Good morning.
North Korea fired yet another missile over northern Japan this morning, escalating its face off with the rest of the world. The missile traveled about 2,300 miles—far enough to reach the U.S. island of Guam. You can read the details here.
Here at CEO Daily, it’s Feedback Friday. Lots of reaction, much of it thoughtful, to yesterday’s post on ever escalating CEO pay. A sampling:
From CF: “I fully agree that the capitalist system as we know it with regards to compensation is severely out of balance when you compare the growth of executive level compensation with that of labor….The U.S. Middle Class is shrinking compared to the base of 1962 and is now about 47% of the population from about 62%… These are the kinds of trends that lead to social and political upheaval.”
From JS: “Nice job on reminding readers that inequality requires looking at both ends of the spectrum.”
From PG: “I think the greatest contributor to the CEO pay problem is benchmarking. Instead of tying compensation to real value added, most compensation committees delegate comp decisions to external consultants. Those consultants do a study of comp for similar companies. Then they want their CEO to be in the top quartile. All the peer companies do this, so executive pay keeps rising. Benchmarking is safe for the board, but it is bad for the shareholder.”
News below. Enjoy the weekend, and be sure to read Shawn Tully’s piece on why P&G needs Nelson Peltz, here.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
• Tillerson Highlights Rift Over Iran
Secretary of State Rex Tillerson said Iran was “clearly in default” of expectations under the 2015 nuclear deal, highlighting a rift with the U.S.’s European allies who are anxious not to provoke a fresh confrontation with the Islamic Republic (European business has been much quicker to re-enter the Iranian market since sanctions were lifted). Iran’s Foreign Minister retorted that it was complying and renegotiating the deal was a “fantasy.” In Asia and Europe, markets shrugged off the latest North Korean missile test. Bloomberg
• Son Senses a $10 Billion Bargain
Rumors about Masayashi Son’s mooted investment in Uber firmed up as The Wall Street Journal reported that Softbank’s tech-focused Vision fund was looking for a stake of between 17%-22% and two board seats. According to the report, it wants to inject a small sum at the last agreed valuation of $68 billion, but make the bulk of the investment buying out existing investors and employees at a valuation closer to $50 billion. A difficult balancing act. Elsewhwere, Reuters reported Alphabet was in talks to invest $1 billion in Uber rival Lyft, as the latter considers an international expansion. Fortune
• EU to Outline New Tax Principles for Digital Giants
The EU’s plans to wring more tax out of digital giants such as Google and Facebook will get more shape this weekend. Commissioner Pierre Moscovici said finance ministers will discuss a draft for a “common consolidated tax” based on revenue rather than profit. The proposal appears to have the support, in principle, of Germany, France, Italy, and Spain, all of which deeply resent the way that Amazon, Apple et al. have shifted profits to smaller jurisdictions such as Ireland and Luxembourg. Reuters
• Nestlé’s Buying Spree Extends to Blue Bottle
The fight over the U.S.’s high-end coffee outlets intensified as Nestlé bought a majority stake in Blue Bottle. Blue Bottle said the deal will let it develop new coffee technology, open new locations at home and abroad, and expand its product line. As with last week’s acquisition Sweet Earth, the Swiss company said it would let Blue Bottle operate as a standalone entity. People close to the deal put the price at $425 million for a two-thirds stake in a business that expects to have all of 55 stores by year-end. Fortune
Around the Water Cooler
• 18 Injured in London IED Attack
What appears to have been an improvised explosive device injured 18 people on a London subway train in the morning rush hour. No one was killed. President Trump, who has been sharply critical of London Mayor Sadiq Khan after past terror attacks, insinuated via Twitter that the perpetrator had been known to the police. The Metropolitan police have not confirmed this yet. Fortune
• FTC Confirms Equifax Probe
The Federal Trade Commission broke with protocol to confirm that it is investigating Equifax’s handling of the data breach that it announced last week. The FTC had earlier put out a blog warning people against scammers who were rushing to exploit people’s fears after the breach. Previous FTC investigations have led to companies paying settlements and agreeing to multi-year monitoring. The FTC also has the power to order refunds to consumers under the Fair Credit Reporting Act, according to the Financial Times. Fortune
• Google’s Female Staff Sue Alleging Discrimination
Three female former employees of Alphabet's Google filed a lawsuit on Thursday accusing the tech company of discriminating against women in pay and promotions. The proposed class action lawsuit filed in California state court in San Francisco comes as Google is facing a sex bias investigation by the Department of Labor. Google’s legal team were also busy elsewhere, as researchers claimed to have discovered one of the biggest outbreaks of Android malware ever to sneak its way from the Google Play Store onto people's devices. Fortune
• Uses for a Dark, Quiet Room
The two-pronged attack on Bitcoin from China’s financial regulators and Jamie Dimon’s mouth continues to take its toll on digital currencies. Having started the month near $5,000, Bitcoin is flirting with the $3,000 level today, while rival Ethereum has gone from $389 to $204. Whatever the long-term investment case, the old adage about commodities still applies for now: if ever you feel like trading them, find a quiet, dark room to lie down in until the feeling goes away. Fortune
Summaries by Geoffrey Smith; geoffrey.smith@fortune.com
@geoffreytsmith
