Equifax CEO Richard Smith steps down in aftermath of massive breach

Equifax Chairman and CEO Richard Smith stepped down Tuesday in the wake of a massive cybersecurity breach that exposed the birth dates, social security numbers, and other personal information of 143 million Equifax customers, The New York Times reports.

Paulino do Rego Barros Jr. will vacate his post as the company’s president of the Asia-Pacific region to assume the CEO duties in an interim capacity, the Times says. Equifax will consider candidates from both inside and outside the company as permanent replacements.

According to the Times, Mark Feidler will become chairman of the board.

“Speaking for everyone on the board, I sincerely apologize [for failing to protect the seized data],” Feidler said in a statement, per the Times. Feidler said, per the Times, that the board has formed a special committee to handle the breach.

Lawmakers, as well as the general public, have taken issue with Equifax’s failure to secure the data, and some have cast aspersions upon the company’s handling of the fallout that followed the breach.

Equifax set up a special-purpose website to provide information about the attack, and to help customers contain the damage. Among the website’s primary offerings was a tool by which a customer could enter his information and find out whether the breach had affected him. But the tool ran into a number of problems. Moreover, the company struggled to field the myriad calls that flooded its customer support lines.

The Times reports that three Equifax executives sold a combined $1.8 million worth of stock in the company in the days after the breach had been discovered but before it had been disclosed. Equifax said, per the Times, that the executives mentioned were unaware of the breach when they offloaded the shares.

Smith is the third prominent Equifax executive to vacate his post in response to the breach. The company’s chief information officer and chief security officer both stepped down September 14.

“Mr. Smith has been very cooperative and supportive of this approach,” Equifax spokesman Wyatt Jefferies said per the Times.

Smith had served as CEO since 2005. In his 12 years with the company, he more than doubled its annual revenue, the Times notes. He was renowned amongst Wall Street experts for his ability to develop innovative products, and for his sales acumen.

As of now, Equifax has not terminated Mr. Smith, but the terms reached prior to his departure allow the board to retroactively fire him for cause, the Times says. The company will provide neither severance nor accelerated vesting of stock options to Smith, and he will not receive a bonus for 2017 (Equifax awarded him $3-million bonuses in 2015 and 2016).

Smith will retain $18.4 million in pension benefits.

Smith is scheduled to appear at congressional meetings regarding the breach in the coming weeks: one held by the House Energy and Commerce Committee on October 3, the other by the Senate Banking, Housing and Urban Affairs Committee the following day.

Senator Brian Schatz of Hawaii, a leading member of the latter committee, issued a statement ordering Smith to appear for the appointment and admonishing the former executive for shirking his responsibility for the breach.

“A CEO walking out the door just days before he is to appear before Congress is an abdication of his responsibility,” Schatz said, according to the Times.

But, Jefferies, the Equifax spokesman, has indicated that Smith intends to comply with Congress’ demands. “If Congress asks him, he will go,” said Jefferies of Smith.

Schatz is one of the several senators who have, in the wake of the Equifax incident, advocated legislation that would give consumers more latitude to protect their credit information.

The FBI is currently leading a criminal investigation into the breach, the Times says, and attorneys general in 30 states have launched their own probes into the matter. On September 19, the Massachusetts Attorney General sued Equifax seeking civil damages and more compensation.

Featured image via Vimeo

Lyft nearly triples its coverage across the U.S. 

As Uber takes steps to recover from a string of allegations that called its corporate ethics into question, competing ride-share service Lyft is anxious to establish itself as a viable Uber rival, CNBC reports.

Thursday, Lyft nearly tripled its coverage across the U.S., adding 160 cities—for a total of 350—and 32 states for a total of 40. 94 percent of Americans, the company says, can now hail a Lyft ride in minutes.

The company claims to cover more of the US than any other ride-share service, including Uber.

Uber offers service in about 150 US cities. There are holes in Uber’s coverage across the Southeast—the company offers no service in Arkansas, Mississippi, or West Virginia—and the Northeast—Uber rides are not available in Delaware, Maine, Vermont, New Hampshire, New Jersey, or Washington, D.C. Uber does not operate in Alaska.

Lyft, by comparison, now serves nine cities in New Jersey, four in New Hampshire, one in Delaware (the state’s capital of Dover), five in Maine, six in West Virginia, and six in Alaska.

Unlike Uber, Lyft lacks service in South Dakota. Neither company serves Arkansas or Mississippi.

Lyft remains well behind Uber in terms of capital, ridership, and breadth of service, CNBC notes. Uber gives 10 million rides per day across more than 80 countries around the globe. Lyft, which operates in the US exclusively, reached one million rides per day in early July.

Since it began in 2009, Uber has raised $14 billion in capital. Lyft, which launched in 2012, has accrued $2.6 billion worth of capital.

But, the gulf between the two companies is narrowing, CNBC notes. Lyft gave more rides in the first half of 2017 than in all of 2016. The company’s share of the US ride-hailing market has jumped from 12 percent to 30 percent over the past two years.

CNBC says Uber continues to grow its ridership, but Business Insider reported in June that Uber’s growth—in revenue as well as in ridership—slowed in the first quarter of this year. Uber, privately held, rarely publishes ridership statistics or financial data.

“We’ve always been the underdog in the race against Uber. We’ve taken a lot of ground. We still are,” Green told CNBC.

Amidst Uber’s many scandals, Lyft is making an effort to double down on its friendly, wholesome public image.

“As we get service levels to parity and pickup times are equal, people prefer using Lyft,” said Green, per CNBC. ”They like that we treat our drivers better. They like that we treat our customers better. And they like that we have a brand that sort of stands for taking care of people, where Uber has done a lot to build the opposite type of brand.”

CNBC spoke to two drivers who each work for both Uber and Lyft in New York City: Syed Manzar and Karim Guernah. Both noticed a change in customers’ attitudes after news broke of Uber’s various scandals.

Nick Raif, who uses Uber and Lyft to hail rides in the Chicago area, told CNBC the unflattering news concerning Uber sometimes prompted him to use Lyft instead. The two companies provide comparable coverage around Chicago, he said.

Raef said he found himself willing to pay an extra dollar or two for Lyft on days when the news surrounding Uber particularly disturbed him.

But, Jan Dawson of Jackdaw Research contends per CNBC that moral considerations are of secondary importance to most customers.

“It is so tempting to think Lyft is gaining because people are taking a stand against Uber, but convenience usually trumps morality,” he said.

Uber is making an effort to repair its public image, as well as its relationship with its drivers. In July, the company launched an initiative dubbed “180 days of change.” As part of the effort, Uber aims to increase driver compensation, to offer drivers more flexibility, and to offer better support for drivers in the event of emergencies like accidents or passenger violence

The company, according to CNBC, has hired thousands of drivers to help ease each individual’s work load and has for the first time allowed customers to tip drivers using the app. (Lyft’s app has long afforded customers that ability).

Uber is also regaining stability in its corporate leadership. Tuesday, the company announced that it had at last hired a permanent CEO: Dara Khosrowshahi, who had served as Expedia’s CEO since 2005.

Featured Image via Flickr/Alfredo Mendez

 

Major Uber shareholder sues former CEO Travis Kalanick

Venture capital firm Benchmark, a prominent Uber investor, is suing the ride-hailing company’s founder and former CEO Travis Kalanick—who, under pressure from Benchmark and other shareholders, resigned as CEO in June amidst a number of scandals—to force him off of the board, Reuters reports via NBC News. The suit claims Kalanick “fraudulently obtained” power of appointment over three of the company’s board seats.

In 2016, the board voted to expand its size from eight to 11 members and gave Kalanick unilateral power to appoint the additional members. He used that power to install himself on the board following his resignation. In the suit, Benchmark, which controls 20% of the board’s voting power, says it would never have voted to allow Kalanick to fill the empty board positions had it been aware of his “gross mismanagement and other misconduct at Uber.”

The suit cites the mishandling of a rape case in which an Uber driver in India was the defendant; Kalanick’s alleged knowledge that an Uber engineer had stolen trade secrets from Google; and Kalanick’s purported creation of a “pervasive culture of gender discrimination and sexual harassment”  as specific examples of that “misconduct.”  The document also alludes to “a host of other inappropriate and unethical directives issued by Kalanick.”

The suit says Kalanick “intentionally concealed” that misconduct from the board so that he could secure the power of appointment for the three open board seats. The document claims Kalanick intends to use that power of appointment to “pack Uber’s Board with loyal allies in an effort to insulate his prior conduct from scrutiny.”

Benchmark invested in a fledgling Uber in 2011 and still owns 13% of the company. Based on privately-held Uber’s $69 billion market capitalization as of 2016, that stake is worth almost $9 billion.

Bill Gurley, Benchmark’s most senior active partner, led the firm’s original investment in Uber, served on the startup’s board for years, and was a mentor and confidant to Kalanick. However, amidst the federal investigation sparked by the sexual harassment allegations, Gurley led the effort to oust Kalanick from the CEO position. On June 21, one day after Kalanick’s resignation became public, Gurley resigned from Uber’s board.

Per CNBC, the suit surprised many investors around Silicon Valley; one called Benchmark’s move toward litigation “the nuclear option.”

Kalanick has released a statement saying the lawsuit “completely without merit and riddled with lies and false allegations,” and accusing Benchmark of  “acting in its own best interests contrary to the interests of Uber.” The statement calls the suit a “transparent attempt to deprive Travis Kalanick of his rights as a founder and shareholder.”

Erik Gordon, an entrepreneurship expert at the University of Michigan’s Ross School of Business, says the maligned former executive has a point with regard to Benchmark’s so-called selfishness.  “Even if you assume that Kalanick acted outrageously improperly, where was Benchmark when he was acting out?” Gordon said, per Reuters. ”Did Benchmark fight tooth and nail against Kalanick’s conduct, or were they willing to put up with it as long as the company’s valuation, and the value of their investment in it, skyrocketed?”

The Benchmark suit is just one of several challenges Uber is facing. Following former U.S. Attorney General Eric Holder’s investigation into the aforementioned sexism allegations, Uber lost several of its top executives. Moreover, many important figures in the company’s hierarchy are making their own decisions to step down. On Thursday, Ryan Graves, Uber’s first employee, announced intentions to step down from his role as head of operations and concentrate on his position as a board member. (According to Reuters, Graves was a steadfast supporter of Kalanick.)

Now, Reuters says, Uber’s leadership consists of a mere 14 people. The effort to fill the vacuum at the top of the company continues, but co-founder and chairman Garrett Camp wrote in a letter to shareholders that Kalanick is “not returning as CEO.”

Uber is also juggling a lawsuit from Alphabet’s Waymo over the aforementioned engineer who allegedly stole trade secrets from Waymo.

Featured image via Flickr/Tech Crunch

United CEO Says the Company can Learn and Grow from Dragging Incident

Despite all the constant fiasco that seem to plague United Airlines, the company’s top executive want to assure its investors that the airlines will continue to prosper while dealing with new changes brought about by recent events. One event was the forceful removal of a passenger that, thanks to social media, became a worldwide disaster.

United Airlines CEO Oscar Munoz, as well as two other executives, started the conference the conference call to talk about the quarterly earnings of United Continental Holdings Inc. The CEO and his group were forced to recognize the horrific confrontations that occurred on April 9th, which left 69-year-old Dr. David Dao injured and bloody.

Munoz stated that this incident has aroused question from many corporate travelers. Those are the travelers who pay top dollar for their plane tickets. His response to them was simply that the sales team for the airline was doing the best they could to addressing all concerns.

However, the Airline President, Scott Kirby, told analysts that it’s far too early to tell if the entire incident with the doctor hurt bookings for the company.

Yet Munoz thought the entire situation was a “humbling learning experience for all of us here at United and for me in particular.” In an address to those United flyers who seemed to have raised an eyebrow the company’s continuously scrupulous acts, Munoz extended his apologies and says that flyers “should expect more from us.”

It was no more than a week after Dr. Dao was forced to leave his seat by United employees. Dr. Dao was on a flight from Chicago to Louisville, Kentucky. According to his attorney, Dr. Dao suffered not only a sinus injury, but a concussion, a broken nose, and the loss of two front teeth.

The story goes like this. United Airline employees say that the flight was overbooked and room was needed for employees to sit. Employees went throughout the cabin asking for volunteers to leave the plane. They say up to $800 and a hotel stay was also offered. After no one seemed to volunteer, four people including the doctor were chosen. Yet despite the offer, he refused to give up his seat and take the next day flight.

The doctor and his wife were coming back from vacation in California. The two had boarded a connecting flight to head back to Louisville. Many other passengers shot footage of the encounter from different angles. Each video shows Dr. Dao getting loud with employees, but he is never hostile or violent. Suddenly, airport officers who had been called by United employees forcibly remove Dao from his seat.

In a statement after the incident, United says that they will no longer call on police to remove passengers unless the passenger poses a threat to their safety and others around them. United Airlines also said that they will enforce a requirement that has employees traveling for work should book their seats at least an hour beforehand. This will prevent any displacement of customers who are already on board.

Although United CEO Oscar Munoz has issued apology after apology, all his efforts seem to fall on deaf ears. It could have something to do with the fact that his immediate responses to the incident were as efficient as they should have been. In fact, Munoz made a statement not long after the incident with Dao saying that he would have to “re-accommodate” four United customers. The letter he issued to his employees was no better. He called Dr. Dao a “belligerent” customer who had “refused to comply” with employee requests to give up his seat.

Yet many seem to be wondering what will happen to the employees that asked Dao to leave his set? Munoz made another statement on Tuesday saying that “there was never consideration of firing an employee.” This comes in response to the rumor that the employees and even he would lose their jobs.  He even went as far as to call the entire thing a “system failure” and says that none of the employees were at fault.

That, on the other hand, isn’t how many people see it. Since the video of Dr. Dao, visible shaken, mouth bloody, surfaced all over the internet public outrage has reached all the way to China. Many are accusing United to racism due to the unjust treatment of Dao.

To smooth things out, Munoz met with the Chinese consulate in the U.S. after the incident. United has hopes of increasing their business with international travelers. Munoz says that has a scheduled trip to China in the next few weeks and hopes to discuss the issue there too.

Yet things won’t go away that easily. While Munoz sent out a personal letter to United highest spending customers who had nothing but support for the airline, Dao is already acting against the Chicago airline. Dao has hired attorneys in what is estimated to be a multimillion-dollar lawsuit against United. Dao and his attorney say that due to his being dragged off the plane, Dao will have to have reconstructive surgery to fix the damage.

Yet at the end of March United announced that is net income was down to $96 million, which is just 31 cents a share. That’s a considerably low number compared to the $313 million, 88 center a share, it pulled in the same time last year. To earn at least 41 cents a share, United had to get rid of a few things.

Those things include the $37 million in benefits and severance. The airline’s expenses also increased by 7.9 percent which is up to $8.1 billion. That increase was mainly due to the rise in fuel prices and the increase in the cost of labor since new union contracts were signed.

United also claims that to increase their market share they need to bring in more domestic passengers through regional carriers. The company also says it wasn’t to increase its business in Latin America.

But when it comes to the recent dip in United Continental’s stock, many analysts aren’t sure whether it was due to the Dao incident or the earnings report. On Tuesday, United Continental Holdings shares dropped from $70.77, which was Monday’s closing price, to $67.75.

While the event that took place with Dao, could have happened to any airline at any time, Seth Kaplan, the managing partner of Airline Weekly says that “United is under performing.” All we can watch and see how United bounced back from this recent fiasco.

United Passenger’s Actions Called ‘Immature?’

Things with United Airlines seemed to cool down after the airline kicked two young women off of its flight for wearing leggings. However, just this Sunday, the airline suffered another fiasco.

It was Sunday evening that a video of a man being dragged off of a United flight began floating around social media. The man was removed from the flight not only because it was booked but because United had to make room for its own employees.

This incident follows behind one that happened just a few weeks ago. United prevented two girls from boarding their flight due to the fact that they were wearing “form-fitting” leggings. While this and the recent incident has most of the internet in quite a stir, United says that it always attempts to “do a professional job.”  “But not everyone on the plane is professional,” is what former United Continental Holdings Chief Executive Gordon Bethune told CNBC.

As far as the two young women were concerned, United said that they were “representatives” of the company and dress code was mandatory for their travels. But what are the airline’s views on Sunday’s incident?

Bethune also went on to say that the man’s “immature” display was quite upsetting and that it was now up to United to issue an apology. He told a source that it would be best if United CEO Oscar Munoz made an apologetic statement. “I’m sure there will be reconciliation…some effort to show they care about passengers,” Bethune continued.

And it didn’t take long after the incident for Munoz to make a statement. He said, the whole thing was “an upsetting event to all of us here at United. I apologize for having to re-accommodate these customers.”

Yet while some can hardly believe that this kind of thing would be allowed, experts say that this isn’t too uncommon for airlines.  Andy Swan, who founded the social media monitor LikeFolio told a source that many airlines have a “low happiness level” when it comes to their passengers.

Public relations complications like this one are “nothing new” Swan even said. That could have something to do with the fact that United Continentals stock wasn’t all too negatively affected by the incident. In fact, shares actually rose by 1 percent.

The reality is, travelers buy their plane tickets based on whichever airlines offer the lowest prices. Unlike retailers or fast food chains who have to fight their way back to customer satisfaction, things like brand image don’t really faze airlines like United.

Munoz also said in his statement that United would be working “with a sense of urgency to work with the authorities and conduct our own detailed review of what happened.”

 

J.C. Penney Fall in Sales Causes 140 Store Closures

J.C. Penney can be added to the list of retailers closing some of its stores. Many consumers have shifted their focus to online shopping which has lowered the number of sales in many brick and mortar stores.

Recently, however, the 114-year-old retail veteran company says that about 140 of its 1,000 stores will be closing sometime around June. On Friday, a J.C. Penney executive said that in order to focus more on the stronger stores that bring in better profit, the company would cut weaker locations. The company also will offer a buyout to the nearly 6,000 employees of those 140 stores.

J.C. Penney adds its name to the bottom of a long list of long time retailers who have recently closed a great number of stores. Some of them even closing all stores for good. Sears and Kmart not only took out a rather large loan to keep themselves afloat but announced the closing of 108 Kmart stores and 42 Sears locations.

The Limited closed their doors for good after years of service to dedicated customers. Macy also had a round of closings. One hundred of its locations closed, and the company says it is exploring the options for what real estate is left.

These retailers admit to losing major sales during the holiday due to online retailers like Amazon who snag consumers with their easy shopping methods and fast shipping.

Yet the news hasn’t been all bad. Company’s like TJX who owns discount retailers like TJ Maxx and Marshall’s all over the U.S. and Canada said they plan to open at least 1,400 more stores. TJX also says it has plans to go international spanning out through Europe and Australia.

J.C. Penney chief executive Marvin Ellison says that the closings will help the company “effectively compete against the growing threat of online retailers.” J.C. Penney has online ordering and in store pick up that will be used to its full extent at the remaining locations. In fact, it’s reported that 77 percent of J.C. Penney’s online orders went through a physical store for pick up in 2016.

Ellion is a former Home Depot executive who took over J.C. Penney back in 2015. Since then he has done his best to give the company a turnaround. This is shown as the company has tried to let go of its reliance on apparel sales by adding Sephora to its locations. J.C. Penney has also added more appliances throughout its stores to increase the sale of items used in the home. All these actions are to reverse the failed overhaul brought on by the former CEO Ron Johnson. Johnson’s attempt to make the company hip caused an upend in pricing.

Flickr/Jamie Robinson Faber

Yet even though retailers did see a surprisingly big number of sales in 2016, online retailers snagged most of the large numbers. Consumer spending online rose by an estimated 11 percent while department stores saw a drop in that number by 6 percent.

Many believe that these closing are a good thing for J.C. Penney. While it will hurt the number incoming customers that will turn to the store as an alternative for the closing Sears and Macy locations, most analysts believe that this was a much-needed move for the company.

However, in the market, shares of J.C. Penney fell by 9 percent to $6.25, making this a 25 percent drop for the whole year. The market capital for the company is also at $2 billion which is lower than the $12.55 billion it reported last fiscal year and only makes a $1 million gain for the company.

Despite J.C. Penney joining the closing list, its rival Kohl’s says it has no future plans to close any of its 1,150 stores. Instead, the company’s CEO Kevin Mensell plans to lower the chain’s inventory as well as remodel locations. The company will also relocate some of the weaker stores to smaller areas.

While some stores will soon be disappearing from malls all over the country, others are still holding on. While L Brands Inc. who owns company’s like Bath and Body Works and Victoria’s Secret, say it expects sales to fall by 25 percent, both companies have managed to avoid mass closings.

Even CEO of Gap Inc., Art Peck, made a statement regarding store closings saying, “If you read the headlines today, you’ll see the words dead, dying, sick. We are none of those. We are healthy and strong and have a plan and clear direction.”

Sony Says Its Not Selling Its Picture Business

Despite the rumors surrounding Sony, the company announced on Thursday that it was not selling its picture business. The company struggled through a $1 billion writedown that was caused by the low demand for movies on disc. This ended up having Sony cut at least 11 percent of Sony’s yearly profit that estimated around 240 billion.

This percentage cut would not have affected the company so harshly had it not been for a few factors. One would be the weakness of the yen. The yen has recently been reported at its lowest in a while. The other factor that added to the severity of the cut was the demand for Sony’s image sensors by Chinese smartphone makers. The image sensor business has just recently been trying to get back on its feet from recent earthquake damage.

Yet the section that creates the image sensors, the semiconductor division, estimates a loss of around 19 billion yen in operations. That’s a relatively low number compared to the predicted 53 billion. Even though things weren’t ideal for Sony, the company holds hope of turning it around by making use of its existing movie characters and adding sales channels.

As far as its picture business goes, Sony deals with media, television programs, and other networks. Those aspects of the business were the underpinned against its electronics business which struggled against Asian rivals.

The business has more than enough potential to grow if it expands in countries like China. The movie business makes up a good 10 percent of Sony’s sales. However, it still seems that in the box office its movie studios still lag behind its rivals.

After receiving encouragement from a spin-off of its movie business, Sony sold a few of its movie assets. The electronics part of its business is also faring a bit better than before and bringing in profit. Kazuo Hirai, Chief Executive Officer, has made more a presence in Sony Entertainment which, in the future, could aid in the rise in sales.

Trump Claims Victory Over Sprint’s 5,000 New Jobs

Sprint says it will “create or bring back” nearly 5,000 customer care and sales jobs for Americans. Another company called OneWeb also plans to create around 3,000 jobs for Americans.

President-elect Donald Trump claims to take credit for both announcements.

SoftBank, a Japanese company that owns controlling stake in Sprint and has large investments in OneWeb, had announced it had a 50,000-job plan this winter. Whereas SoftBank had announced it would make $100 billion in technology investments long before Trump won the election, it didn’t announce the addition of jobs until December.

Although some of its jobs are still headed for Mexico, Sprint’s job announcement follows a month after Trump helped the company retain nearly 800 jobs. Sprint did, however, cut 2,500 call center jobs earlier in the year.

Despite cutting jobs, though, Sprint, along with SoftBank, says it is in full support of Trump. Sprint CEO said that the company is “excited to work with President-elect Trump and his administration to do our part to drive economic growth and create jobs in the U.S.”

OneWeb CEO, Greg Wyler, says that Florida-based will bring “lots of skilled manufacturing jobs” and that the company has hopes of bringing internet access using small satellites. Wyler did say that his biggest concern as a business owner is taxes and hopes Trump has plans of lowering them in the next four years.

 

Will $200 Million be Enough to Keep Sears in Business?

At the busiest time of the year for all retailers when cash intake is at its peak, Sears Holdings announced that it will obtain a loan from CEO Eddie Lampert in order to keep the company above water. Thursday Sears said they received a $200 million loan that has the potential to be expanded to $500 million.

This loan from the hedge fund guarantees the lenders will be paid should Sears default on its debt. This request also comes after Sears announced that it will also be closing more stores. The recent quarter has not been too nice for the retailer. Revenue fell 13% and the loss for the company rose from $454 million to $748 million last year.

This isn’t the first time that Sears has needed cash. Not including its recent request, Sears has borrowed an estimated $800 million from the hedge fund in order to keep the retailer’s doors open.

According to Business Insider the CFO of Sears commented saying, “As Sears Holdings has consistently shown, we will take actions to adjust our capital structure, generate liquidity, and manage our business to enable us to execute on our transformation while meeting all of our financial obligations. This new standby letter of credit facility further demonstrates that Sears Holdings has numerous options to finance our business strategy.”

Starbucks CEO Steps Down

CEO of Starbucks Howard Schultz is stepping down and handing the reigns over to current Chief Operating Officer Kevin Johnson. Johnson has been with the company seven years before joining the executive board about two years ago.

Schultz has been with Starbucks for over twenty years and is accredited with bringing the company to new heights. After joining the company as marketing director in 1982, Schultz modified the way Americans drink coffee and opened a door for a social gathering place that gets people out of the house. Schultz later left the company to open Il Giornale, his own coffee shop. That didn’t last long, however, and he came back to buy the Starbucks brand, changing his store’s name to Starbucks and expanding the company to over 25,000 shops globally.

Investors aren’t in favor of Starbucks spending over $100 million on a new project if the economy goes south. Schultz will continue to create a new brand of high-end coffee. Schultz believes that this new high-end brand will be the largest change that Starbucks has received in 20 years.

The inspiration for this new project came from the Starbucks Reserve Roastery and Tasting Room in Seattle. This 15,000 square foot coffee shop uses a siphoning process that produces a 12-ounce cup of coffee for $12. Schultz plans to open at least 30 more large facilities like the Roastery and at least 1000 smaller shops similar to the Roastery. However, Starbucks plan to further expand over 25,000 of its stores to offer similar options that are available in shops like the Roastery.

Although Schultz is stepping down as CEO this April, he will remain on as chairman and says this new change “gives me the entrepreneurial freedom to do what I think I do best.”

Wells Fargo CEO Forfeits Majority of 2016 Salary and $41 Million in Stocks

Wells Fargo has been getting a lot of attention lately for the recent seemingly neverending issues with their practices. As the company faces some serious criminal allegations, some employees of the company have been taking some measures to rectify things. According to CNN, the CEO of Wells Fargo is giving up $41 million dollars in stock awards. This news has officials as well as patrons of the bank looking at the company’s practices once again.

The news arose on Tuesday. CNN is reporting that the company’s CEO, John Stumpf, is going to forfeit the majority of his 2016 salary along with the $41 million dollar bonus he was supposed to receive as a bonus. In addition, another Wells Fargo executive will be suffering from some wage pullbacks as well. Officials have also been reporting that Carrie Tolstedt will also be losing some of her wages, as she is also leaving the company. Though she was scheduled to leave the company for her retirement, due to the recent controversy she has pushed up her exit from Wells Fargo.

Wells Fargo has been turning heads all over the nation due to the creation of fake accounts recently coming to light. CNN reported earlier this month that employees of the company were not only putting in unauthorized credit card applications to get bonuses, but the employees were also creating fake checking accounts to make goals and receive bonuses from the company. The company will have to reimburse all those who have been affected by the illegal practices.

Wells Fargo is a bank that many people in the United States as well as the world use and are familiar with. The company is making efforts to not only restore its good name but to regain the trust of its loyal customers. As the changes continue to be made, it will be interesting to see how the company will be able to recover.

It’s Time for Women’s Empowerment!

Empowerment is not only a word that needs to be a part of education, but it also needs to be on mentioned in the War on Sexism. I heard a  man once say to a woman,” You are one of those…” because she spread the word of empowerment to others.

I could not believe what I heard. Later  that night I thought about the words that were said, about how that woman was “one of those.” One of what, may I ask? I think it is time for both of the sexes to talk about women’s empowerment.

Firstly, men need as much empowerment as the girls. It should be “even steven” on both sides, but it is not. If something is not done soon we may not have time to solve the issues at hand. Our economic environment depends on this working out, and we keep pushing the sexes away from each other. If we give attention to one sex, we need to show the other the same amount of attention.

Via Flickr/The Library of Congress
Via Flickr/The Library of Congress

 
It is imperative to empower women through education. Women do not have to give up their educational goals. They can have it all while taking care of themselves and their family.

Unfortunately, tons of women do not have the drive or the know-how. This is the normal standard of life for some women on a daily basis only because they allow the standard to continue. They let their husbands pay for everything and  they have no clue what is in their bank account. It is time for women to take some initiative. By doing this, it helps break the gap in the workforce between Adam and Eve. When more women work it increases our economy, and that is what is needed to get America off her butt again.

Men also need to change! Why not encourage women? They need to let go of being in charge and let the ladies do what they can do. Women can do the same things men can do. Men can do more than what a ” man” is suppose to do. There is more job growth when everyone plays nice!

Also, why do you need to pass the family business on to someone because they have the same last name? Most of the time family owned businesses that are passed down by generation end up failing. So instead of allowing DNA  to be the factor in giving a job, pass it down to someone that will take your legacy to the highest. If there is not much pressure when passing down the family-owned business then the children can choose to follow their own career paths. When you are doing what you love, it’s not working. There is the possibility of love, life, and labor being in the same sentence.

Men need more options and don’t need to feel the pressure to do what is expected. Men do not need to pay for everything and work alone, and they should be educated. Men have the same issues, but they’re on a different spectrum. Not having an education because you have to work and pay bills should not even be in the thoughts of Americans.

Only 19 % of Congress is made up of women. There are only 26 female CEO’s listed in the Fortune 500. There is a double standard and nothing is being done about this. The main issue is the lack of education in regards to book learning, finances, and health.

So, I think it is time for a change, and maybe it is the time we see how the ladies hold up next to a man. Women have man’s rib so why not give us a shot?  Let’s let Ronda Rousey fight Floyd Mayweather and just see where this goes. Let’s start this empowerment movement with a bang or a pow but most definitely a shot. Alternatively, we should keep it simple and look at what is missing from the bigger picture and see how to improve and not hold each other back. We are all fighting for the same thing in the end.

 

Photo via Flickr/Christoph Lehmann

Founder of GoPro Becomes the Highest Paid CEO in America

Woodman, 39, has officially been determined the highest paid CEO in America with his product making him $284.5 million in stocks at the end of 2014.

Though he may not have received all the money quite yet since it is given to him in monthly payments through a couple years he is still ranked at number 1 in the Bloomberg Pay Index.

The GoPro was an idea that came from his own hobby as a surfer. He wanted a camera he can use to film action scenes of him surfing. He did just that with the current worth being nearly $6 billion.

He first introduces his product to Wall Street in June of 2014 and it quickly grabbed the eyes of all investors.

The GoPro launched its IPO at $425 million making the maker’s share value at $24 per product. It quickly raised and ended up being valued in the triple digits.

Woodman possesed stock before the IPO even launched. Filing says he received 4.5 million restricted stock units.

At the end of 2014 Bloomberg estimated Woodman’s shares were worth over $200 million.

Not too impressive but still high enough to make him top paid CEO.

Yet, Woodman is not expected to make as much in the following year. So will he keep his top CEO position?

Even Michael Pachter, a GoPro analyst at Wedbush Securities says, “Nobody is worth that much–except maybe Steve Jobs back in the day.”

Patcher explains that Woodman most likely will not make the same salary as he did in 2014, yet still receive several millions. His wealth will all be determined by the status of his stocks.

Patcher adds, “Nobody begrudges anyone’s stock gains, especially founders.”

For now Woodman remains the rising star, it is up to the next big founder and/or CEO to come up with the next big craze of the year.

 

New Bloomingdale’s CEO, Tony Spring, Outlines Future Plans

Tony Spring, the new chairman and CEO of Bloomingdales appointed in February, sat down with Women’s Wear Daily to discuss his plans for helping the department store grow and flourish in the upcoming months and years. The hands-on CEO has worked with the store for 27 years, starting as a trainee, advancing as a home buyer, and climbed on to take on various top marketing, stores, and operations jobs.

Among his developments as CEO, the September 10 launch of what is called 100% Bloomingdale’s, might be the biggest yet. The collection features over 1,000 styles designed for and sold exclusively at Bloomingdale’s by 100 designers and labels. Designers and brands collaborated directly with Bloomingdale’s buyers and fashion directors to create products available at the department store. It should be quite exciting to see what the collection entails.

While there are currently 38 stores – 1 overseas in Dubai – and 13 outlets, Spring also revealed plans to open new locations. The stores include units in Ala Moana, Honolulu, to open in the fall of 2015, in the Mall at Miami WorldCenter in Miami to open in the fall of 2016, and what he called “the store of the future,” to open in StandFord Shopping Center in Palo Alto, CA. this October. The store aims to mix more brands and have technology more involved in the shopping process. This includes opening “smart fitting rooms” that are equipped with iPads so costumers can call for employees for assistance in sizing, read product reviews, etc.

Spring talked to WWD about growing and developing not just its flagship locations, but also developing “additional full-line stores, additional outlets, and … bloomingdales.com.” There could be more openings of smaller locations like the ones in Soho and Santa Monica. On international expansion, Spring quotes: “We can have more stores internationally. I am not going to give you specifics. We are not pressured to open 10 more outlets, or 10 international stores by tomorrow. Looking over the next five to 10 year, I would be surprised if Bloomingdale’s doesn’t have a larger international footprint.”

The new CEO plans to focus on growth and relationships between the store and its designers and costumers. He told WWD: “There’s an evolution, not a revolution. I don’t think we need to sharpen our image – we need to sharpen our game,” Spring said, referencing the success of his predecessor as CEO Michael Gould. He continued, stating that it is his mission “to continue to build, to create a new sense of opportunity. This is not completely different. It is the next chapter in the continued successful evolution of the Bloomingdale’s brand. Change is inherent in this business.” He added.

 

 

Target Names Pepsi Executive Brian Cornell as New CEO

Target Corp. has hired PepsiCo Inc. executive Brian Cornell as its new CEO. According to USA Today, this is the first time Target has hired outside of its corporate branch, and it is looking to bring in a fresh perspective following former CEO Gregg Steinhafel’s business difficulties.

The new head honcho has come at the perfect time because Target has been struggling to repair itself from complications in its Canada stores as well as other concerning commerce downfalls. Cornell replaced interim CEO John Mulligan, who stepped in after Steinhafel stepped down, according to The Huffington Post.

“As we seek to aggressively move Target forward and establish the company as a top omnichannel retailer, we focused on identifying an extraordinary leader who could bring vision, focus and a wealth of experience to Target’s transformation,” said Roxanne Austin, interim non-executive chair of the board, according to USA Today.

Target is in desperate need of a transformation after the holiday season brought a data breach that drove customers away. The Wall Street Journal reported that Target has 1,900 stores in the United States and Canada, and Cornell has big decisions to make in order to effectively bring business back to these stores.

Cornell’s plan of action is still underway, but he remains confident in Target’s foundation and its potential to regain a positive reputation. “Target is full of talented individuals, and Target guests routinely share stories of their personal love of the brand. These are powerful assets,” said Cornell, according to The Wall Street Journal.

Cornell officially begins his CEO duties on Aug. 12.

 

 

Laura Geller Beauty Hires Industry Expert as New CEO

Laura Geller Beauty announced this week that it has appointed Elana Drell Szyfer as the new CEO of the company. Elana has many years of expertise in the field with an impressive résumé that reaches to Estée Lauder, L’Oreal and Avon, according to Jewish Business News. She plans to continue on with the company’s revamp and global expansion of its branding image.

Former CEO Alyce Cucurullo informed the Laura Geller team and key partners of her exit in an email that stated, “I’m happy to report the building blocks have been laid; the core team is in place; and the first phase of our rebrand is complete and ready for its public debut this summer. It is now in the hands of my successor, Elana Drell Szyfer to lead the very talented LGB team forward.”

According to PRNewswire, Szyfer was also hired as an Operating Advisor at Tengram Capital Partners, an investor of Laura Geller. Both companies are thrilled with Szyfer as a new addition and have confidence with what she will bring to the table.

“I am very excited to welcome Elana on board. I am confident that her significant industry expertise and leadership will take the brand to the next level. After founding this company over twenty years ago, I am delighted to see the brand’s recent evolution and am looking forward to the growth that Elana will bring,” said Laura Geller, Founder of Laura Geller Beauty, according to GCI.

Szyfer’s start date was June 30, and so far, everyone seems to be on board with the new head honcho.

 

 

Microsoft CEO Refines Company Priorities

Microsoft’s CEO Satya Nadella is shifting the company into a new dynamic. Former CEO Steve Ballmer had previously implemented strategies for the business that Nadella is now out to change. According to PCWorld, Ballmer had fixated Microsoft’s attention to a “devices and services” theme, which Nadella wishes to adjust.

“While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy,” Nadella said in a recent email to all his employees.

Nadella’s goal is to reinstate core values into the company and to demonstrate that Microsoft is “the productivity and platform company for the mobile-first and cloud-first world,” according to the email.

Many feared what this shift would entail, but The Verge reported that even with the fundamental modifications, products such as Xbox, Surface and Windows Phone would not be eliminated.

“We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft,” Nadella said, according to The Verge.

This presumed business value is going to come in part from Nadella’s strategy to redesign product teams. The Verge explained Nadella’s desires to speed up engineering processes while upholding the excellence of the software.

Microsoft is on the road to forming a new philosophy in and of itself. Just as Nadella said in his email, “Our ambitions are bold and so must be our desire to change and evolve our culture.”

 

American Apparel Narrowly Escapes Bankruptcy with Shareholder Deal

American Apparel Inc. is holding on for dear life. It has just made a deal with shareholder Standard General that will financially save the company from spinning into bankruptcy. According to Los Angeles Times, the retailer has agreed to receive $25 million from the investment company in order to handle the monetary concerns and bring in a new management board.

The deal is set to eliminate founder Dov Charney and other members from their board positions, according to Mashable. The board of directors removed Charney from CEO in June after poor business judgment and lawsuits with female employees. Mashable reported that Charney might be fortunate enough to return to CEO, subsequent to an examination of his actions. Until then, however, he will remain as a “strategic consultant.”

 

Read also: American Apparel CEO Dov Charney Canned for Sexual Assault — Company Struggles with Debt

 

Hence, American Apparel is putting full trust in Standard General—especially after it lost $270 million in its last three fiscal years, according to The New York Times.

“This truly marks the beginning of an important new chapter in the American Apparel story,” said Allan Mayer, a board co-chairman, according to The New York Times. “With the support of Standard General, we are confident the company will finally be able to realize its true potential.”

Standard General controls approximately 44 percent of American Apparel, and it has stressed that keeping American Apparel’s made-in-the-U.S. standard is of great concern. Loyalty to Charney, however, is not its first priority.

“The best way forward is to build a brand independent of the founder’s name,” said Anne Olderog, director of brand consulting firm Vivaldi Partners Group, according to The New York Times.

American Apparel is on its way to a big change, and it appears to be that this transformation will be a beneficial, two-way road.

 

 

Fields Named Ford’s New CEO

It has been a good week for Mark Fields. Being bumped up to CEO of Ford, Fields waves goodbye to his old position as chief operating officer. He will be taking Alan Mulally’s vacant position, as Mulally retired Tuesday, July 1, according to USA Today. There is a lot of chatter about the new adjustment, but there seems to be high hopes for Fields’ success.

Ford wasted no time acknowledging Fields as a highly esteemed individual. CNN reported his pay increased from $1.54 million as COO to $1.75 million on day one of being CEO. There are not many people who would be less than ecstatic with a 14 percent pay increase in 24 hours.

“Ford also granted Fields a performance-tied bonus that could be worth $3.5 million, and 710,227 stock options, according to the filing,” stated CNN. Fields received $10.2 million in total payment during 2013, and Mulally was granted $23.2 million. It looks like Fields will be obtaining a substantial salary in more ways than one.

“This is not jaw dropping for the executive compensation world. This reflects a decision by the board to raise his 2014 compensation to CEO levels, but they haven’t pushed it to stratospheric levels,” said Gary Hewitt, managing director at New York-based GMI, in an interview with Bloomberg News.

The only question is if Fields will do his job as thoroughly as Mulally did. Most signs are pointing to yes, as Fields helped Mulally save the company and lead it through potential bankruptcy and other financial dilemmas, according to CNN.

Mulally is set to keep Ford’s company jet service and housing through Aug. 31.

 

 

Higher-Paid CEOs Perform Worse

A recent study by Michael J. Cooper of the University of Utah, Huseyin Gulen of Purdue University and P. Raghavendra Rau of the University of Cambridge have determined that higher-paid CEOs do a worse job than their lower-paid counterparts. According to the study cited by USA Today, CEO pay has increased 725 percent since 1978, while regular worker pay has gone up only 10 percent. As it turns out, it is not just the common worker who thinks CEOs get paid too much, the data agrees too.

A high-paid CEO is looked at like any big name superstar athlete. Corporations bring these skilled individuals to steer the ship towards a successful financial future. Cooper, Gulen and Rau would tend to disagree. They have proven that in the long run, the majority of highly paid CEOs end up losing the company money rather than making it. In fact, those in the top 10 percent of the pay scale end up losing their company up to 8 percent in revenue. They also determined that the longer the CEO stays in the position, the bigger the negatives become.

The researchers even believe they have come to understand the source of the phenomenon. They believe it all comes down to overconfidence. They argue that acquiring so much personal wealth would lead anyone to believe that they must be doing well at their job. The overconfidence therefore serves as the catalyst for poor decision-making that may lead to long term consequences they can not immediately envision.

The study explained, as reported by USA Today, “Higher-paid managers exhibit behavior consistent with overconfidence. Further, these overconfident CEOs invest more, engage in more mergers, and experience greater negative returns to the announcements of these mergers relative to other CEOs. Most importantly, we find that firms with highly-paid CEOs earn significantly lower returns when the CEO is also overconfident.”

One example the study cited was the British Petroleum oil spill, which came about by then-CEO Tony Hayward taking several cost-cutting short cuts in the rigs’ construction. The study also cited GM who has suffered for the last decade from CEOs who have declined to recall vehicles in favor of saving money. GM is in the midst of settling one such recall lawsuit right now.

 

Read also: GM Initiates Recall in China

 

Cooper, Gulen and Rau explained that CEOs often create a “yes-man” culture, even if accidentally, and they have no one to tell them when they are making a bad move. These CEOs see themselves as slaves to the shareholders who demand short-term rewards even if it creates trouble for the company down the line.

At the moment, there is very little that can be done to reign in CEO salaries. When speaking with Forbes, Cooper explained a “clawback” policy that would tie a CEO’s earning power to the financial status of the company. Still, there are very few companies that would be willing to change their current models.

 

 

 

 

 

 

 

 

Photo: photospin stock/file