convince shareholders that CEO Brian Moynihan should also remain chairman, as the bank faces a Sept. 22 vote on the issue after its decision to combine the roles last year led to some shareholder unhappiness. The board’s move to combine those roles went against a 2009 rule passed by shareholders during the financial crisis that required the CEO and chairman jobs be held by separate people. As BofA tries to drum up support, major proxy advisors are arguing the bank overstepped its authority.
WSJ (subscription required)
• Tesco sells South Korea business
Britain’s Tesco has agreed to sell its South Korea business to a group led by private equity firm MBK Partners for $6.1 billion, a deal that comes as the world’s third-largest retailer faces a slowdown at home. The deal will help Tesco cut down its indebtedness. But here’s the real interesting fact: it is the largest-ever private equity deal in Asia.
• Refugee crisis response takes shape
One of the biggest news stories that has been getting more international press has been a refugee crisis that has stemmed from Syria, Iraq and other war-torn countries. Much is being made about the European response (with a lot of criticism levied to some of those nations) as they struggle to come up with an appropriate way to help the refugees that are seeking a safer life. Some European leaders, like those in France, are accepting mandatory quota systems for resettled refugees to help relieve the pressure on Greece, Italy and Hungary.
Around the Water Cooler
• Contactless payments are on the rise
“Contactless payments,” which let shoppers wave their mobile smartphone in front of a reader at a cash register to make a payment, are expected to reach 200 million mobile wallets by the end of 2016 – up 100% from the end of last year. Apple Pay is powering a lot of the growth, though other rivals like Google have also sought to launch competing services. The growth also comes as Apple pushes for more retail locations to accept such payments. There are some expectations that Apple Pay updates will be unveiled at the company’s news event later this week.
• How JPMorgan uses its clout
JPMorgan, the largest U.S. bank, has been cutting prices for a group of its credit card customers and getting Visa to shoulder at least some of the burden of the lost revenue. Chase generated about $3.6 billion of revenue last year from those fees but is facing stiff competition from other banking rivals as well as Silicon Valley rivals like Paypal and Square. At stake are the billions of dollars that ranks receive from customers that use a credit car to pay retailers.