National / International News
The AGM is a usually carefully choreographed affair, with the board doing its best to provide a canned, self-congratulatory narrative about the company's performance over the last 12 months, and issuing a bland-yet-optimistic forecast for the next year.
More and more often these days, however, the kabuki performances are interrupted and disrupted by activist investors. These gadflies like to show up and throw hand grenades about the place, trying to force the board of directors to do things that most of them don't want to do: buy back shares; merge with other companies; ditch certain board members; the list goes on. If you don't know what an activist investor is, watch this short video for an explanation:
We all want things. The difference between most of us and activist investors is that they are prepared to spend lots of money and cause lots of pain until they get what they want. Last year was a particularly successful year for activist investors: they ousted the CEO of Sotheby's and got shareholders to overthrow the entire boards of both Darden Restaurants and CommonWealth REIT, now renamed Equity Commonwealth. This year they're going after Tempur Sealy International, DuPont, MGM Resorts, Macerich and Shutterfly.
In his Dealbook column, Steven Davidoff Solomon, a professor of law at the University of California, Berkeley, says this year more sparks may fly than usual, because companies appear to be digging in their heels and pushing back. And it's not just companies. The heads of several big institutions (investors in those companies) have said publicly that they believe the current vogue for share buybacks — a favorite of shareholder activists — is bad for the economy. That may give companies heart as they announce their opposition to the activist scourge.
In 2013, more than 200 bottles of pricey Pappy Van Winkle bourbon vanished from a Kentucky distillery. Tuesday authorities announced indictments in what appears to be a much bigger crime syndicate.
The fatal shooting of a suspect by a volunteer deputy in Tulsa, Okla., raises the question that some have already been asking: Why are nonprofessionals allowed to wear badges and carry guns?
A jury is now deciding whether Boston Marathon bomber Dzhokhar Tsarnaev should be put to death.
Cooper Union architecture professor Diana Agrest has influenced generations of accomplished architects. Now in her 70s, Agrest was one of the first women to teach in the largely male dominated field.
This week, Google started prioritizing mobile-friendly websites in Google searches made on a smartphone. The change could hurt businesses whose sites don't pass Google's mobile-ready test.
A flu strain deadly to chickens and turkeys is striking farms in the West and Midwest. This week, it hit an Iowa facility with millions of egg-laying hens. No one knows how it's entering houses.
Iowa is the top egg-producing state in the U.S. Unfortunately, the state found a flock of millions of hens infected with avian flu on Monday. The spread of this bird flu has accelerated concerns over how much the current outbreak will affect the U.S. egg and poultry industry. It’s said to be the worst case so far in a national outbreak.
According to the U.S. Department of Agriculture, the H5N2 bird flu virus was found at a farm in northwest Iowa's Osceola County. About 3.8 million hens will be euthanized there.
Although that is a very large number of birds, Ed Fryar, CEO of Ozark Mountain Poultry in Rogers, Arkansas, says it is actually a small number relative to the overall size of the flock that's in the U.S.
"The U.S will produce about nine billion brawlers this year," says Fryar. "It can be really tough on an individual farmer or an individual company, if you lose 10 or 20 or 50 million birds, but you’re still talking way less than one percent of the population."
Iowa was already among a list of states to have detected bird flu infections – killing over five million turkeys and chickens just this year.
A California appeals court ruling has complicated water conservation efforts in the state. This week the 4th District Court of Appeal ruled the city of San Juan Capistrano’s tiered water rates violated Prop 218, an amendment to the state constitution. Tiered water rates discourage water waste by charging customers more as their water consumption goes up. They’re a key tool in California’s campaign to save water. At least two-thirds of water providers in the state use some form of tiered pricing.
When California voters passed Prop 218 in the mid-'90s, they had no clue it might gum up efforts to conserve water in a severe drought. The idea then was to plug what anti-tax groups saw as loopholes in Prop 13, the granddaddy of all California propositions. That one limits property taxes. Prop 218 limits certain property-related fees, from trash collection to water service.
Ellen Hanak, director of the Water Policy Center at the Public Policy Institute of California, says under Prop 218, those fees cannot exceed the cost of the service.
“Anybody who hears that will think, yeah, that sounds right," she says. "Why should they be allowed to charge us more than the cost of the service they’re delivering?” She said the law provided more transparency to government fees and costs.
The court ruled San Juan Capistrano hadn’t shown that its higher rates for big water users were directly tied to the costs of delivering the water. Tim Quinn, executive director for the Association of California Water Agencies, says higher water rates are commonly used to force conservation, “not so much to cover cost of service.”
“If that tool is off the table," Quinn says. "I don’t know what they’re going to do. It’s a very powerful tool, and it’s not clear to me that you’ll have an easy substitute."
But Tom Ash, a water rates expert and senior environmental resource planner at Inland Empire Utilities Agency, emphasized that the California court didn’t invalidate conservation pricing. It simply clarified the rules. “I’m not afraid of any of those guidelines,” Ash says. “I think they help us set up transparent, equitable and very practical rates.”
Many California water agencies have had to hire water rate consultants to help them design tiered rates that stay within Prop 218 guidelines. “It’s a complex task and so it takes a complex, sophisticated rate design to do all of that – to be fair, yet recover the cost of service,” Ash says.
Brian Gray, a professor at UC Hastings College of Law, said Prop 218’s conflict with drought efforts may lead some groups in the state to try to pass yet another proposition that would “harmonize Prop 218 with the compelling water conservation needs that we have in the current drought.” It might authorize higher tiered water rates as penalties, rather than fees.
The first federal report card on our energy infrastructure is out today. It calls for more than $8 billion in power grid safety and upgrading.
The power grid is vulnerable in a couple of ways, the report says. One is increasingly unpredictable weather, and thus, blackouts. Every year, the average New Englander loses power for three and a half hours. The average person in Japan: four minutes.
Threat two is physical attacks on key pieces of the grid, like high-voltage transformers. Engineering professor Massoud Amin at the University of Minnesota calls these transformers "critical nodes" that change voltage at key junctions. They're indispensable — and they're barely made in America.
"Post 9-11, we did not have manufacturing capability to manufacture them," Amin says. "If they are taken out, the recovery time to actually build, deliver, retrofit and install it was somewhere between six months to two years."
Today's report proposes a strategic transformer reserve to stockpile extra for emergencies, like we have for crude oil.
Two years ago, one transformer site in California was attacked by snipers. "This was a well-trained group that had sophisticated weaponry, shooting at a very critical part of the power grid," says Peter Fox-Penner, principal of the Brattle Group consultancy and senior policy scholar at Georgetown University.
The lights stayed on, thanks to redundancies. "The real fear is that terrorists would target several transformers at once," Fox-Penner says, "really damage them so they couldn't be repaired."
One internal government analysis reportedly found that taking out nine key transformer sites could black out the entire country. Fox-Penner says eventually the grid may decentralize and become less vulnerable to hardware threats. But that would take a generation.