DealBook: Exclusive: Airbnb Imagines a ‘Stakeholder’ World
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Airbnb moves beyond shareholders
Brian Chesky, Airbnb’s co-founder and C.E.O., spoke exclusively to Andrew last night about the company’s announcement today that it will think about all “stakeholders” when it comes to corporate governance, not just investors.The move is Mr. Chesky’s take on the Business Roundtable’s recommendations last year that companies consider employees, the environment and more in their business decisions.• Airbnb is planning to hold a “Stakeholder Day.” It would be like a traditional annual shareholder meeting — except that everyone from customers to “hosts” to employees and others will be invited.• It will also change its compensation program, with factors important to stakeholders like progress on guest safety taken into account when bonuses are calculated.“I don’t want to be one of those C.E.O.s to say we’re trying to do all this great stuff, but then we treat board meetings exactly like every other board meeting,” Mr. Chesky told Andrew. He added that he doesn’t think this is particularly radical: “I think this is where the world is going.”The big picture: • Airbnb remains under fire on a number of fronts, including battles with regulators over housing laws, concerns over the safety of its customers and claims of discrimination by hosts. They’re among the struggles that surround the company’s plans to go public this year.• It’s unclear whether investors, as one of many groups of stakeholders, will embrace their diminished stature within Airbnb’s universe.• And it remains to be seen whether the new goals will increase the company’s valuation in its market debut.____________________________Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Michael J. de la Merced in London.____________________________
Microsoft’s ambitious climate goal: going “carbon negative”
The tech giant unveiled a response to climate change yesterday that goes beyond offsetting carbon emissions. It wants to erase its entire historical carbon footprint by 2050, a target that no other major company has set before.What the plan involves:• Becoming “carbon negative” by 2030, which means not only ending the emission of carbon into the atmosphere, but also removing it.• Creating a Climate Innovation Fund that will invest $1 billion over the next four years into developing carbon-removal technology, which currently isn’t commercially viable.It goes further than other environmental pledges by Fortune 500 companies. Amazon said last year that it aimed to be carbon neutral by 2040. And PepsiCo announced this week that it wanted to cut its carbon emissions by 20 percent over the next decade. Climate activists hope that such moves will spur other corporations to think just as big.But there’s reason to be skeptical of Microsoft’s pledge. Sue Reid of the environmental nonprofit group Ceres told Reuters that the economics of carbon removal remained murky: “That math is all facing some new uncertainty and vulnerabilities tied to exacerbated climate change impact,” such as more wildfires, she said.Expect this to be a huge topic at the World Economic Forum in Davos, Switzerland, next week. Andrew will be on the ground to give you the inside scoop.
Inside Leon Black’s moneymaking machine
Apollo Global Management is one of Wall Street’s biggest private equity firms, managing over $320 billion in assets. Apollo’s success is due in large part to the strategies of its founder, Leon Black, who gets his close-up in this week’s Bloomberg Businessweek cover story.“Black’s aggressive approach — involving layoffs and slashing benefits — is also among the most profitable,” Caleb Melby and Heather Perlberg of Businessweek write. “Apollo’s flagship private equity fund, which it opened to investors in 2001, has delivered annual returns of 44 percent.”Highlights from Mr. Black’s career include:• Working with Mike Milken on junk bonds, a term Mr. Black still hates because competitors came up with it: “We were never accepted by the Goldmans and the Morgans and the Kidder Peabodys and the First Bostons.”• Investing where others wouldn’t dare. “Everybody else is running for the doors, and we’re backing up the trucks,” Mr. Black told Businessweek.But his biggest problem right now might be his association with Jeffrey Epstein:• The depths of Mr. Black’s financial ties to the late financier are unknown, but he is known to have given $10 million to Mr. Epstein’s charity and persuaded the financier to invest in a friend’s muffler company.• “After Epstein was found dead in his Manhattan jail cell a month later, former Apollo employees joked darkly that his death had made Black’s life easier.”
Why banks should give thanks to Trump
President Trump ribbed a top JPMorgan Chase executive this week when he said her bank should thank him for its stellar earnings. He may have had a point, at least when it comes to his tax cuts, writes Yalman Onaran of Bloomberg.• Savings for America’s top six banks — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley — from the 2017 tax overhaul have now surpassed $32 billion.• The banks “posted earnings this week showing they saved $18 billion in 2019, more than the prior year, as their average effective tax rate fell to 18 percent from 20 percent,” Mr. Onaran writes.• “The six firms posted $120 billion in net income for 2019, inching past 2018’s mark. They had never surpassed $100 billion before the tax cuts.”
Can Alphabet stay in the $1 trillion club?
The parent company of the search giant Google hit $1 trillion in market value yesterday, the fourth tech company to do so. But Alphabet faces challenges to stay at that level:• Regulation. Dai Wakabayashi of the NYT notes that “it faces investigations from Congress, state attorneys general and the Department of Justice,” as well as pressure from other regulators around the world.• New leadership. Alphabet’s co-founders, Larry Page and Sergey Brin, have taken a step back, leaving the company in the hands of Sundar Pichai, who has been criticized as lacking vision.• Shareholder sentiment. Investors are “debating whether the largest internet stocks have gotten too pricey,” Amrith Ramkumar of the WSJ writes.And here’s why it could keep climbing, Mr. Wakabayashi points out: “Google search is the on-ramp to much of the internet.”
Revolving door
Chris Young is stepping down as the chief of the cybersecurity company McAfee to become a senior adviser to TPG, the investment firm. He will be replaced by Peter Leav of BMC Software.George Cheeks, the vice chairman of NBCUniversal Content Studios, reportedly resigned to take a senior role at CBS.James Debney stepped down as the C.E.O. of the parent company of the gun maker Smith & Wesson after the board discovered what it said was nonfinancial misconduct.
The speed read
Deals• The Gap called off plans to spin off its most successful division, Old Navy, and investors cheered. (CNN)• Ant Financial, the corporate sibling of the Alibaba Group of China, is reportedly working with banks to revive its I.P.O. plans. (FT)• M.&A. advisory fees for five of Wall Street’s top banks dropped 5 percent last year, or $558 million. (FT)Politics and policy• President Trump said he would formally nominate Judy Shelton, a longtime critic of the Fed, to the central bank’s board of governors. (NYT)• How the U.S.-China trade deal could change the way international disputes are settled. (WSJ)• The Senate approved the revised North American trade deal known as U.S.M.C.A. by a vote of 89 to 10. (WSJ)• Several Democratic lawmakers said that JPMorgan Chase had not provided enough detail about its efforts to improve diversity and to address complaints about discrimination. (NYT)Tech• Facebook has reportedly called off plans to sell ads in WhatsApp, at least for now. (WSJ)• Fiat Chrysler is teaming up with Foxconn to develop electric vehicles. (TechCrunch)• Pinterest has surpassed Snapchat as the third-most popular social network in the U.S., a new study found. (Search Engine Journal)• Do you really need a smart toilet? (WSJ)Best of the rest• Employees at Barneys are angry that the fashion retailer, now in liquidation, fell short of $4 million in severance payout obligations. (NYT)• The German authorities raided the homes and offices of three people suspected of spying for China. (NYT)• Brace yourself: Here comes Build-a-Bear’s Baby Yoda. (Business Insider)Thanks for reading! We’ll see you next week.We’d love your feedback. Please email thoughts and suggestions to [email protected]. Read the full article