For students of perverse incentives created by tax, it is a bonanza week. Apple has raised $12bn in bonds to buy back shares, despite having $130bn sitting in cash overseas, and Pfizer wants to turn itself into a UK-domiciled company by acquiring AstraZeneca for £60bn.
Managers are notorious for prioritising short-term demands when they clash with long-term goals. Research in the US has shown that most executives would shy away from a value-enhancing long-term project if it caused them to miss a quarterly earnings forecast.
How companies can manage such clashes was the subject of a “Strategy Live” debate organised by the Financial Times in London this morning. Chaired by management editor Andrew Hill, the session featured senior figures from finance and industry, who spoke on a non-attributable basis under the Chatham House rule.
Participants used the example of Barclays to launch a broader debate, examining its controversial decision to increase bonuses to its investment bankers even as it – seemingly paradoxically – tried to move to a less abrasive, more long-termist culture. Read more
Shuanghui sausages on display at a Beijing supermarket
First Alibaba, then Watson, now WH Group. The decision from the world’s top pork producer – with dominant businesses in China, the US and much of Europe – to ditch its initial public offering in Hong Kong is not just a blow to the company, which must now fork out millions in extra debt service costs, but also to the city itself. Having started the year with four possible blockbuster deals, Hong Kong will be lucky now to get even one.
The first blow came in January, when Hong Kong Electric – a spin-off by Li Ka-shing’s Cheung Kong – chose to slash the size of its deal on tepid demand. Even the smaller deal was tough – getting it over the line was a ‘near-death experience’ according to those familiar with the sale. Investors just weren’t convinced.
Rajeev Suri, newly appointed head of Nokia, has plenty to tackle at the Finnish group, but one challenge relates to the part of the business he no longer oversees – the handset business that has finally transferred to Microsoft’s ownership.
As head of Nokia Solutions and Networks, Mr Suri developed the telecoms equipment business, which now makes up the largest part of “new Nokia”, more or less autonomously from the devices business. Its culture is likely to dominate the Finnish group as it now evolves. But what of the deep-rooted residual link with the handsets in our pockets?
Even if the Nokia brand is quickly stripped from smartphones, I wonder whether the Finnish group will experience the business equivalent of “phantom limb syndrome” – twitching and wincing as though the amputated devices arm is still attached to the rest of the body corporate. Read more
I am sitting in a packed conference room, somewhere in the heart of London’s financial centre, in an office I have sworn not to identify. It is quiet for a midweek lunchtime. In fact, it is silent. Along with the ex-chairman of a blue-chip company, a handful of executives and board members, a former senior central banker, a Buddhist software engineer, a Benedictine monk and 60 others, I am meditating. Or trying to.
Researching my latest column about the management benefits of mindfulness and meditation, I came across a priceless FT article from 1957. Headlined “Keeping Managers Healthy”, it warns about the “effects of stress and strain on top-level executives” and concludes, gravely, that a number of executives “break the most important rule of all – which is not to ‘keep in touch’ with the company while ostensibly on holiday”.
The article contains this cut-out-and-keep list of 10 “do’s and dont’s”, distilled in part from “what one oil company advises its men [sic]“: Read more
Pfizer has finally made a public announcement of its interest in AstraZeneca. One of the main points of the deal, it turns out, is tax inversion – turning Pfizer into a UK-domiciled company.
Pfizer is making tax inversion a point of the proposed deal Photo: Bloomberg
We have been presented this week with two visions for the future of innovation in the pharmaceuticals industry. One is encouraging, the other is not.
Private personal details: a luxury? Photo: Dreamstime
A little while ago I conversed with someone over email. He calls himself Alastair but I have no idea if that’s his real name. I doubt it. Read more
Lesson Two: ensure your predecessor is dead or distant (photo: Getty)
Good morning and welcome to the new Harvard MBA module on sports management. I’m assistant professor David Moyes. Read more
To the news that General Electric’s board of directors has been meeting in solemn conclave to debate whether its chief executives should serve a 20-year term, the natural response is: which egomaniac came up with that idea?
Oral haptics – more simply known as “mouthfeel” – is one of the food industry’s subtler (or murkier) arts. New research gives an intriguing glimpse into how snackmakers can use it to manipulate grazing customers: for better or for worse.
A group of people were offered either a hard or soft version of the same chocolate and asked to estimate how many calories it contained. They erroneously assumed that the hard version had fewer calories, when the energy content in each of the treats was actually the same. Read more
Suddenly, after a prolonged drought, fresh money is pouring into US digital news. The strange thing is where it is going.
Companies expanding overseas have made great efforts to counter past mistakes of corporate imperialism – rather than merely exporting home grown staff and products they make an effort to adapt to local culture and consumer tastes.
McDonalds, for example, offered vegetarian burgers and samosas in Gujarat, where most citizens are vegetarian. In New Delhi, it sold the Maharaja Mac with lamb and chicken for non-beef eaters. It also recruited local managers in New Delhi, which helped the company negotiate bureaucracy. Read more