By Alan Murray and Geoffrey Smith
May 30, 2017

Good morning.

I hope you had a great Memorial Day, and spent some part of the day thinking about those who gave their lives to defend our freedoms.

The New York Times used the holiday weekend for a different purpose: to do its latest takedown of executive pay. It noted that CEO pay packages climbed in 2016 after slipping in 2015, and credited the “Trump bump” in the post-election stock market for much of the surge. The story included this interesting statistic: President Trump has met with 307 “highly paid executives” since his inauguration, including 41 of the 200 most highly paid. The Times‘ point: high CEO pay helped feed the populist anger that swept Trump into office, but since getting there the President has spent a lot of time with people whose “views on taxes and economic inequality tend to differ from those of average Americans.”

How do CEOs really view the executive pay issue? We are in the field right now with our Fortune 500 CEO survey that includes a question on just that point. It shows that four out of five CEOs acknowledge high CEO pay is a problem. But what kind of problem? The majority agree with the statement that “CEO pay is fairly set by the marketplace in most cases” but “nevertheless has undermined public support for business.” Only a minority believe—as I do—that the “market for CEO pay doesn’t work properly.” (If you are a Fortune 500 CEO and haven’t completed the survey yet, please do so today—it only takes five minutes. If you haven’t seen it in your email inbox, reply to this newsletter and I’ll send a link. Results will be published in the Fortune 500 issue of the magazine.)

Who were the big winners in the pay sweepstakes last year? The Times devoted two pages of its Sunday print edition to list the 200 most highly paid executives, which you can read online here. For brevity, we’ll stick to the top ten, with total pay packages ranging from $98 million to $33 million, in descending order:

1) Thomas Rutledge, Charter Communications

2) Leslie Moonves, CBS

3) David O’Connor, Madison Square Garden

4) Fabrizio Freda, Estée Lauder

5) Mark Parker, Nike

6) Mark Hurd, Oracle

7) Robert Iger, Disney

8) Safra Catz, Oracle

9) David Zaslav, Discovery Communications

10) Robert Kotick, Activision Blizzard

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

Angela’s Outburst

In an unusually outspoken outburst, German Chancellor Angela Merkel warned that Europe can no longer count on the U.S. as a reliable partner, and needs to take its destiny into its own hands. Her comments followed a bad-tempered summit where she and the rest of the G7 clashed with President Trump over trade and climate change policy. The speech dented the recent market enthusiasm for European assets, allowing the dollar to start the week on a relatively firm note. Another factor weighing on the euro this morning is ECB chief Mario Draghi’s repeated assurance that the ECB will keep monetary policy loose until the recovery is more firmly established.
Fortune

BA Counts the Cost of IT Outage…

Shares in British Airways owner IAG fell over 3%, equivalent to over $500 million of market value, as London’s stock market reopened after a torrid holiday weekend. An IT failure forced it to cancel hundreds of flights and strand over 75,000 passengers. BA says it’s operating a full schedule at the two London hubs of Heathrow and Gatwick Tuesday. CEO Alex Cruz, who rebuffed calls for his resignation, blamed the outage on a power surge on Saturday morning that had hit its flight, baggage and communications systems, including its back-up systems. Cruz also rejected labor union claims that blamed the outage on the outsourcing of vital functions to Indian group Tata last year, when it cut hundreds of in-house IT jobs.
Fortune

…While Ryanair Prepares to Cash In

BA’s problems may stop it capitalizing on an improving environment for European airlines. Ryanair, the continent’s biggest short-haul airline, posted a record profit for the fiscal year ended in March and said it expected another record this year due to lower fuel costs and stronger pricing as economies around the region improve. The potential downside of Brexit, meanwhile, appears fully priced in. Ryanair also said it was looking at taking more aircraft from Boeing as it returns to a more ambitious tempo of capacity expansion.
WSJ, subscription required

Fake Goods Lead to Real Competition for Alibaba

Tencent Holdings, the group behind China’s biggest social-media network, is making a long-term play to be the dominant online retail channel for luxury goods in the country. It’s using the WeChat network with its 900 million users to host sales by a growing number of luxury goods makers, in a move that contrasts with Alibaba’s long-running problems with the sector over fake goods on its Taobao marketplace. LVMH, Longchamp and Burberry are already active sellers on WeChat, while Cartier owner Richemont has already opened a full store on the network. 
WSJ, subscription required



Around the Water Cooler

Goldman Clients Bet on Venezuela

Goldman Sachs decided not to let a political crisis, and a brewing humanitarian one, get in the way of an irresistible opportunity, snapping up $2.8 billion of bonds issued by Venezuela’s state oil company for less than a third of their face value. It said the deal was on behalf of its clients. The bonds were held by the country’s central bank, which will be able to prop up the collapsing edifice of Chavismo for another few days with the money, something that offended the country’s opposition politicians.
WSJ, subscription required

…While Buffett Bets on Chemicals

Warren Buffett’s shake up of the dowdy industrial chemicals sector continues. Buffett’s General Reinsurance announced a 3% stake in German specialty chemicals business Lanxess Monday, driving its stock up nearly 7%. Lanxess is best known in the U.S. for its Lubrizol lubricant business. It’s the third move by Buffett on smaller German industrials in just over a year. Earlier this year, Berkshire Hathaway agreed to buy piping components makers Wilhelm Schulz.
Bloomberg

Court Rejects Elliott’s Move to Oust Akzo Chairman

PPG’s bid for Akzo Nobel suffered an important setback after a Dutch court ruled that the paint and coatings maker was under no obligation to hold a vote to oust chairman Antony Burgmans. Activist investor Elliott Advisors and others had argued Burgmans had failed Akzo investors by refusing to talk to PPG about its offer. PPG has until June 1 to submit a formal offer to the Dutch market regulator or suspend its pursuit for six months.
Reuters

Summaries by Geoffrey Smith; geoffrey.smith@fortune.com @geoffreytsmith

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