DealBook Briefing: 1,188 Years to Earn $22 Million at Walmart (Unless You’re the C.E.O.)

Mr. Weinstein will have to put up $1 million in cash, surrender his passport and agree to an ankle-monitoring device as part of his bail package. But the charges may not be the last against him, according to the NYT:

An investigative grand jury, still convened, will look into other sexual assault allegations against Mr. Weinstein as well as possible financial crimes relating to how he paid women to stay silent, people familiar with the proceedings said.

The fallout from the #MeToo movement hasn’t stopped yet. The actor Morgan Freeman apologized after several women accused him of sexual harassment.


Mark Zuckerberg of Facebook.

Yves Herman/Reuters

Europe is now the world’s data cop

Today, the E.U. introduced its strict new data rules, known collectively as G.D.P.R. Though meant to define how citizens’ data is handled, the borderless nature of the internet means that the effects will be felt globally.

Silicon Valley firms, in particular, must change their ways to accommodate the regulations, and could feel their power crimped. President Emmanuel Macron of France urged those firms to embrace the rules. (Mark Zuckerberg insisted that Facebook had “always shared” their spirit.)

The sweeping nature of the new rules means that many organizations — and regulators — aren’t ready to comply. Some websites are simply blocking E.U. users for now.

But the E.U. is just getting started: Plans for tougher antitrust laws and tax policies are next. And other nations, including Brazil, Japan and South Korea, are expected to follow the E.U.’s stead.

A business opportunity: G.D.P.R. offers privacy experts a chance to make serious money.

The political flyaround

• The Congressional Budget Office estimates that revenue from the White House’s latest proposed budget would fall short by $1.9 trillion over the next decade. (WSJ)

• Randy Quarles, the Fed’s vice chairman, is worried about tech companies moving into unregulated financial services. (Bloomberg)

• The Senate confirmed Jelena McWilliams as the new head of the Federal Deposit Insurance Corporation. (WSJ)

• The E.U. dismissed Britain’s current hopes for Brexit as a “fantasy,” while the Bank of England’s chief, Mark Carney, warned of financial disruption if negotiations don’t run smoothly. (FT)

• Senator Tom Carper, Democrat of Delaware, has asked the Pentagon for more details about the security of President Trump’s smartphones. (Politico)


Behrouz Mehri/Agence France-Presse — Getty Images

No North Korea talks? China would love that.

President Trump’s decision to walk away from a summit meeting with North Korea perplexed world leaders. But the move could strengthen Beijing in trade negotiations with Washington, given China’s influence over North Korea.

That theory may be tested when Commerce Secretary Wilbur Ross returns to Beijing on June 2 for another round of trade talks. Among his potential talking points: putting American compliance officers inside ZTE in exchange for lifting penalties on the Chinese telecom company.

Critics’ corner: The White House’s latest trade strategy is a mess, the WSJ editorial board argues. And it’s squandering an opportunity to remake America’s trade relationship with China, according to Scott Paul, the president of the Alliance for American Manufacturing.


A self-driving Uber vehicle.

Natalie Behring/Reuters

Uber’s driverless car saw the woman it killed, but didn’t brake

A report by the National Transportation Safety Board found that the ride-hailer’s vehicle had its emergency braking system turned off when it struck and killed a pedestrian in March. Its sensors and software detected the woman six seconds before impact, but the vehicle didn’t slow down.

Tesla had troubles, too: The Utah police found that a Model S that crashed while in Autopilot mode this month actually sped up before hitting a fire truck and injuring two people.

What this means: Questions about the speed with which autonomous cars are being developed, and the safety issues of testing them on public roads, aren’t going away. The mayor of Pittsburgh, where Uber’s driverless car operations are headquartered, now says that he will limit testing of autonomous vehicles in his city.

The tech flyaround

• An Amazon Echo recorded a couple’s conversation and sent it someone on their contact list. Amazon blamed an improbable chain of events. (Recode)

• The age of Netflix has been lucrative for content creators. (Hollywood Reporter)

• A U.S. jury awarded Apple $539 million in the company’s patent fight with Samsung. (BBC)

• Proposed legislation could force U.S. tech companies to disclose whether they allowed foreign authorities to scrutinize their code. (Reuters)

• Ireland’s abortion vote today is the latest test for Facebook and Google’s attempts to fight foreign online influence. Yesterday, Facebook and Twitter announced new plans for regulating political ads.

• The Justice Department has reportedly begun investigating cryptocurrency price manipulation. (Bloomberg)


About businesses’ uneasy alliance with Trump…

From The Economist’s lead editorial this week:

Now bosses think they have entered a nirvana, when the reality is that the country’s system of commerce is lurching away from rules, openness and multilateral treaties toward arbitrariness, insularity and transient deals.

Revolving door

• United Continental has named Jane Garvey as its chairwoman. She’s the first woman to run the airline’s board. (WSJ)

• JPMorgan Chase has hired two senior Houston-based energy bankers from Morgan Stanley. Jonathan Cox will become JPMorgan’s global co-head of oil and gas investment banking, and Michael Johnson will become a vice chairman of investment banking. (Bloomberg)

• The C.E.O. of Rusal, Alexandra Bouriko, and seven board members, resigned in a bid to ease U.S. sanctions on the Russian aluminum giant. (WSJ)

The speed read

• Commerce Secretary Wilbur Ross says that moon colonies could happen “sooner than you may have ever thought possible.” (NYT)

• Deutsche Bank investors voted to keep Paul Achleitner as chairman. (FT)

• Banks in Estonia may have laundered as much as $13 billion. (Bloomberg)

• Reportedly up for sale: Diageo brands like Seagrams whisky and Goldschlager, and Essential, a device maker founded by a creator of Android.

• Goldman Sachs and Blackstone have settled a fight over an $11 billion derivatives trade. (WSJ)

• Some of Goldman’s senior associates will have to wait until 2019 for promotion. At Merrill Lynch, some brokers are bracing for a big pay cut.

• Americans just won’t put their phones down, even when they’re on vacation. (Skift)

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Want to Make Money Like a C.E.O.? Work for 275 Years

This year, publicly traded corporations in the United States had to begin revealing their pay ratios — comparisons between the pay of their chief executive and the median compensation of other employees at the company. The results were predictably striking.

“It’s grotesque how unequal this has become,” said Louis Hyman, a business historian at Cornell University. “For C.E.O.s, it’s like they are winning the lottery year after year. For a lot of Americans, they don’t have any savings. When they lose their job, they lose everything.”

Walmart, Live Nation and Time Warner did not reply to requests for comment.

The pay ratio rule, part of the 2010 Dodd-Frank banking regulation law, has been left untouched by the effort to roll back parts of Dodd-Frank now making its way through Congress.

As glaring as the ratios may seem, they tell an incomplete story. Some companies reported very low ratios and relatively high median incomes, but rely on outsourced labor for important tasks. Other companies that reported very high ratios employ many workers overseas where pay is far lower than in the United States. And not all companies have reported their pay ratios.

“As much as these numbers reveal, they also hide,” said Mr. Hyman, who in August will publish “Temp,” a book about gig workers and the proliferation of part-time labor. “It all depends on who you consider to be an employee in this new economy.”

For example, Mattel, the toy company, owns its factories overseas and employs thousands of low-paid workers in Asia. As a result, Mattel reported the second-highest ratio on the Equilar list: The chief executive’s pay was 4,987 times that of the median employee.

Contrast that with Incyte, a drugmaker with the lowest ratio on the Equilar list. The chief executive of Incyte made just 64 times what the median employee earned. But unlike Mattel, Incyte outsources its factory work, allowing it to keep its work force small and its median pay high.

At least some compensation experts harbor a hopeful view that over time, sustained scrutiny of the income gap might lead to a more equitable distribution of wealth.

“This could have beneficial results about how companies communicate with their employees,” said Jannice Koors, an executive compensation consultant at Pearl Meyer. “In a good year, if the C.E.O.’s pay goes up, does the median employee’s pay go up, too? Does the company have profit-sharing that goes deep enough into the organization that the median employee is getting equity grants?”

That may be wishful thinking, and critics of rising income inequality are quick to point out that sustained low wages can lead to reduced economic growth and marginalize large swaths of the population. Disposable income is needed for a healthy economy, and people need the time and resources to take care of themselves and their families.

“Particularly in low-wage jobs, people are struggling to pay for housing, for health insurance, for child care,” said Jennifer Gordon, a law professor at Fordham University. “When people are working two and three jobs and are not able to put together a decent wage, then at a very basic level they don’t have time to be active in their children’s schools, they don’t have the ability to engage in their local politics.”

And still, executive pay, already excessive in the eyes of many critics, rises.


The Highest-Paid C.E.O.s in 2017

Here are 200 of the highest-paid chief executives in American business.

OPEN Graphic

[See who the highest-paid executives in 2017 were.]

For the first time, two chief executives on the list were awarded more than $100 million each. Hock Tan of Broadcom received $103.2 million, while Frank Bisignano of First Data earned $102.2 million.

In 2017, the median pay for the 200 highest-paid chief executives was $17.5 million, and they received an average raise of 14 percent, compared with 9 percent in 2016 and 5 percent the year before that.

Among the 160 companies of that group that revealed pay ratios, the median compensation for chief executives was also $17.5 million. In contrast, workers earned $75,217, a decent salary in a country with a shrinking middle class, but one that further demonstrates the growing gap between the C-suite and the typical employee. Equilar calculated that the median pay ratio disclosed by these companies was 275 to 1.

In defending these lavish awards, companies are quick to point out that much of this compensation is in stock, that many of the biggest awards represent long-term incentive plans, and that in some cases, the stock vests only if the company’s share price hits certain targets. As a result, they argue that the value of annual compensation packages can turn out to be much lower than initially stated.

That logic cuts both ways. If the stock does well, the total value of these compensation plans can be even greater than the large sums first reported.

In theory, such compensation plans encourage chief executives to focus on creating value for shareholders. And at times, that pay seems to mirror the fortunes of the company. At Morgan Stanley, for example, shares were up about 20 percent last year, while James P. Gorman, the company’s chief executive, received a 16 percent pay rise.

“The design of executive compensation continues to emphasize shareholder alignment,” said Brian Blackwood, an executive compensation consultant at Willis Towers Watson. “When shareholders prosper, executives will benefit, and vice versa.”

It doesn’t always work out that way. Shares of TripAdvisor fell by roughly a third last year. Nonetheless, the company’s chief executive, Stephen Kaufer, was awarded a long-term incentive package worth some $43.2 million.

And while chief executives are among the highest-paid people in the country — the 200 chief executives on the Equilar list, almost all of them white men, were awarded some $4.4 billion last year — they are not alone in enjoying lavish pay. Others who don’t hold that exact title also did well in 2017.

David T. Hamamoto, a former C.E.O. who is now the executive vice chairman of Colony Northstar, a real estate company, was awarded $53 million last year. Larry Ellison, the founder, chairman and chief technology officer of Oracle, was awarded $41.3 million, adding to his net worth of some $57 billion.

Financiers at hedge funds, which are generally private and not included in the Equilar study, can earn billions of dollars a year. Michael Platt, the founder of BlueCrest Capital Management, earned $2 billion last year, according to Forbes. James Simons, a founder of Renaissance Technologies, earned $1.8 billion.

And two technology entrepreneurs who last year took their companies public were awarded generous pay packages, but were not included on the list because they did not file proxy statements, which is part of Equilar’s methodology.

Evan Spiegel, a co-founder and the chief executive of Snap, received a stock award worth $636.6 million in connection with the company’s initial public offering. And the Dropbox co-founder and chief executive Drew Houston was awarded a performance-based grant worth about $110 million.

“The top layer of management live like kings and queens while the people at the bottom are scrabbling for a decent existence,” Ms. Gordon said. “We should not have that in a society where equality and fairness supposedly matter.”

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