Berkshire bucks the trend
Tomorrow is Berkshire Hathaway’s annual shareholder meeting, the gathering known as “Woodstock for capitalists.” Like last year, the company is bowing to the times by holding the meeting virtually. But another aspect of the discussion may show that Warren Buffett is increasingly out of step with the times, DealBook’s Michael de la Merced reports.
Investors are pressing Berkshire to disclose more about climate change and work-force diversity. Shareholders, including the Calpers public pension fund, argue that Buffett’s conglomerate isn’t doing enough to disclose its portfolio companies’ progress in addressing those issues. Buffett opposed these initiatives ahead of the meeting, arguing that they cut against Berkshire’s philosophy of letting its subsidiaries operate largely independently. “I don’t believe in imposing my political opinions on the activities of our businesses,” he said at Berkshire’s 2018 annual meeting.
Buffett is expected to get his way, for now. He controls over a third of Berkshire’s voting power and holds sway over faithful retail investors, virtually guaranteeing that the proposals will fail to pass.
Simiso Nzima, the head of corporate governance at Calpers, points out that the S.E.C. appears inclined to force more disclosure on climate change risks anyway.
The big question is whether this will tarnish Berkshire’s golden reputation. Corporate America is increasingly heeding investor demands — including from BlackRock, a major Berkshire shareholder — to do more to fight climate change and racial inequity. Berkshire does not dispute the importance of climate change and diversity, but Buffett’s pushback here risks denting his standing as perhaps the world’s most admired investor. “I don’t think at the moment there’s been a slip in the gold standard,” said Lawrence Cunningham, a professor at George Washington University and a Berkshire shareholder, “but if it’s not tended to, there might be.”
HERE’S WHAT’S HAPPENING
Big Tech finishes earnings season on a strong note. Amazon’s first-quarter earnings more than tripled — yes, tripled — to $8 billion, surpassing expectations. As our colleague Shira Ovide writes, the quarter showed that tech giants are “unquestioned winners of the pandemic economy.”
announced today that an E.U. investigation found that the iPhone maker abused its control over its App Store to charge its music-streaming rival more in fees.
A big day in New York City: July 1. Mayor Bill de Blasio said the city would fully reopen by that day. But officials concede that tourism won’t fully return to prepandemic levels for years, and employers have been largely targeting the fall for bringing workers back to offices.
The head of the Credit Suisse board’s risk committee steps down. Andreas Gottschling won’t stand for re-election. He is the latest official at the Swiss bank to exit following scandals at Greensill and Archegos.
Good and bad news for AstraZeneca. The drug maker beat expectations for earnings and sales growth, but it is struggling to compile the data requested by U.S. officials to have its Covid-19 vaccine approved by the F.D.A., The Wall Street Journal reported.
given the Tesla chief’s history with the S.E.C.
Today in Business
“The days of the bullpen, the trading floors — that’s over.”
— Whitley Collins of CBRE on how the pandemic has upended the commercial real estate market, reversing the trend of “more and more dense” office spaces.
A warning on gig workers
Marty Walsh, the labor secretary, said yesterday that “in a lot of cases” gig workers in the U.S. should be classified as employees, not independent contractors. “In some cases they are treated respectfully and in some cases they are not, and I think it has to be consistent across the board,” he told Reuters. Shares of Uber, Lyft, Fiverr and DoorDash fell on the news.
But how much control does Walsh have over how companies classify their employees?
There’s no single law that makes workers employees or contractors. The Labor Department can enforce the Fair Labor Standards Act, which establishes the federal minimum wage and overtime pay. This only applies to employees, and who should fall into that category has been the subject of a long-running debate.
New guidance wouldn’t change the law. But it could change how the Labor Department decides whether to bring lawsuits against gig economy companies. “It’s implicitly a sign to employers that you should comply with this interpretation or there’s a risk of enforcement,” Brian Chen, a staff attorney at the National Employment Law Project, told DealBook. The guidance is nonbinding, but Benjamin Sachs, a professor at Harvard Law School, said courts “tend to give it deference” when making decisions. “I wouldn’t be surprised if we saw specific action coming from the department sometime this year,” said William Gould, a Stanford law professor and the former chairman of the National Labor Relations Board.