Proctor & Gamble Concedes Proxy Fight, Names Nelson Peltz To Board

Two months after narrowly losing a proxy vote that would have granted him a seat on Proctor & Gamble’s board, Trian’s Nelson Peltz has somehow managed to win a crucial battle in the largest and most expensive corporate proxy battle in modern history.

To wit, the consumer-products giant announced Friday that it would add Peltz to its board, according to the Wall Street Journal. The company said it would add Peltz to the board beginning March 1.

P&G’s stock, which has lagged the broader market this year, rose over the summer after Peltz started his proxy fight. Shares tumbled on Oct. 10, the day Peltz lost his proxy vote at the company’s annual shareholder meeting in Cincinnati.

Afterwards, Peltz revealed that he intended to challenge the results of the narrow vote in court.

Trian is disagreeing with the P&G and is to challenge the count...

 

“According to our proxy solicitors, today’s vote is too close to call and it will take more time to determine the outcome. We await the certified election results by the independent inspector of election. Trian is pleased with the support we have received from shareholders and all of the nation’s independent proxy advisory firms. We believe shareholders’ voices are being heard at P&G today, thanks to Trian’s involvement.

 

“With approximately $3.5 billion invested in P&G, Trian has a vested interest in the long-term success of the Company. If elected to the P&G Board, Nelson Peltz plans to start engaging collaboratively with his fellow directors. He has a long history of working collegially with boards and management teams and is looking forward to working closely with P&G’s leadership to revitalize P&G. Regardless of the final voting results, Trian believes management and the Board have been put on notice by shareholders – a continuation of the past decade’s underperformance is simply unacceptable. Trian is confident that P&G shareholders will hold the Board and management accountable and will be far less tolerant of lackluster performance going forward.

 

“Trian believes in P&G’s potential and wants to see the Company grow market share again and deliver long-term sustainable value for the benefit of all stakeholders. We feel strongly that a shareholder voice is needed in the boardroom and that Trian’s approach will help revitalize P&G."

On Friday, P&G revealed that a certified vote count showed the results of the vote were “extremely close” and because so many shareholders had voted for Peltz, the company apparently decided it would be easier to give him what he wants.

Peltz’s Trian Fund Management has invested about $3.5 billion in P&G. He then called on the company to end the dispute and appoint him to its 11-person board.

Per WSJ, Peltz’s pitch was that the company needed to streamline its businesses and consider bringing in outside talent. The company’s CEO, David Taylor, said Peltz would interrupt a turnaround plan he was in the middle of executing.

The two sides have battled publicly for months about the best structure and strategy for the world’s biggest consumer-products company. Mr. Peltz argued the company needs to streamline it businesses and bring in outside talent. P&G Chief Executive David Taylor countered that Mr. Peltz will disrupt a turnaround that is under way at the maker of Tide detergent and Gillette razors after a decade of market-share losses and stagnating profits.

 

“We have had constructive discussions with Nelson and we are committed to working together for the best interests of all P&G shareholders,” Mr. Taylor said in a news release. P&G said it and Mr. Peltz have agreed that it won’t take on excessive leverage, substantially reduce R&D spending or break up the company.

 

In addition, P&G said it would also add Novartis AG Chief Executive Joseph Jimenez to its board on March 1.

 

P&G is the biggest U.S. company by market value to face a proxy contest. The two sides spent at least $60 million and crisscrossed the country for weeks to win support from shareholders, from major index fund managers to thousands of P&G retirees. At the end of the campaign, the company’s shareholders were essentially evenly split.

P&G shares jumped in after-hours trade...
 

Google Is Using Hot Air Balloons To Restore Cell Service In Puerto Rico

While Elon Musk is pretending that he can rebuild Puerto Rico’s power grid with solar-powered batteries, Google wants to deliver cell phone service using balloons.

Alphabet Inc., Google’s corporate parent, received permission on Friday from the FCC to begin providing emergency cellular service to hurricane-ravaged Puerto Rico using balloons. The effort appears to be a dry run for Google X’s “Project Loon” moonshot program, which ultimately aims to beam internet across the world using high-altitude balloons.

2) We"ve granted an experimental license to Project Loon; it could help Puerto Ricans access cellular service. https://t.co/VJPbZ0ipYo pic.twitter.com/31IrPhDW00

— Ajit Pai (@AjitPaiFCC) October 7, 2017

Pai is also waiving regulations on telecom providers operating in Puerto Rico for six months to allow them to focus on the recovery effort.

4) We"ve also extended deadlines for telecom providers, allowing them to focus on restoring networks over paperwork. https://t.co/mo2fj4FELM pic.twitter.com/VvMtg1g9oO

— Ajit Pai (@AjitPaiFCC) October 7, 2017

Pai said on Friday he was launching a Hurricane Recovery Task Force focused on providing aid to Puerto Rico and the U.S. Virgin Islands. The agency has also reportedly been working with private companies since the storm to devise ways to more quickly restore the island’s downed communications infrastructure, the Hill reported.

Eight-three percent of the island"s cellular sites remain out of commission, making communication on and off the island difficult, according to the agency.

One of Google X"s "Project Loon" balloons

After exchanging tweets about the possibility of Tesla rebuilding the island’s power grid (presumably after helping itself to a generous portion of federal government aid dollars) PR Gov Ricardo Rosselló and Tesla chief Elon Musk had a 25-minute phone conversation Friday night where the two discussed relief efforts as well as Tesla playing a leading role, Rosselló told USA TODAY. Teams from Tesla and Puerto Rico’s energy sector will continue the talks early next week, Rosselló said at the time.

As proof of a precedent, Musk cited Tesla"s work building a solar energy grid for the Hawaiian island of Kauai. However, Kauai"s population is only around 70,000 people, whereas Puerto Rico’s is 3.4 million. As Newsweek points out, the island"s aging power grid relies on fossil fuels that must be imported by the island, a costly expense. Solar batteries could help alleviate the financial strain on Puerto Rico as it struggles with $74 billion in debt, a large chunk of which is owed by Prepa, the island"s power authority.

However, it looks like Musk might find himself preoccupied trying to rescue his company from yet another embarrassing production fiasco. As WSJ revealed late Friday, the company has been assembling new Model 3s by hand because its production line remains inoperable. Earlier in the week, Tesla revealed that it had completed only a tiny fraction of the 1,500 Model 3s it had promised to deliver by the end of the third quarter, blaming unspecified “production bottlenecks”. To be sure, Musk has sent a team of engineers to oversee installations of Tesla"s "powerwall" home solar battery systems in the homes of Puerto Rican customers.

Here"s a video introducing Project Loon that was published by Google back in June 2013:

Musk Is Sending A "Powerwall Team" To Puerto Rico To Restore Electricity

Update: Tesla"s Musk confirms he is sending an "experience powerwall team" to Puerto Rico to investigate reports of price gouging and oversee installations of Tesla"s "Powerwall" home battery - a product that was initially develoepd by Solar City.

Tesla always charges the same price for a Powerwall (only taxes & shipping costs vary), so something is messed up here. I"ve asked my team to stop shipment to any installers charging excessive premiums.

— Elon Musk (@elonmusk) October 6, 2017

The internal Tesla Powerwall install team in PR is very small right now. Sending experienced installers from continental US to hire & train local team as fast as possible.

— Elon Musk (@elonmusk) October 6, 2017

*  *  *

As we detailed earlier, Tesla CEO Elon Musk wants you to know that Tesla could rebuild Puerto Rico"s devastated power grid and make it more resilient, and more efficient, than ever before.

In what appears to be another in a series of exaggerated claims made by the Tesla CEO, Elon Musk said he believes his company could rebuild Puerto Rico’s power grid using batteries and solar power technology to make energy on the island less costly. Tesla tweeted his claim in response to a story published by Earther.com about Puerto Rico"s "once in a lifetime" opportunity to build a cutting-edge power grid.

The Tesla team has done this for many smaller islands around the world, but there is no scalability limit, so it can be done for Puerto Rico too. Such a decision would be in the hands of the PR govt, PUC, any commercial stakeholders and, most importantly, the people of PR.

— Elon Musk (@elonmusk) October 5, 2017

Musk"s claims apparently caught the attention of Puerto Rico Gov. Riccardo Rossello, who tweeted "let"s talk" at Musk following the latter"s claim. Musk, for his part, responded that he"d be more than happy to discuss the possibility with Rossello, adding that Tesla "could be helpful."

@elonMusk Let"s talk. Do you want to show the world the power and scalability of your #TeslaTechnologies? PR could be that flagship project. https://t.co/McnHKwisqc

— Ricardo Rossello (@ricardorossello) October 6, 2017

Of course, while Tesla has build solar energy grids for smaller islands, the company hasn"t taken on anything even approaching the scale of rebuilding Puerto Rico"s shattered energy infrastructure. Most recently, Tesla biild a solar eergy grid for the Hawaiian island of Kauai. However its population is only around 70,000 people, whereas Puerto Rico’s is 3.4 million. As Newsweek points out, the island"s aging power grid relies on fossil fuels that must be imported by the island, a costly expense. Solar batteries could help alleviate the financial strain on Puerto Rico as it struggles with $74 billion in debt, a large chunk of which is owed by Prepa, the island"s power authority.

Figures provided to Newsweek by the Kauai Island Utility Cooperative showed that it projects fossil fuel usage will be reduced by 1.6 million gallons per year thanks to the new solar gird. If Tesla could scale this proportionally for Puerto Rico, the island could potentially reduce its fossil fuel consumption by 78 million gallons a year.

As Newsweek points out, this isn"t the first time Musk has publicly offered to help a country with its energy crisis. Earlier this year, Musk claimed that it would take Tesla less than 100 days to solve power problems in the Australian state of South Australia by building a giant battery farm.

Puerto Rico’s electrical grid was utterly devastated by Hurricane Maria and Hurricane Irma. Weeks after Maria made landfall on the island as a category four storm, fewer than 10% of Puerto Ricans have access to electricity.

JPMorgan Updates By-laws In Case Of "Nuclear Disaster" Or World War III

In the most bizarre news of the day, Bloomberg"s Hugh Son noticed that in a late Thursday filing, the board of JPMorgan approved a series of revisions to the bank"s by-laws, including a particularly notable one: a new section defining what constitutes a quorum in an emergency resulting from "an attack on the United States" or a “nuclear or atomic disaster.” That scenario is listed among emergencies that - understandably - might make it hard to hold a normal meeting for board members of America"s largest bank.

The clause can be activated not just in case of a nuclear disaster or World War III, but also in a variety of situations including "without limitation apparent terrorist activity or the imminent threat of such activity, chemical and biological attacks, natural disasters, or other hazards or causes commonly known as acts of God."

In short, JPMorgan"s Board has decided it is time to seriously consider a TEOTWAWKI scenario.

As Son notes, in such an event, any member of the board or the firm’s operating committee can call a meeting using “any available means of communication.” And, just in case everyone else on the Board happens to die, one person will be sufficient to constitute a quorum. Vacancies can be filled by a majority vote of available directors. And if none are around, then designated officers can stand in. No officer, director or employee can be held liable in such a situation, except for “willful misconduct.”

The revised Emergency By-Laws are reposted below (highlights ours):

ARTICLE XI

Emergency By-laws

Section 11.01. Emergency By-laws. This Article XI shall be operative during any emergency resulting from an attack on the United States or on a locality in which the Corporation conducts its business or customarily holds meetings of its Board or its stockholders, or during any nuclear or atomic disaster, or during the existence of any catastrophe or other similar emergency condition (including without limitation apparent terrorist activity or the imminent threat of such activity, chemical and biological attacks, natural disasters, or other hazards or causes commonly known as acts of God), as a result of which a quorum of the Board or the Executive Committee thereof cannot readily be convened for action (an “Emergency”), notwithstanding any different or conflicting provisions in the preceding Articles of these By-laws, the Certificate of Incorporation or the General Corporation Law. To the extent not inconsistent with the provisions of this Article XI, the By-laws provided in the other Articles of these By-laws and the provisions of the Certificate of Incorporation shall remain in effect during such Emergency and upon termination of such Emergency, the provisions of this Article XI shall cease to be operative.

Section 11.02. Meetings. During any Emergency, a meeting of the Board, or any committee thereof, may be called by the Chairman or any other member of the Board or the Chief Executive Officer, or any member of the Corporation’s Operating Committee (each, a “Designated Officer” and collectively, the “Designated Officers”), or the Secretary. Notice of the time and place of any meeting of the Board or any committee thereof during an Emergency shall be given by any available means of communication by the individual calling the meeting to such of the directors and/or Designated Officers who shall be deemed to be directors of the Corporation for purposes of obtaining a quorum during an Emergency if a quorum of directors cannot otherwise be obtained during such Emergency, in each case, as it may be feasible to reach. Such notice shall be given at such time in advance of the meeting as, in the judgment of the individual calling the meeting, circumstances permit.

Section 11.03. Quorum. At any meeting of the Board, or any committee thereof, called in accordance with Section 11.02 above, the presence of one director shall constitute a quorum for the transaction of business. Vacancies on the Board, or any committee thereof, may be filled by a majority vote of the directors in attendance at the meeting. In the event that no directors are able to attend the meeting of the Board, then the Designated Officers in attendance shall serve as directors for the meeting, without any additional quorum requirement and will have full powers to act as directors of the Corporation for such meeting.

Section 11.04. Amendments. At any meeting called in accordance with Section 11.02 above, the Board or a committee of the Board, as the case may be, may modify, amend or add to the provisions of this Article XI so as to make any provision that may be practical or necessary for the circumstances of the Emergency.

Section 11.05. Management Contingency Plan. During an Emergency, the Corporation shall be managed by the Operating Committee under the direction of the Chief Executive Officer. In the absence of the Chief Executive Officer or his or her successor, the Operating Committee shall act under the direction of the Operating Committee member with the longest tenure with the Corporation.

Section 11.06. Liability. No officer, director or employee of the Corporation acting in accordance with the provisions of this Article XI shall be liable except for willful misconduct.

Section 11.07. Repeal or Change. The provisions of this Article XI shall be subject to repeal or change by further action of the Board or by action of the stockholders, but no such repeal or change shall modify the provisions of Section 11.06 of this Article XI with regard to action taken prior to the time of such repeal or change.

Section 11.08. Termination of Emergency. The provisions of this Article XI shall cease to be operative upon the termination of the Emergency as determined by a quorum of the Board or the Executive Committee thereof in accordance with Sections 2.06 and 3.01, respectively, of these By-laws.

Look Who Kalanick Just Appointed To The Uber Board Without Consulting Anyone

It looks like Travis Kalanick is preparing for all-out war in the Uber boardroom.

The Uber co-founder and former chief executive officer - who retains control over three board seats, including his own - has finally filled his long-vacant seats. And guess whom he picked to fill them? Former Xerox Corp. Chairwoman and CEO Ursula Burns...and former Merrill Lynch Chairman and CEO John Thain, "ratcheting up a Machiavellian battle for control of the world’s most valuable startup" as Bloomberg put it. Uber immediately challenged the appointments, calling them "a complete surprise."

“I am appointing these seats now in light of a recent board proposal to dramatically restructure the board and significantly alter the company’s voting rights,” Kalanick said in a statement emailed to Bloomberg. “It is therefore essential that the full board be in place for proper deliberation to occur, especially with such experienced board members as Ursula and John.”

As many may remember, Thain was the last CEO and chairman of Merrill Lynch before it was absorbed by Bank of American during the financial crisis. The last leader of an independent Merrill Lynch was roundly criticized for the same venal behavior as other too-big-to-fail CEOs - BOA paid a $16.7 billion fine in 2014, at the time the largest single settlement in US history, partly for Merrill"s witholding of crucial information (namely, that the products were stuffed with garbage subprime loans while being marketed as AAA) to buyers of its MBS and CDO products. There was, of course, also the whole $35,000 "commode on legs" incident as part of Thain"s $1.2 million office redecoration (which also included $17,100 traveling toilet boxes and a $15,000 dog umbrella stand).

Thain was, appropriately, singled out for criticism by former President Barack Obama, who accused him of "lining his pockets" - and those of his employees - at the taxpayers" expense by handing out massive bonuses after BofA accepted $45 billion in TARP funds.

Kalanick - who resigned as CEO on June 20 after a longrunning battle between him and the company"s largest shareholder, Benchmark Capital - is making the appointments without consulting the rest of the board, according to the Wall Street Journal, which broke the story. He was granted control of three board seats as part of $3.5 billion investment from a Saudi wealth fund in 2016.

The appointment is particularly controversial because Kalanick is presently being sued by Benchmark, who claim he mislead the company"s investors in order to gain control over an additional board seat, and as such the appointments appear to be the latest salvo in Kalanick"s war with Benchmark.

As WSJ noted, the appointments could serve to push back against Benchmark, which also holds a board seat and led other members in a coup to push Kalanick out, which has proposed a new voting structure for shareholders allowing them to vote based on the size of their stake, rather than the current system which rewards the earliest investors with greater voting power. Travis confirmed as much in a statement to WSJ, when he said he believed the "full board should be in place" before boardmembers vote on the proposal.

“I am appointing these seats now in light of a recent board proposal to dramatically restructure the board and significantly alter the company’s voting rights,” Mr. Kalanick said in the statement. “It is therefore essential that the full board be in place for proper deliberation to occur, especially with such experienced board members as Ursula and John.”

It"s also notable that the appointments come just days after Softbank, which is in talks to potentially invest as much as $10 billion in the cash-burning ride-sharing company, reportedly struck a deal with Benchmark to do everything in its power to oppose Kalanick"s efforts to be reinstated as CEO if it becomes an Uber shareholder and gains a board seat.

According to Bloomberg, Uber expressed concern at Kalanick’s announcement: "The appointments of Ms. Burns and Mr. Thain to Uber’s board of directors came as a complete surprise to Uber and its board," the company said. “That is precisely why we are working to put in place world-class governance to ensure that we are building a company every employee and shareholder can be proud of.”

Uber’s board had been scheduled to vote Tuesday on a plan to revamp the company’s corporate governance, a person familiar with the matter said.

Kalanick remains supportive of Khosrowshahi, the person said. The former CEO saw the two appointments as a way to improve the company’s board of directors ahead of the impending vote on Uber’s governance structure, the person said.

To be sure, Kalanick has reportedly told friends and family that he has no intention of returning as CEO - though he might be interested in some kind of senior-level operations position. However, his actions would suggest something entirely different. Of course, considering the astounding run of scandals that erupted under his watch - from claims of sexual harassment, a federal bribery investigation, and the revelation that Uber intentionally blocked law enforcement agents from using its app - the notion of Kalanick returning as CEO seems almost incongruous. Since leaving, his legacy has only been further tarnished by the London taxi regulator"s decision to revoke the company"s operating license, citing abuses that largely occurred during his tenure.

But regardless of whether Kalanick"s ultimate aim is to return as CEO, there"s a more pressing matter at hand: Preventing Benchmark, his primary boardroom nemisis, from asserting even more control even as skepticism continues to grow about the mega valuation of the cash-burning, regulator-flouting Silicon Valley unicorn he helped create.

Disney Tumbles After Bob Iger Cuts Outlook

Once upon a time, Disney used to be the hedge fund world"s media darling. Not today, however, when at the BofA Media Communications Conference in New York, Disney CEO Bob Iger slashed the company"s outlook and said earnings in 2017 will be "roughly in line" with last year, sending the stock tumbling as much as 3.9%.

The entertainment giant, which has been under pressure to improve profit at its TV business amid criticism it failed to anticipate the competitive threat posed by Netflix and overpaid for sports rights for its ESPN cable network, was expected to post EPS growth of 3.2%. It will be lucky to get 0.0%.

Not even Iger"s promise that the parks business is having a “tremendous” year, or his promise that fiscal year "will be stronger than 2017" did anything to dent the wholesale revulsion against Mickey Mouse.

Iger"s other comment, that among DIS"s key priorities include a succession process, will likely further add to near-term stock concerns.

The other announcements made by Iger today, which had zero impact on the stock, included:

• ESPN app will offer a plus service for more programming, Disney’s
  Chief Executive Officer Bob Iger says at Bank of America conference.


• ESPN app will have 10,000 new live sporting events


• ESPN app will be “a sport marketplace platform”


• Iger says Disney will talk about app pricing in early 2018


• Iger sees Disney app being introduced internationally before in the U.S.


• Distributors will be able to distribute future Disney apps


• Iger says Disney’s direct to consumer app to debut in late 2019

Disney"s weakness has quickly translated to other large cap media stocks, which have quickly fallen in sympathy including CBS -1.7%, VIAB 1.4%, and FOXA -1.3%.

EXPOSED: Regulators suppress truth about inflation & Fed policy to destroy the US Dollar

For savvy investors the fact that the US Dollar loses value every year is no surprise.  CEO of JP Morgan (JPM) Jamie Dimon characterized this eloquently with an analogy of ‘musical chairs’ – basically that at some point some asset class has to blow up.  There’s actually a reason for this, because in a debt based fiat monetary system, fresh credit needs to be created on a growing basis even to payback the interest on previous credit, or the system will implode (systemically speaking).  The Fed knows this, bankers know this, CEOs – about 50% know this, Zero Hedge readers know this, most economists know this…

But this still remains a ‘secret’ of the FX business that regulators don’t want the average retail investing public to know.  Now we’ve proven there is a conspiracy to keep these self-evident facts secret:

1. Inflation is much worse than the Fed is saying


2. There is a solution to inflation which is called hedging

WHY they don’t want folks to know this – well there can only be one reason.  As we’ve exposed in previous articles, banks are making a fortune by people not understanding how FX works.  If someone tries to explain it, in a way based on facts and substantiated – that simply can’t be allowed.  If the Fed says inflation is 2%, then it’s official – inflation is 2%.  Who is anyone to question the Fed?

Here’s the phrase that the regulators don’t want you to read because it’s ‘misleading’ – that’s right – it’s misleading.  It was to be immediately removed:

[REDACTED]“Currency Headwinds” is not an excuse for losing billions of dollars.  Inflation is much worse than the Fed says, and QE impacts other markets.  FX is starting to become the most significant market component.  So we believe that it’s important anyone, not only investors, master FX. [REDACTED]

It comes as no surprise, although we feel obligated to inform people generally about the Fed’s plans.  The Fed isn’t involved in a conspiracy to make people poor (although it might seem that way) – it’s simply the Fed’s answer to monetary policy in an electronic world.  Practically new USD is needed every year not only in the US but globally.  Management of this global financial system isn’t as easy as going to an alternative system ‘backed by Gold’ for example.  But in any event, regulators don’t want investors to suspect that inflation is greater than what the Fed is saying – this allows them to continue their QE program in stealth.

The reality is for most people inflation is killing their quality of life, while product inflation is rampant wage inflation is stagnant – they earn the same every year (mostly).  This issue is further confused by people not understanding that the “Fed” is not the “Feds” as depicted in films – the Federal Reserve is no more Federal than Federal Express (Celente).  So if the “Fed” says inflation is 2%, then it’s like the US Government saying the weekly weather forecast via NOAA.  No, it’s not.  NOAA has no conflict of interest to tell us the weather – whereas the Fed has a huge conflict as their member banks have a profit incentive when it comes to inflation.  You see, if the banks can rip people off on small money transfers to foreign countries, meanwhile borrowing at rock bottom rates and inflating markets like real estate, stocks, and the rest – it will create a new oligarch class that even surpasses Russia.  In the last 10 years especially, the Ultra High Net Worth became the Super Ultra Galactic High Net Worth – the gap between the 1% and the 99% widened even further and QE is responsible for this.

So there is a vested interest to keep the wheels of this machine well oiled – and certainly don’t tell people about this dirty little secret.

To learn more about this checkout  Splitting Pennies Understanding Forex.

Elon Musk Doubles Down On AI Scare: "Artificial Intelligence Vastly More Risk Than North Korea"

With the world"s attention focused on the Korean Peninsula and the growing threat of global thermonuclear war, Tesla CEO Elon Musk has bigger things to worry about. In a series of "alarming" tweets on Friday, Musk warned the world should be more worried about the dangers of artificial intelligence than North Korea.

Having unveiled his apocalytpic vision of the world a few weeks ago...

“Until people see robots going down the street killing people, they don’t know how to react because it seems so ethereal,” he said.

“AI is a rare case where I think we need to be proactive in regulation instead of reactive. Because I think by the time we are reactive in AI regulation, it’s too late.”

“Normally the way regulations are set up is a while bunch of bad things happen, there’s a public outcry, and after many years a regulatory agency is set up to regulate that industry,” he continued.

“It takes forever. That, in the past, has been bad but not something which represented a fundamental risk to the existence of civilization. AI is a fundamental risk to the existence of human civilization.”

Musk was quickly admonished by another Silicon Valley billionaire as Mark Zuckerberg suggested Musk is exaggerating, noting:

“I have pretty strong opinions on this. I am optimistic. I think you can build things and the world gets better. But with AI especially, I am really optimistic.

“And I think people who are naysayers and try to drum up these doomsday scenarios — I just, I don"t understand it. It"s really negative and in some ways I actually think it is pretty irresponsible.”

And while the feud grows...

Musk took to Twitter to turn the fearmongery amplifier to "11"...

“If you"re not concerned about AI safety, you should be. Vastly more risk than North Korea,” he tweeted.

“Nobody likes being regulated, but everything (cars, planes, food, drugs, etc.) that"s a danger to the public is regulated. AI should be too,”

If you"re not concerned about AI safety, you should be. Vastly more risk than North Korea. pic.twitter.com/2z0tiid0lc

— Elon Musk (@elonmusk) August 12, 2017

Nobody likes being regulated, but everything (cars, planes, food, drugs, etc) that"s a danger to the public is regulated. AI should be too.

— Elon Musk (@elonmusk) August 12, 2017

His stark warning came at a time when the US and North Korea remain on heightened alert amid spiraling tensions on the Korean Peninsula. Earlier this week, both sides degenerated to open threats, demonstrating readiness to use coercive force if provoked to do so.

But Musk appeared to be more frightened by artificial intelligence, a rising phenomenon he is willing to put under control.

We look forward to Mr. Zuckerberg"s response.

Elon Musk Admits He Is Bipolar

In addition to persistent cash burn problem, Tesla CEO Elon Musk has admitted he is also bipolar.

In a series candid of tweets on Sunday, one day after delivering the first production Model 3, Musk replied to questions by other Twitter users about his mental state, shedding some light on the inner turmoil he struggles with. Asked "whether the the ups and down he had make for a more enjoyable life", Musk responded "The reality is great highs, terrible lows and unrelenting stress. Don"t think people want to hear about the last two."

The reality is great highs, terrible lows and unrelenting stress. Don"t think people want to hear about the last two.

— Elon Musk (@elonmusk) July 30, 2017

Turns out people did, and when asked if Musk was bipolar, he answered "Yeah" adding in a follow-up tweet that "maybe not medically tho. Dunno. Bad feelings correlate to bad events, so maybe real problem is getting carried away in what I sign up for."

@elonmusk are you bipolar?

— Fahad Uddin (@iFahadUddin) July 30, 2017

Maybe not medically tho. Dunno. Bad feelings correlate to bad events, so maybe real problem is getting carried away in what I sign up for.

— Elon Musk (@elonmusk) July 30, 2017

Musk said that his way of dealing with the lows is to "take the pain and make sure you really care about what you"re doing."

"If you buy a ticket to hell, it isn"t fair to blame hell…" he said.

If you buy a ticket to hell, it isn"t fair to blame hell ...

— Elon Musk (@elonmusk) July 30, 2017

His final tweet on the topic: "I"m sure there are better answers than what I do, which is just take the pain and make sure you really care about what you"re doing"

I"m sure there are better answers than what I do, which is just take the pain and make sure you really care about what you"re doing

— Elon Musk (@elonmusk) July 30, 2017

While unclear if related, last week Facebook founder Mark Zuckerberg and Musk traded insults over the threat artificial intelligence poses to human civilisation. As we reported recently, Musk reveals an apocalyptic vision in which he fears killer computers will wipe out humanity – a view shared by some of the world’s brightest minds.

Zuckerberg – who wants to read human thoughts at 100 words per minutes – claimed that super smart computers will help our species, rather than wiping us off the planet.

"Reverse Pay Gap?" Female CEOs Make More Than Male Peers

The latest blow to the mainstream media’s misleading narrative about the relationship between gender and compensation has been delivered by the Wall Street Journal’s annual report on CEO pay, which revealed that - country to popular perception - female CEOs of S&P 500 companies actually earn more than their male peers.

In what WSJ described as “an unusual reversal of the gender pay gap,” the paper found that last year, 21 female CEOs of S&P 500 companies received a median compensation package of $13.8 million, compared with $11.6 million for 382 male chief executives.

Contrary to popular belief, women who make it to the top rung on the corporate ladder likely find that their gender – if it has any impact at all – likely works in their favor because, as the WSJ delicately suggests, corporate boards don’t want to risk a PR disaster by underpaying a female chief executive.

Or as Robin Ferracone, head of Farient Advisors LLC, puts it: “Boards don’t want to shortchange their female CEO in today’s environment, when pay equality is such an issue.”

Female CEOs also benefit from the perception that “these women must be exceptional” because so few reach the corner office, Heidi Hartman, president of the Institute for Women’s Policy Research, told WSJ.

Male executives still outnumber their female peers by a considerable margin, but WSJ found that female CEOs made more money than male execs during six of the last seven years. What’s more, for the first time in history, three female CEOs rank among the top 10 highest paid corporate execs. They are Meg Whitman at Hewlett Packard Enterprise Co., Virginia “Ginni” Rometty at International Business Machines Corp. and Indra Nooyi at PepsiCo Inc.

Women-led companies also posted higher returns, on average, than male-led firms. As WSJ reports, S&P 500 businesses now run by women generated a median total shareholder return of 18.4% in 2016, compared with 15.7% for those commanded by men. Returns at female-led firms outpaced returns at male-run companies in three of the previous five years.

Of course compensation still varies widely based on the firm’s performance: At HP Enterprise, which posted a total return of 55% last year, CEO Meg Whitman earned $35.6 million during the year ended Oct. 31 – more than twice what she earned a year earlier when she was running the combined Hewlett-Packard Co.

Though, as WSJ noted, Whitman’s latest package included a special equity grant tied to the debut of HP Enterprise. Aside from such one-time items, “Meg’s target compensation has remained unchanged over the past three years,’’ a company spokeswoman said, describing part of her package.

Mylan NV had the lowest one-year return among women-led companies at minus 29%, and longtime CEO Heather Bresch’s compensation fell to $13.8 million down from $18.9 million the previous year.

To be sure, not all female CEOs are immune to criticism about bloated pay packages: IBM CEO Ginni Rometty earned $32.7 million last year, up from $19.8 million a year earlier, while her company saw revenue decline for the 20th straight quarter.
Her 2016 package included 1.5 million stock options, which she can’t fully exercise unless IBM’s stock price increases as much as 25%, according to the company’s proxy, but she can hold on to those options for 10 years.
About 46% of votes cast at this spring’s annual meeting opposed the company’s executive pay practices, which represents a record level of IBM investor opposition for a “say-on-pay” vote.
 

Sanctions, What Sanctions? Russian Credit Risk Collapses To 4-Year Lows

After more than three years of US sanctions (and almost a year of constant attacks from the western media) Russian credit risk has collapsed to its lowest level since September 2013.

As Bloomberg notes, high demand for Russia’s dollar-denominated assets is driving the cost of the country’s credit-default swaps back near record lows...

Investors with a bullish view on the nation’s debt sell the default protection and collect regular payments for the instruments rather than buying the country’s dollar bonds and receiving interest.

After sanctions caused a dearth of new dollar securities, CDS have become an increasingly popular way for investors to gain exposure to Russia, according Societe Generale SA’s Rosbank PJSC unit.

While Russian 10Y bond yields have tumbled back to 4.00% - the lowest since the election, Chinese bond yields have exploded higher (up almost 100bps to 3.7% - the highest since Dec 2014).

Perhaps Rex Tillerson was right after all - despite the liberal media"s desperation to paint him as yet another "friend of Putin" - when he questioned the efficacy of US sanctions on Russia this week during his confirmation hearings...

The long-serving executive said the Trump administration needs to review the efficacy of the sanctions and judge whether there might be better ways to try to constrain, or potentially woo, the Kremlin.

"Sanctions, in order to be implemented, do impact American business interests,” Mr. Tillerson said in response to questioning. "When sanctions are imposed, they are, by design, going to harm American business."

"In protecting American interests.…sanctions are a powerful tool. Let’s design them well... Let’s ensure those sanctions are applied equally.”

Wells Meeting Turns Into Screaming Match, Shareholder Kicked Out After "Physical Approach" Toward Board Member

What may be the most controversial annual shareholder meeting in Wells Fargo history, in which the board is seeking re-election after last year"s misselling scandal, devolved into a screaming match on Tuesday morning and was briefly halted following interruptions by angry shareholders as the bank"s chairman and chief executive tried to calm nerves ahead of a vote that could oust the majority of its board.

According to Reuters, at least one shareholder was ejected and the meeting went into recess after he made what Chairman Stephen Sanger called a "physical approach" toward a board member. Others were escorted out and the meeting was interrupted several times as investors demanded answers related to the bank having created as many as 2.1 million unauthorized accounts in customers" names without their permission.

"You"re saying we"re out of order. Wells Fargo has been out of order for years!" the first angry shareholder said, before being ejected. Board Chairman Sanger and Chief Executive Tim Sloan repeatedly asked him to sit down because he was out of order, and then called a recess, only to have other shareholders stand and shout.

The meeting is unusual in that a dozen of Wells Fargo"s 15 directors on the ballot, who have come under fire after it was discovered that employees in its retail banking business had been creating accounts under customer"s names without their knowledge for years, face a rare negative recommendations from Institutional Shareholder Services (ISS). The influential proxy adviser argued that the group, including Chairman Stephen Sanger, failed in their oversight duties, although Wells Fargo"s top investor Berkshire Hathaway has already voted in favor of the bank"s board. According to the WSJ the board is expected to remain having clinched a majority of the votes.

Wells Fargo"s guidelines require that directors offer to resign if they fail to receive a majority of votes cast. But in practice, directors who win with less than 80 percent support should consider exiting the board, said Charles Elson, a University of Delaware expert on corporate governance, Reuters notes. "If they"re below 80 (percent) I"d say they have a lot of soul-searching to do," he said.

The bank"s board and management have said steps taken to fix problems and punish employees responsible for abuses show there is now strong oversight, and that directors nominated deserve to be elected. But the public firestorm that hammered its shares and led to the resignation of then-Chairman and Chief Executive John Stumpf last year was not forgotten. They repeated those messages on Tuesday.

"It"s been a busy seven months but we are focused on making things right," Sloan said.

At most S&P 500 companies, director support averages around 95 percent of votes cast, according to pay consulting firm Semler Brossy. Typically a recommendation from ISS that investors vote "against" a director will reduce the support they receive by an average of 17 to 18 percentage points.

Should Wells Fargo directors win narrow majorities - between 50 to 80 percent of votes cast - the board would have to decide whether to accept any individual director"s resignation. University of Pennsylvania law professor Jill Fisch said a likely outcome, in the event of a close vote, would be for the board to bring in fresh faces over a period of months or longer. "From a business perspective that may be the best response you could make," she said. "You don"t want the whole leadership to be in flux."

"We Have A Serious Problem": For Jamie Dimon, This Is The Most Troubling Chart About The US Economy

As discussed earlier, Jamie Dimon"s annual letter this year was a departure from his usual optimistic sermons about the state of nation, dedicating an entire section in the 45 page letter to  describe that "something is wrong" with the US. And of all the items mentions, the following aspect of the US economy is what was most troubling to the JPM CEO. Not surprisingly, it deals with two of the biggest threats facing the US currently: demographics and labor, and shows the at least in one key economic metric, the US is now the worst among the entire universe of developed countries.

This is what Dimon said:

Labor force participation in the United States has gone from 66% to 63% between 2008 and today. Some of the reasons for this decline are understandable and aren’t too worrisome – for example, an aging  population. But if you examine the data more closely and focus just on labor force participation for one key segment; i.e., men ages 25-54, you’ll see that we have a serious problem. The chart below shows that in America, the participation rate for that cohort has gone from 96% in 1968 to a little over 88% today. This is way below labor force participation in almost every other developed nation.

If the work participation rate for this group went back to just 93% – the current average for the other developed nations – approximately 10 million more people would be working in the United States. Some other highly disturbing facts include: Fifty-seven percent of these non-working males are on disability, and fully 71% of today’s youth (ages 17–24) are ineligible for the military due to a lack of proper education (basic reading or writing skills) or health issues (often obesity or diabetes).

Incidentally, Dimon"s key concern was initially flagged here back in 2013 and most recently, last summer. For the remainder of the US economic problems listed by Dimon, please refer to the original article.

Musk Taunts Shorts As Tesla Hits Record Highs

Amid the stock"s best day in 6 months, pushing the taxpayer-subsized company to record highs, Tesla"s CEO Elon Musk has three brief words for some speculators...

Stormy weather in Shortville ...

— Elon Musk (@elonmusk) April 3, 2017

It appears "Pride goes before destruction, and haughtiness before a fall," was not a consideration for Mr. Musk.

CEO Pay Soars In 2016 As Employee Wages Continue To Stagnate

CEO pay increases took a brief pause in 2015 dropping to a paltry median of just $10.8 million with most getting a pay cut or a raise of less than 1.5%.  But, as the Wall Street Journal points out this morning, the CEO"s of America can once again rest assured that their families will not starve to death as 2016 pay soared nearly 7% setting a post-recession record.

Median pay for the chief executives of 104 of the biggest American companies rose 6.8% for fiscal 2016 to $11.5 million, on track to set a postrecession record, according to a Wall Street Journal analysis.

Twice as many companies increased their chiefs’ pay as reduced it, though a few high-profile bosses took substantial pay cuts, including Apple Inc.’s Tim Cook and General Electric Co.’s Jeff Immelt.

The higher pay was doled out as the stock market notched strong gains and corporate profits rebounded over the course of 2016. “If ever there was going to be a good year for CEO pay, it was going to be 2016,” said David Yermack, a finance professor at New York University’s Stern School of Business who studies executive pay.

As usual, operating results had limited impact on CEO earnings potential and some of the largest payouts went to CEO"s who were fired in 2016.

Some of the biggest paydays went to companies in transition—or even turmoil. Philippe Dauman, who was forced out as chief of media giant Viacom Inc. in August, made $93 million during the year. The total includes $58 million of exit payments, promised under his 2015 employment agreement. A Viacom spokesman declined to comment.

At Johnson Controls International PLC, Alex Molinaroli made $46.4 million in the year ended Sept. 30, more than double the $21.7 million he made the prior year. Last fall, he split off an auto-parts business that accounted for a significant part of Johnson Controls’ revenue and closed a $14 billion merger with Tyco International PLC. A Johnson Controls spokesman declined to comment.

Meg Whitman made $35.6 million in the year ended Oct. 31 as chief executive of Hewlett Packard Enterprise Co., which was created when she split Hewlett-Packard Co. into two companies in late 2015. That is more than double the $17.1 million she made a year earlier at the combined company.

Her latest package included a special equity grant tied to the launch of HP Enterprise. Aside from such one-time items, “Meg’s target compensation has remained unchanged over the past three years,’’ an HP Enterprise spokeswoman said, referring to a portion of the CEO’s pay package.

Thomas Falk of Kimberly-Clark Corp. received a 29% raise, compared with a 21% pay cut in 2015 and bringing his total compensation to $15.7 million in 2016 from $15.4 million two years earlier.

Mr. Falk’s raise came even as the maker of Huggies diapers and Kleenex tissues posted a shareholder return of -7.7% last year compared with 14% a year earlier.

A Kimberly-Clark spokesman said the company considers its three-year shareholder return of 25% and five-year return of 90% better measures of Mr. Falk’s performance.

And here"s how the top 20 highest paid CEO"s in America made out in 2016:

Much of the higher pay was awarded in various forms of restricted stock or stock options. The compensation increases have come about because rising equity awards have more than made up for declines in cash incentive pay, according to a separate analysis by Institutional Shareholder Services, the large proxy advisory firm.

While cash bonuses have fallen about 1.4% among the companies that have filed pay disclosures, stock awards have risen 7.4% and option awards have risen 3%, noted John Roe, head of analytics at ISS.

Of course, that"s hardly any consolation for the average American worker who just saw his real earnings collapse over the past two years and actually turn negative in 2017.