Pocketing Profits or Reinvesting Them?
Corporations have gone from reinvesting about 90 percent of their profits into their business in the 1970s, to about 10 percent today, William Lazonick wrote in a recentHarvard Business Review article. Profits are instead being used to pay dividends to investors and to buy back stock to boost its price, benefiting the company’s executives.
Can this trend be reversed to help fuel growth that benefits everyone?
The New York Times, "Room for Debate: Pocketing Profits or Reinvesting Them?" September 15, 2014.
Who Owns Fashion?
A debate on whether there should be more legal protection for designs.
The New York Times, “Who Owns Fashion? - Room for Debate,” September 7, 2014.
Wired, "Weird Facts About 5 of the World’s Most Famous Logos" by Kyle Vanhemert, September 3, 2014.
"The Treasury Department is considering new regulations that would make corporate inversions less profitable. Hedge fund managers, investment bankers and others are handicapping the timing and scope of any new rules and to whom they would apply. Possibilities include further limiting earnings stripping, reclassifying certain debt held by United States subsidiaries of foreign corporations as equity or restricting the repatriation of untaxed offshore cash from corporations that have gone through an inversion.
Another question is whether any new regulations will hold up in court. Even Treasury Secretary Jacob J. Lew questioned whether his department had the legal authority to act unilaterally. But after Stephen E. Shay, a law professor at Harvard University, published an article urging Treasury to act, the department’s lawyers began developing some options. Mr. Shay suggested that by looking beyond Section 7874, the specific code section that addresses inversions, the Treasury Department might find other ways to curb some of the economic tax benefits of an inversion. In my view, Professor Shay’s suggestions are indeed within the lawful authority of the Treasury Department.”
The New York Times, "Court Challenge to New Inversion Rules Would Face Long Odds" by Victor Fleisher, September 3, 2014.
“The eyes of the nation and the world are watching Ferguson right now. The world is watching because the issues raised by the shooting of Michael Brown predate this incident. This is something that has a history to it and the history simmers beneath the surface in more communities than just Ferguson.” —Attorney General Eric Holder on visiting Ferguson yesterday to meet with community leaders, FBI investigators, and federal prosecutors to get detailed briefings on the status of the case
Inside Apple’s Internal Training Program
"…Steven P. Jobs established Apple University as a way to inculcate employees into Apple’s business culture and educate them about its history, particularly as the company grew and the tech business changed. Courses are not required, only recommended, but getting new employees to enroll is rarely a problem….
It is highly secretive and rarely written about, referred to briefly in the biography of Mr. Jobs by Walter Isaacson. Apple employees are discouraged from talking about the company in general, and the classes are no exception. No pictures of the classrooms have surfaced publicly. And a spokeswoman for Apple declined to make instructors available for interviews for this article…”
The New York Times, "Simplifying the Bull: How Picasso Helps to Teach Apple’s Style" by Brian X. Chen, August 10, 2014.
How to Learn the Law Without Law School
"California is one of a handful of states that allow apprenticeships like Mr. Tittle’s in lieu of a law degree as a prerequisite to taking the bar and practicing as a licensed lawyer. In Virginia, Vermont, Washington and California, aspiring lawyers can study for the bar without ever setting foot into or paying a law school. New York, Maine and Wyoming require a combination of law school and apprenticeship…
“Attorneys trained in this way will be able to be average people,” Ms. Orsi said, “not just because they don’t have debt, but because law school tells us that we’re really special.”
The New York Times, "The Lawyer’s Apprentice" by Sean Patrick Farrell, July 30, 2014
At Patagonia, the Bottom Line Includes the Earth
“Patagonia executives are also convinced that the many years of development and testing they have supported have resulted in a revolutionary material that will wind up not only in wet suits but also in everyday items like sneakers and yoga mats…
But if they have their way, only a few of those products will bear the Patagonia name. Instead of holding the manufacturer of the rubber, Yulex, to a yearslong exclusive contract, Patagonia is encouraging its competitors to use the product, hoping to see its use grow and drive down the price. Other wet suit and athletic apparel companies have shown interest, and Quiksilver plans to have a biorubber wet suit on the market next year.
Patagonia’s promotion of Yulex is the latest example of its unusual commitment to advancing sustainability, sometimes at the expense of its bottom line. It introduced organically grown cotton into its products in the 1990s, pushing ahead even though it lost customers and money on the transition. It has rejiggered its corporate structure so it can count success in factors that benefit the public, like helping the environment, rather than simply maximizing profit, without the fear of being sued by potential investors.”
"…Let’s pause and reflect that Medtronic is pushing a transaction that from Day 1 may cost some of its shareholders as much as 33 cents on the dollar.
The sand in the eye for the shareholders is that Congress tried to halt the tide of inversions about a decade ago. Lawmakers amended the tax code to provide that executives of companies like Medtronic that went abroad would have to pay a tax on their stock compensation. The tax is at the same capital gains tax that Medtronic’s shareholders will have to pay in connection with the transaction.
But unlike its shareholders, Medtronic’s executives will be “grossed up” by the company. Medtronic will spend millions to pay the tax obligations of its executives in connection with the transaction. At least seven other companies undertaking inversions have indemnified their executives to the tune of tens of millions of dollars, according to Bloomberg News.
But shareholders will receive nothing from Medtronic.”
The New York Times, "In Deal to Cut Corporate Taxes, Shareholders Pay the Price" by Steven Davidoff Solomon, July 8, 2014.
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