Power Sheet – December 7, 2015

On Wednesday the Senate Special Committee on Aging will hold a hearing on the wave of mammoth drug price increases that has swept through the past several months. This is guaranteed bad news for, among others, CEOs J. Michael Pearson of Valeant and Martin Shkreli of Turing, formerly CEO of Retrophin. Both have pursued a strategy of buying the rights to existing pharmaceuticals and multiplying the price; Turing, for example, in August bought the rights to a 50-year-old anti-parasite pill and raised the price from $13.50 to $750 a tablet. The leadership issue is whether any of these CEOs will finally step up and take a role in the larger debate about how drug makers get paid for what they sell and whether government should regulate prices, subsidize drug purchases, both, or neither.

Also on Wednesday, Volkswagen’s board will meet. I detailed VW’s worsening crisis last week and won’t repeat the details. In the few days since, it’s striking how the bad news has just kept coming. VW sales, having fallen 25% in the U.S. in November, are reported down 20% in the U.K. and down 2% even in the company’s home market, Germany, where overall car sales rose 9%. The big question for outside observers is to what extent the directors support CEO Matthias Müller, who replaced Martin Winterkorn soon after the emissions scandal broke in September, and whether they believe yet another CEO replacement is necessary to retrieve this expanding disaster.

Mauricio Macri will be sworn in as president of Argentina on Thursday. It’s likely to be the best day of his administration. He surprisingly defeated ruling party candidate Daniel Scioli last month and now must begin implementing his promised policies of opening the economy and cutting government deficits – necessary to revive the stagnant economy but certain to cause pain before they pay off. It’s a challenge that many leaders face in tough times.

The U.S. Congress has until the end of the day Friday to pass a $1.1-trillion federal spending bill in order to keep the government running. It’s the biggest test yet for new House Speaker Paul Ryan, who got the job in October when former Speaker John Boehner resigned in similar circumstances. Boehner quit rather than lead a rejection of a spending bill and force a government shutdown, as demanded by the Republicans’ most conservative faction. Ryan is committed to passing the bill on time (he may even be able to negotiate another week of wiggle room), but this isn’t a done deal. Like many leaders, he holds only limited authority over those he leads – a type of leadership that’s growing in importance across fields.

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What We're Reading Today

Obama denounces ISIS

In an oval office speech, President Barack Obama declared the San Bernardino shooting an act of terrorism. He asked Congress to prohibit people on the no-fly list from purchasing guns and encouraged legislators to approve a war against ISIS through continued air strikes. Republicans, including presidential candidates Donald Trump and Jeb Bush, criticized Obama for not acting sooner. CNN

GE ends sale of appliance business

Federal regulators oppose the sale of General Electric's appliance business to Sweden's Electrolux as anti-competitive, prompting GE CEO Jeffrey Immelt to call off the deal. The move forces Electrolux chief Keith McLoughlin to rethink his strategy. The purchase would have made Electrolux the largest U.S. appliance maker, surpassing Whirlpool. CNBC

The Best of Business in 2015 

Fortune looks back at the best and biggest, the highs and lows of the past year. Examples: Best multitasker was Jack Dorsey, who became Twitter's CEO while also running Square and taking it public. German President Angela Merkel held the eurozone together while also spearheading the response to the migrant crisis. And it was the all-time biggest year for M&A (as a helpful chart illustrates). There's much more. Fortune

Marco Rubio goes after Ted Cruz

As Cruz's poll numbers rise in Iowa, Rubio has begun to attack the Texas Senator directly on national security, immigration, and other issues. Rubio has avoided criticizing other candidates so far. Now he wants to cut Cruz's momentum even though the two candidates' policy positions are highly similar. NYT

Building a Better Leader

Allowing frontline employees to show creativity...

...improves customer service by helping them respond to customer needs, says new research. Harvard Business Review

Sometimes it's best to put the data away...

...and follow your gut. Others will follow if it's the right thing to do. Fortune

Companies with a strong female presence on the board...

…earned an average 36% higher return on equity than companies without. Quartz

Worth Considering

Venezuela elects new government

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Vanguard faces lawsuit for evading taxes

A whistleblower suit claims Vanguard's low-cost index funds have remained so cheap because the company owes $35 billion in back taxes and interest. Vanguard founder John Bogle grew the company on the concept of low-cost index funds. He and subsequent CEOs, including the current one, William McNabb, maintain that fees aren't marked up for profit, thus reducing reported profits and tax liability. Vanguard recently paid millions in back taxes in Texas over a similar claim.  Fortune

VW's investigation may lack teeth

As CEO Matthias Müller meets with the company's third largest shareholder in Qatar, skepticism grows about the German government agency investigating the  scandal. With VW accounting for almost 280,000 jobs in Germany, there's concern that the German Transport Ministry won't take on a company so important to the country. On Thursday, Müller will present the interim findings of VW's internal investigation. NYT

Up or Out

J. Crew has hired Michael Nicholson as CFO, COO, and President.  WSJ

Chuck Williams, founder of Williams-Sonoma, died on Saturday. He was 100. NYT

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Home shopping network for guns to make debut

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