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Google Walkouts, Tech Tax, Tesla Investors: CEO Daily for November 1, 2018

Good morning.

A new study out from PwC this week shows R&D spending by companies reached record levels in 2018—a good sign for the future.

The study looks at the 1,000 public companies around the world that spend the most on R&D, and found a hefty 11.4% jump from 2017, to a record-high $782 billion. The increase was nearly triple the rise from 2016 to 2017.

The top ten R&D spenders were:

1. Amazon
2. Alphabet
3. Volkswagen
4. Samsung
5. Intel
6. Microsoft
7. Apple
8. Roche
9. Johnson & Johnson
10. Merck

Companies headquartered in North America were the biggest spenders by far—accounting for nearly half of the total—but Chinese companies saw the fastest growth, up 34% from the previous year, compared to an 8% increase at North American companies. The authors said that when they started this list in 2005, only eight Chinese companies registered, with a negligible amount of spending. But this year, 145 Chinese companies were among the top 1,000 spenders.

Rising R&D spending is an indication that companies are committing to the future, and should portend future growth in productivity. But the study’s authors caution that they find no direct correlation between a company’s R&D spending and its overall ability to innovate.

“For the entire 14 years we have conducted this annual study we have consistently found there is no statistically significant relationship between how much you spend on R&D and how well you perform,” Barry Jaruzelski, partner at PwC’s strategy consulting business development told me. “What does matter is the depth of your customer insight, the quality of the talent assembled, and rigor of the processes you employ.”

Worth noting that wages also have been showing strong growth this year, after a decade-long slump. The full-employment economy seems to be driving companies to invest in both people and innovation. The longer that continues, the better. Let’s hope the recent stock market slump isn’t a sign that the end is near.

The full study here. More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

Google Walkout

Google staffers’ big walkout is happening today at more than 20 offices around the world. Employees are protesting against the company’s workplace culture, specifically the sexual harassment and misbehavior that certain executives appear to have gotten away with. They want an employee rep on the board and an end to forced arbitration in cases of harassment and discrimination. CNBC

Tech Tax

U.S. lawmakers and business groups are very much against the U.K.’s plan to impose a new tax on tech giants. The European Commission has proposed something similar, but there’s discord between EU countries on the subject, so the U.K. and Spain are moving ahead with their own plans. The Americans claim the tax unfairly targets American firms, and also don’t like the fact that it’s calculated based on revenue, not profit. BBC

Tesla Investors

Activist Tesla investors, including a union-affiliated investor group and five major pension funds, want a plan for refreshing the company’s board, as well as a permanent separation of the CEO and chair positions—the SEC’s forced separation, in response to Elon Musk’s errant tweeting about funding for a go-private plan, only comes with a three-year shelf-life. Bloomberg

GM Buyouts

General Motors is reportedly offering voluntary severance packages to 18,000 employees who have 12 or more years of experience at the company, as a cost-saving measure. The employees have until November 19th to accept or refuse the buyout offer, after which GM will decide whether to move ahead with layoffs. Fortune

Around the Water Cooler

Autonomous Uber

Volvo, which just signed a deal to develop self-driving cars with Baidu, will start shipping autonomous vehicles to Uber next year. Uber’s testing program was paused following a fatal accident in March, but it is now apparently back on track, according to Volvo. Financial Times

Belt and Road

Australia decided not to participate in China’s “Belt and Road” infrastructure-building initiative, but one state in the country has broken ranks. Victoria (the state with Melbourne in it) has signed up, despite the country’s current diplomatic unease about China. “It means more trade and more Victorian jobs and an even stronger relationship with China,” enthused state Premier Daniel Andrews. South China Morning Post

Early Voting

This year’s U.S. midterms have already seen record numbers of early votes. The election is still five days away, and early and absentee voting numbers are already outstripping those from 2014 in at least 17 states. The surge appears to be on both sides, although it may benefit the Democrats more than the Republicans. Washington Post

Turnout Tactics

Voter turnout should generally be higher this year than in previous midterms, thanks to the introduction of automatic voter registration (AVR) in more than a dozen states. Jim Condos and Natalie Tennant, respectively the Vermont secretary of state and the former West Virginia secretary of state, write for Fortune that AVR is the “smart” alternative to laws that suppress rather than encourage voting. Fortune

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.