HBC shareholders challenge executive renumeration, real estate plans

Hudson’s Bay Company faced a fight from some of its most prominent investors Tuesday over its decision to award executives with multi-million-dollar pay packages despite two years of weak sales and sizable losses for the retailer.

The Ontario Teachers’ Pension Plan, British Columbia Investment Management Corp. and the California Public Employees’ Retirement System (CalPERS) said they voted against the company’s remuneration practices that include a $54.8 million pay package for the retailer’s executive chairman Richard Baker.

The “say on pay” vote — a non-binding motion that is growing in popularity at Canadian companies and aimed at collecting shareholder feedback — took place at the company’s annual general meeting in Toronto and ended in the executives’ favour.

However, CalPERS spokesperson Mike Osborn said in an email “we don’t feel the company sufficiently linked pay with performance” and Teachers’ said in its proxy vote statement that “in this case, we do not feel that the awards have been sufficiently justified.”

Baker’s compensation includes more than $37 million in share-based awards and more than $16.6 million in option-based awards. The company’s other executives are due to earn totals between $1.4 million and $9.4 million, according to HBC’s information circular.

After the vote passed, one shareholder in the audience criticized Baker’s remuneration saying, “It is one thing to award a package. It is another to accept it and so I think accepting it reflects on (Baker)’s character, who not so long ago said the fair value was twice where these payouts are.”

The shareholder called on Baker to address the issue, to which Baker replied “we appreciate your question. Thank you.”

The majority of other stakeholders at the meeting focused on the value of the company’s real estate, which at least one activist investor has previously pushed the company to think strategically about, given the retailer’s rocky recent performance that included a $400-million loss in its first quarter compared with a loss of $221 million a year ago.

In October, Jonathan Litt, who is chief investment officer and founder of activist investor Land & Buildings Investment Management, said the company is really a real estate company, not a retailer, that has failed to outline a plan to unlock the “substantial real estate value trapped in the company.”

On Tuesday, one shareholder echoed Litt’s sentiments saying, “what are you people waiting for? Are you waiting for us to go into a recession before you sell some of your real estate?”

He suggested the company take its Toronto HBC and Saks Fifth Avenue location at Yonge and Queen St. and build condos above it “while real estate is hot.”

Helena Foulkes, the company’s chief executive officer, indicated that the company might be ready to heed some of their investor’s advice.

She said the company was looking at selling certain properties, but was not in a hurry to sell everything quickly.

Baker said the company was looking to “better utilize” its spaces to create revenue as it has through partnerships with Topshop, health clubs or shared office space business We Work.

In Toronto, for example, he said the company had taken its Yonge and Queen St. real estate and emptied two floors, pushing merchandise to other floors “in a way where we will lose no sales.”

That freed up 100,000 square feet of prime space that the company used for a lease with We Work, valued at more than $50 a square foot.

He said the deal was generating foot traffic and new shoppers and is indicative of the company’s plans moving forward.

“Our general focus around the world is to better utilize space, rather than selling off the particular pieces.”



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AT&T wins U.S. court approval to buy Time Warner for US$85 billion

AT&T Inc. won approval from a U.S. court on Tuesday to buy Time Warner Inc for US$85 billion, allowing AT&T to compete with internet companies that dominate digital advertising and providing new sources of revenue.

The planned deal is seen as a turning point for a media industry that has been upended by companies like Netflix and Google which produce content and sell it online directly to consumers, without requiring a pricey cable subscription.

Distributors including cable, satellite and wireless carriers all see buying content companies as a way to add revenue.

The ruling could also prompt a cascade of pay TV companies buying television and movie makers, with Comcast Corp.’s bid for some Twenty-First Century Fox assets potentially the first out of the gate.

The merger, including debt, would be the fourth largest deal ever attempted in the global telecom, media and entertainment space, according to Thomson Reuters data. It would also be the 12th largest deal in any sector, the data showed.

The Justice Department filed a lawsuit to stop the deal in November 2017, saying that AT&T’s ownership of both DirecTV and Time Warner would give AT&T unfair leverage against rival cable providers that relied on Time Warner’s content, such as CNN and HBO’s Game of Thrones.

AT&T in a six-week trial argued that the purchase of Time Warner would allow it to gain information about viewers needed to target digital advertising, much like Facebook and Alphabet’s Google already do.

AT&T and other wireless carriers need to find new sources of revenue as the mobile phone market stagnates and more customers abandon pricey cable and satellite packages for streaming services they can watch on their phones or televisions.

Costs from deal

The government estimated costs to industry rivals, such as Charter Communications Inc, would increase by US$580 million a year if AT&T owned Time Warner. To assuage the Trump administration’s criticisms, AT&T offered to submit pricing disagreements with other pay TV companies over Turner’s channels to third-party arbitration.

The companies further offered not to black out programming during arbitration for seven years. Announced in October 2016, the deal was quickly denounced by Donald Trump, who as a candidate and later as president has been critical of Time Warner’s CNN and its coverage.

Before the trial started, AT&T lawyers said the Time Warner deal may have been singled out for government enforcement but Judge Richard Leon of the U.S. District Court for the District of Columbia rejected their bid to force the disclosure of White House communications that might have shed light on the matter.

The deal cost AT&T’s top lobbyist, Bob Quinn, his job in May after it became public that AT&T had paid Trump’s personal lawyer Michael Cohen $600,000 for advice on winning approval.

The ruling could also have implications for CBS Corp’s potential tie-up with Viacom, which is already uncertain because of a lawsuit between CBS’s controlling shareholder, Shari Redstone, and its board.



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Tesla to lay off 9% of workers as part of restructuring plan

U.S. electric car giant Tesla is laying off nine per cent of its global workforce, it announced on Tuesday.

The company, based in Palo Alto, Calif., said the move was part of its organizational restructuring announced by CEO Elon Musk last month

“As part of this effort, and the need to reduce costs and become profitable, we have made the difficult decision to let go of approximately nine per cent of our colleagues across the company,” Musk said in an email to employees. 

“These cuts were almost entirely made from our salaried population and no production associates were included, so this will not affect our ability to reach Model 3 production targets in the coming months.”

Tesla told CBC News that it has more than 42,500 employees around the world.

Last week, Musk had announced that the company would “quite likely” be able to build 5,000 Model 3 vehicles a week by the end of June after facing production setbacks.

In the email to employees, Musk said that Tesla’s rapid growth over the past several years has resulted in some duplication of roles and job functions.

“Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us,” he said. 

“What drives us is our mission to accelerate the world’s transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable.”

In May, Tesla posted its biggest-ever quarterly loss when it announced first quarter results and then it lost $2 billion in market capitalization after Musk started cutting analysts’ questions short during an earnings conference call.

Partnership with Home Depot

Musk also said his company will not renew its residential sales agreement with retailer Home Depot in order to focus on selling solar power in Tesla stores and online.

“The majority of Tesla employees working at Home Depot will be offered the opportunity to move over to Tesla retail locations,” Musk said.

The company had only announced its partnership with Home Depot to sell solar panels and batteries in February.

Musk added that Tesla will be providing “significant” salary and stock vesting (proportionate to length of service) to the employees being let go.

Shares of Telsa listed in New York fell in the afternoon after news of the layoffs, but were still up more than three per cent. They were up as much as seven per cent earlier in the day.



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Former ATB employee charged with stealing $1.1M through fake bank loans

A former Alberta Treasury Branch loan officer faces numerous charges after more than $1 million in fake loans were issued, police say.

The Red Deer RCMP fraud unit investigation revealed that numerous loans were based on personal information of bank clients and other people the suspect knew totalling $1,148,020.

Sarah Miles Brouilette, 38, of Red Deer is facing charges of theft, fraud, possession of property obtained by crime and laundering the proceeds of crime.

“All alleged victims have been contacted and RCMP have been assured that none of them faced a financial loss,” police said.

Brouilette is scheduled to appear in a Red Deer court on July 17.



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Economists debunk Trump’s Twitter trade ‘facts’ against Canada

U.S. President Donald Trump made some “factual errors” in tweets about trade with Canada following the G7 summit, and his tariffs threats could be “akin to shooting oneself in the foot,” economists tell CBC News.

Trump’s criticism of U.S. trade with Canada escalated to another level after he left the summit early and then attacked Canadian Prime Minister Justin Trudeau on Twitter using words such as “dishonest” and “weak.”

Trump cited “facts” such Canada’s 270 per cent tariff on dairy imports and a $100-billion trade surplus against the U.S. as evidence that Canada is charging U.S. farmers, workers and companies “massive tariffs.”

But how accurate is the data that Trump vows are facts in his tweets?  

Derek Holt, vice-president of Scotiabank Economics, said the “thought processes” at the core of the U.S. administration are not grounded in “reason, diplomacy or facts.”

“A trio [Trump and top advisers Peter Navarro and Larry Kudlow] of fast-talking gunslingers in the U.S. administration defamed Canada’s institutions, leadership, values and policies over the weekend,” said Holt, in a note on Monday. “The vulgarity of the remarks is worth a recap before turning to the factual errors that are behind their beliefs.”

270% tariff on dairy

Trump’s blistering Twitter attack on Trudeau on Sunday started with a tweet about Canada’s 270 per cent tariff on imports of U.S. dairy products.

 

Holt said Trump’s use of the 270 per cent tariff to “besmirch” Canada’s overall trade policies is “disingenuous to be polite about it.” 

“That’s right, Trump is quoting a figure that applies to milk that accounts for a tiny fraction of Canada’s $33 billion of goods imported from the United States each month,” Holt said. “Better judgment would question whether an entire trading relationship needs to be jeopardized in order to appeal to dairy farmers in Wisconsin.”

Royce Mendes, senior economist at CIBC World Markets, also defended Canada’s supply management and quotas on dairy products meant to stabilize the market by saying that almost every country has some legacy supply-managed industries, including the U.S. which subsidizes dairy products, along with import quotas on sugar.

“Dairy is a small portion of overall trade between the two countries. Supply management is being trumped up as having more economic implications than it actually does,” Mendes told CBC.

“While they might provide friction between trading partners, import quotas among most developed nations are not on a scale that should cause a breakdown of the global trading system.”

‘Fool Trade’

Trump then went on to tweet that “fair trade” between Canada and the U.S. is now called “Fool Trade” if it is not reciprocal, citing Canada makes almost $100 billion in trade with the U.S.


Mendes said Canada ran a $40 billion goods trade surplus with the U.S. last year, according to Statistics Canada and it was even less according to the U.S. Bureau of Economic Analysis, which put the figure at $30 billion.

“If you include services, trade between the two countries is roughly balanced,” Mendes said. “Either way, most of the goods surplus we have with the U.S. is related to energy. I’m guessing most Americans wouldn’t want us to turn off the taps and cause U.S. fuel prices to skyrocket.”

Holt added that Trump constantly blaming other countries for his country’s trade deficits is a deflection tactic.

“Is it because everyone treats the U.S. as its piggy bank as Trump asserts? Hardly. Part of the problem is that the U.S. lost its piggy bank a long time ago,” Holt said, referring to a statement made by Trump last week.

Holt said the U.S. doesn’t save enough at the national level relative to what it invests and consumes to have a “piggy bank.”

“One example is the personal saving rate that now sits at just 2.8 per cent and is at its lowest on record. Another is decades of fiscal deficits; over the past half century, the U.S. has only run surpluses for a meaningful period in the late 1990s and early 2000s,” said Holt. 

“The deficit-to-GDP ratio is projected to blow out to almost 10 per cent of GDP over the longer term, because of unfunded social security and health-care costs, while the U.S. can’t afford Trump’s fiscal policy stimulus.”

Risk from auto tariffs

Despite Trump starting the tariff dispute between Canada and the U.S. when he imposed tariffs on Canadian steel and aluminum imports from the start of June, he went on to tweet that Canada is charging the U.S. “massive tariffs” and threatened to impose tariffs on automobiles from Canada that he says are “flooding” the U.S. market.

    

Mendes said Canada’s tariffs on automobiles would pose a far more serious risk to the Canadian economy than those implemented by the U.S. on steel and aluminum.

“Autos [and related parts] represent just under 20 per cent of our goods exports to the U.S. The products covered under the steel and aluminum tariffs are only about four per cent,” Mendes said.

“However, the U.S. administration should tread carefully. A major portion of the automotive products we ship south are made up of U.S. parts.”

With an extremely integrated auto industry in North America, Mendes said the tariffs could turn out “to be akin to shooting oneself in the foot for the U.S. administration.”





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Amid nickel boom, Vale moves forward with underground mine at Voisey’s Bay

Brazilian mining giant Vale is capitalizing on a nickel boom and moving forward with its underground mine at Voisey’s Bay, Newfoundland and Labrador Premier Dwight Ball announced Monday morning.

It’s a “momentous announcement” for the mining industry, Ball said at the announcement at the Sheraton Hotel in downtown St. John’s.

Past and present Newfoundland and Labrador premiers gather at the Vale press conference: from left, Brian Tobin, Ball, Roger Grimes and Clyde Wells. (Terry Roberts/CBC)

“Vale is proceeding with its underground mine,” Ball said.

“This is a province that’s open for business, and people are showing up.”

The move will extend the mine’s operating life by at least 15 years, Ball said. Over the five-year construction, more than 16,000 person-years of employment will be created.

Once operational, direct employment will hit 1,700 jobs, including the Long Harbour processing plant, Ball said.

Construction will begin later this summer, with first ore expected no later than April 2021.

Eduardo Bartolomeo, Vale’s executive director of base metals, said the Voisey’s Bay mine is a “huge source of pride” for the company, including the established relationship with the Inuit and Innu communities.

“They are not only our neighbours, but also our employees, our service providers, our partners in so many aspects of our operation.”

Vale always had a commitment to Voisey’s Bay, Bartolomeo said, but a worldwide nickel decline forced the company to put plans on hold.

“Unlike downturns in the recent past, this one took much more than ever predicted it would be. So everybody in the world from the nickel miners went into preservation mode. Vale was no exception,” he said.

The project was cast into uncertainty 10 months ago when the company announced it was reviewing its worldwide operations amid a persistent downturn in nickel prices.

Nickel prices, though, have solidly rebounded over the last year, with the commodity moving Monday around $15,240 US per tonne, or more than 70 per cent over a 52-week low set last year. 

Bartolomeo said the company is ready to go. 

“We are ready to start hiring, ready to begin construction and ready to fulfil a long-standing commitment to this project.”

The Voisey’s Bay mine and concentrator is located south of Nain, on Labrador’s northern coast.

Voisey’s Bay, one of the world’s richest deposits of nickel, was discovered in 1993. 

Surface mining at the site began in 2005. 

Indigenous groups, construction sector welcomes expansion

Vale plans to spend more than $2 billion on the expansion, and that’s welcome news for Indigenous groups in Labrador.

“The expansion is certainly going to help Labrador Inuit,” said Johannes Lampe, president of the Inuit government in Nunatsiavut.

“The spinoffs will certainly help Labrador Inuit continue to see the benefits.”

The president of the Innu Nation, Gregory Rich, also welcomed the expansion, but believes there could be more benefits for his people.

“I would like to see more Innu people, especially the trades people, hired in that project,” said Rich.

Meanwhile, the construction industry is breathing a sigh of relief.

“There’s a lot of construction workers unemployed. And of course construction workers make good money, and they spend good money,” said Darin King, executive director with the Newfoundland and Labrador Building and Construction Trades Council.

Vale is the latest global giant to expand its footprint in the province, joining companies like Husky, Rio Tinto and ExxonMobil.

“This is a province that’s open for business, and people are showing up,” said Ball.

Read more articles from CBC Newfoundland and Labrador





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Rift between Trump and Trudeau could be first step towards a recession, warns former foreign affairs minister

Read Story Transcript

Experts are calling the public animosity brewing between U.S. President Donald Trump and Prime Minister Justin Trudeau after the G7 summit unprecedented, alarming — and a possible first step towards a recession in Canada.  

If Trump makes good on his threat to impose new tariffs on the auto industry, there could be serious repercussions for Canada, warns former foreign affairs minister Peter MacKay.

“This is an enormous part of the economy in Ontario but it has a ripple effect right across the country,” he told The Current‘s guest host Connie Walker.

“This is the type of thing over time that could lead to a recession. And in the meantime the United States’ economy, against all odds one would expect given the volatility of the president and the relationships that are in jeopardy around the world, their economy is humming.”

MacKay, a member of former prime minister Stephen Harper’s cabinet between 2006 and 2007, suggested Canada needs to reach out to critical allies such as Congressional colleagues and heads of industrial sectors in the U.S. to help “normalize relations.”

Christopher Sands, director of the Center for Canadian Studies at Johns Hopkins University, said that what’s being tested is how much “an American president can beat up on Canada.”

“Canada for most Americans is not really a foreign relationship — it’s a familiar one,” said Sands. He told Walker Canada interacts with the States on a daily basis far more than any other country.

“We do have a trade disputes. But politicians have been very careful to make those very issues specific criticisms without criticizing Canada writ large or attacking Canadian politicians in public.”

Sands predicts if Trump persists with a war of words, many in Congress who are “not comfortable with this degree of bellicosity between the two countries” will part ways with the president.

Listen to the full conversation near the top of the page.


This segment was produced by The Current’s Idella Sturino and Pacinthe Mattar.





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Mulroney says he’s ‘never seen anything’ like Trump surrogates’ attacks on Trudeau

Former prime minister Brian Mulroney said today weekend attacks on Prime Minister Justin Trudeau by surrogates of U.S. President Donald Trump were unprecedented — but Canadian negotiators shouldn’t let the remarks throw them off their trade strategy.

Mulroney — who was prime minister when both the original Canada-U.S. Free Trade Agreement and the North American Free Trade Agreement were negotiated — said the Canadian side must not let static from the White House distract from the more serious business of managing the trade relationship with the U.S. and completing high-stakes negotiations on a new NAFTA accord.

“I’ve never seen language like this. Least of all from subordinates of the president directed at the prime minister of their greatest friend and ally,” he said. “This, I’ve never seen before. Nor has anybody else.”

Mulroney also said Trudeau’s words in the closing hours of the G7 summit in Charlevoix, Que. — the ones that seemed to have sent the president into a rage — were hardly unexpected.

“All Mr. Trudeau was doing was, in a rather gentle way, articulating the position of his government, which would be the position of any Canadian government in these circumstances,” he said.

“So I don’t view it as lethal…. International negotiations, they have their ebbs and flows. This is an ebb.”

The former PM said Trudeau would be wise to steer clear of engaging in a Twitter brawl with the president, and added the government’s plan to impose retaliatory tariffs on U.S. products is a sensible response.

“Somebody puts a tariff on your products, you put a tariff on theirs. Now, how it’s received on the other side is something else — but that’s life.”

Canada-U.S. relations seemed to have reached their lowest point in more than a generation after Trump tweeted Saturday that he was withdrawing support from a G7 joint communique, while complaining he had been blindsided by Trudeau’s criticism of U.S. tariffs at a closing G7 news conference.

As he flew from Canada to Singapore Saturday night, Trump took to Twitter to label Trudeau “dishonest” and “weak.”

Trump’s advisers piled on over the weekend, with White House trade adviser Peter Navarro telling Fox News that “there’s a special place in hell” for Trudeau. Trump’s economic adviser, Larry Kudlow, suggested Trudeau’s comments somehow made the president look weak on the eve of a summit meeting with North Korean dictator Kim Jong-un.

“POTUS is not going to let a Canadian prime minister push him around … on the eve of this,” Kudlow said. “Kim must not see American weakness.”



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