CEO Daily: Wednesday, June 1
A majority of Fortune 500 CEOs would favor Hillary Clinton over Donald Trump in a presidential election, according to our new survey.
The survey, which was sent to all Fortune 500 CEOs, asked which candidate they would favor most as next President of the United States, and gave only the two leading candidates as options. Of those who answered, 58% said Clinton; 42% said Trump.
Big company CEOs tend to lean heavily Republican. But most of the 500 operate on a global scale, and many disagree with Trump’s proposals for raising trade barriers, his stance on immigration, or other comments showing his lack of understanding of the basics of government (Example: Trump saying that if interest rates rise significantly, “we can buy back government debt at a discount”—a statement that ignores the fact that the government would have to borrow money at higher interest rates to buy back old debt, making any such transaction a wash.)
The poll also showed that CEOs are increasingly chafing under the increased regulation of the Obama years. A full 69% cited increased regulation as one of the top three or four challenges facing their company.
Close to half—49%—of the CEOs who answered the survey said they expect the global economy to be “about the same” over the next 12 months as it has been in the last 12 months. Some 31% said it would be better; 20% said it would be worse. The CEOs were more optimistic about their own company’s growth prospects. Fully 70% said they expect to employ more people two years from now than they do today. Only 14% expect to cut employees, while 15% expect no change.
The poll was sent by email to all of the CEOs of Fortune 500 companies. Fourteen percent —or 71 CEOs—completed the survey. But 16 of the 71 declined to answer the question about the presidential candidates.
Separately, nearly 300 regular readers of the CEO Daily took a run at the same polling questions on Friday. Among that group, 69% favored Clinton; 31% Trump. If you want to take the CEO survey, click here.
More news below. Apologies for misstating the name of Viacom’s lead independent director in yesterday’s CEO Daily. It’s Frederic Salerno.
• Trump Fires Back after More Details on Trump University Lawsuit
The row over Donald Trump’s ‘University’ gets ever uglier. A trove of court records unsealed Monday showed evidence of the type of marketing more familiar with subprime lenders circa 2007. One formal statement by a former staffer alleged it engaged in “misleading, fraudulent and dishonest” practices and “preyed upon the elderly and uneducated to separate them from their money.” The records also detailed evidence that Trump was personally involved in devising the marketing strategy, even to the point of vetting ads. Trump himself, meanwhile, continued his personal attacks on Indiana-born Gonzalo Curiel, the judge who is hearing a class-action lawsuit against Trump University in a San Diego court, calling him “very, very unfair” and “very bad.” Trump has questioned Curiel's objectivity, due to his Hispanic heritage. Trump also turned on reporters who had criticized him for being slow to fulfil his promise of donating $1 million to veterans’ charities (he produced a photocopy of a check to prove that the donation has now been made). Washington Post
• Softbank to Sell Alibaba Shares
Softbank is selling around $8 billion worth of Alibaba stock in what looks like a milestone for both companies. The move is a shift of strategy for an investment company that has done a lot more buying than selling in recent years, racking up $80 billion of debt in the process. Around $30 billion of that is tied to Sprint, whose fortunes Softbank has failed to restore since buying a controlling stake three years ago. Alibaba has been its most successful investment, and a partial cash-out is not so much understandable as overdue (Softbank will still have around 28% of the company after the sale). But a sale is a sale is a sale, and when people who know the company best get out, especially after an uncharacteristic drop in profit and an only-too characteristic wave of negative news about its tolerance of fakes, you’re allowed to raise an eyebrow. Fortune
• When Reality Beats Reality TV
Shari Redstone said (via her spokeswoman) that “she has no desire to manage Viacom nor chair its board,” in a rebuff to the independent directors who are preparing to drag her through the courts if she ousts them. The first skirmish in that campaign will come next week when a Massachusetts court will hear the complaint of Viacom CEO Philippe Dauman and board member George Abrams against their removal from the board of National Amusements, the family trust controlling Sumner Redstone’s stakes in Viacom and CBS. In other news, Sydney Holland, a former girlfriend of Mr. Redstone, is set to join the cast of ‘Real Housewives’, according to The Wall Street Journal. ‘Reality TV’ is going to struggle to match reality in this one, though. Wall Street Journal, subscription required
• Morale Boost for the Fed Hawks
The global economy is sliding into a ‘low-growth trap’ where ultra-loose monetary policy is doing more harm than good, according to an unusually critical assessment from the OECD out today. The Paris-based think tank says low interest rates are causing increasing distortions in the global economy, and blames its rich world members for not doing enough to revive their economies post-2008 with better fiscal and structural policies. The OECD’s message looks first and foremost like a thinly-veiled critique of German-led austerity in the Eurozone (which registered another disappointing round of manufacturing PMIs earlier today). It’s a message that will play well at tomorrow’s meeting of the European Central Bank, and will stiffen the resolve of hawks at the Federal Reserve when its policy-making committee meets later this month. Bloomberg
Around the Water Cooler
• Dell Shareholders Got a Raw Deal
A Delaware judge ruled that Michael Dell and his private equity partners Silver Lake underpriced their 2013 buyout of Dell Inc. by around 22% and should compensate investors accordingly. The ruling affects only a fraction of the shares affected by the buyout, so it will cost Dell and Silver Lake only another $36 million on top of the $24.9 billion they actually paid, but it’s an eye-catching victory for hedge funds who make last-minute investments in a takeover target for the sole purpose of referring the deal to independent arbitration, a type of lawsuit known as ‘appraisal’. The ruling could have been much more expensive if the judge hadn’t struck down T. Rowe Price’s $190 million claim for appraisal—the settlement is only open to those who voted against the deal, while T. Rowe Price had voted for it. Even so, it’s now on the record that public investors got a raw deal from management who were supposed to be acting in their interests: Vice Chancellor Travis Laster adjudged the fair value for the stock was $17.62, not the $13.75 deal price. The ruling can be appealed. Reuters
• Microsoft Rides to Xiaomi's Rescue
Microsoft can’t kick its mobile phone habit. After its ill-fated attempt to revive the Nokia brand, it’s now partnering with Chinese start-up Xiaomi, selling much needed patents to a company that has been dangerously—some allege unlawfully—reliant on the intellectual property of others for most of its short history. The deal will help Xiaomi reduce its litigation risk as it tries to diversify away from a slowing home market. Its budget phones have started to lose market share in China to higher-spec competition from the likes of Samsung, Apple and Huawei. Like Apple, it’s keen to crack the Indian market next. The price of the deal wasn’t disclosed. It comes as Microsoft CEO Satya Nadella visits Beijing, hoping perhaps to settle some of the issues around a Chinese antitrust probe into its software bundling. Fortune
• Mysteries of Outbound Chinese FDI
Anbang, the less-than-transparent Chinese insurance group last seen being ushered away from Starwoods Hotels by people looking like Chinese Treasury officials, has now dropped its $1.57 billion bid for Fidelity & Guaranty Life, after questions from the New York Department of Financial Services. The action is all the more remarkable because the Treasury’s Committee on Foreign Investment in the U.S., which screens Chinese or other activity for national security issues, has already waved the deal through. FGL says it expects “Anbang and its subsidiaries” will refile the application in New York “in the near future.” It’s impossible to know what is behind the latest twist, not least because it’s impossible to tell who pulls the strings at Anbang—the names of the investors behind its 400% capital increase two years were never disclosed. Unlike Anbang’s bid for Starwood, the move for FGL didn’t seem likely to breach Chinese rules capping the size of insurers’ overseas investments. Elsewhere, China’s foreign exchange regulator denied that it was to blame for Zoomlion dropping its bid for crane-maker Terex. Zoomlion had tried to crash an agreed $1.3 billion merger deal with a $3.4 billion offer of its own for the Westport, CT.-based company. Financial Times, metered access
• Sargent Out at Staples
Staples CEO Ron Sargent has fallen on his sword after antitrust regulators killed his long-cherished merger with Office Depot. Shira Goodman, president of Staples’ North American operations, will become the interim CEO while the board searches for a permanent replacement, while Sargent, who was 14 years at the helm of the country’s biggest stationer, will continue as non-executive chairman until next January. The company has had to make big changes to its strategy since the Office Depot deal died, and now wants to beef up sales to smaller companies. It’s also likely to offload its European operations to free up capital for the new approach. Fortune