December 2022

Posting something light tonight . . . .

I have found myself fascinated listening to Jax’s recent hit “Victoria’s Secret,” a clever pop ballad about female body image concerns and intimates retailer Victoria’s Secret.  The refrain is catchy and, itself, tells a story–a business story.

I know Victoria’s secret
And, girl, you wouldn’t believe
She’s an old man who lives in Ohio
Making money off of girls like me”
Cashin’ in on body issues
Sellin’ skin and bones with big boobs
I know Victoria’s secret
She was made up by a dude (dude)
Victoria was made up by a dude (dude)
Victoria was made up by a dude

Because I knew some of the history of the Victoria’s Secret business, I understood that the allusion to the “old man who lives in Ohio”–the “dude”–is a reference to Leslie Wexner, the founder of L Brands (earlier famous for owning major brands like The Limited, Express, and Abercrombie & Fitch, as well as Victoria’s Secret).  Victoria’s Secret became an independent publicly traded firm, Victoria’s Secret & Co., last year through a tax-free spin-off from L Brands (now known as Bath & Body Works, Inc.).  From the Victoria’s Secret & Co.

My classroom teaching for the semester is over.  I am in “grading mode”–not my favorite way of being.  But final assessments must be completed!  (Wishing you well in completing yours.)

Before I left the classroom, however–specifically, in the last class meeting for my corporate finance students–I did have some fun.  I saved my last class session in the course to address what my students wanted me to cover.  I asked for the topics in advance.  They covered a range of corporate finance topics, from litigation issues (Theranos, FTX, and current hot legal claims) through common mistakes to avoid in a corporate finance practice to survival tips for first-year law firm associates.  Weaving all of that together in a 75-minute class period was a tall task.

My ultimate vehicle was to come up with a list of maxims–short-form guidance statements–that would allow me to address all of what my students had asked me to cover.  I came into class with just a few maxims to get us started and cover the basics.  But the conversation was very engaged and got rich relatively quickly.  As we riffed off each other’s questions and comments, my little list grew to a robust thirteen maxims!  …

I’m a huge football fan. I mean real football– what people in the US call soccer. I went to Brazil for the World Cup in 2014 twice and have watched as many matches on TV as I could during the last tournament and this one. In some countries, over half of the residents watch the matches when their team plays even though most matches happen during work hours or the middle of the night in some countries. NBC estimates that 5 billion people across the world will watch this World Cup with an average of 227 million people a day. For perspective, roughly 208 million people, 2/3 of the population, watched Superbowl LVI in the US, which occurs on a Sunday.

Football is big business for FIFA and for many of its sponsors. Working with companies such as Adidas, Coca-Cola, Hyundai / KIA, Visa, McDonald’s, and Budweiser has earned nonprofit FIFA a record 7.5 billion in revenue for this Cup. Fortunately for Budweiser, which paid 75 million to sponsor the World Cup, Qatar does not ban alcohol. But in a plot twist, the company had to deal with a last-minute stadium ban. FIFA was more effective in Brazil, which has…

A former shareholder of Anaplan recently filed a lawsuit against several of its former officers and directors, alleging a variety of fiduciary breaches in connection with the company sale to Thoma Bravo (“TB”).

As you may recall from news reports at the time – or Matt Levine’s column – Anaplan signed a deal to sell itself to TB at $66 per share.  Then, the bottom fell out of the market, and suddenly that looked like a very generous price.  TB was stuck, though, until Anaplan screwed up by approving a bunch of new bonus payments to executives that violated the merger agreement’s ordinary course covenant.  That gave TB an excuse to threaten to walk away unless Anaplan agreed to a lower deal price, and the merger ultimately closed at $63.75 – a reduction of $400 million.

Pentwater Capital, a hedge fund with a substantial stake in Anaplan, is now suing, alleging that compensation committee directors, and the officers involved with the awards, breached their duties of loyalty and committed waste, and that the officers – including the company CEO, who was also Chair – acted with gross negligence. 

(Side note: to distinguish the CEO’s behavior in his capacity as…

Back in October, I posted a blog asking “Should Antitrust Regulators Come for the ESG Cartel?” Yesterday, The Federalist reported (here) that Republicans are launching an investigation into the “Climate-Obsessed Corporate ‘Cartel.’” Some key points from the article:

  • In a June op-ed published in the Wall Street Journal and cited by lawmakers, Sean Fieler, the president of Equinox Partners, a Manhattan-based investment firm, outlined how “The ESG Movement Is a Ripe Target for Antitrust Action.”
  • Republican Arizona Attorney General Mark Brnovich launched a separate antitrust investigation into the Climate Action 100+ network in November last year.
  • House Republicans launched an investigation Tuesday probing whether major climate groups that spearhead the “environmental, social, and governance” (ESG) movement are violating antitrust laws.

The article notes that: 

In a letter sent to executives of the Steering Committee for Climate Action 100+, Republicans led by Ohio Rep. Jim Jordan are demanding a treasure trove of documents that illustrate the coalition’s network of influence…. “Woke corporations are collectively adopting and imposing progressive policy goals that American consumers do not want or do not need. An individual company’s use of corporate resources for progressive aims might violate fiduciary duties or

…

A Pacific Legal Foundation press release from Nov. 16 (here) reports the following, which may be of interest to #corpgov types overseeing DEI initiatives.

Today, Joshua Diemert, a former City of Seattle employee, filed a federal lawsuit against the City and Mayor Bruce Harrell for subjecting him to a racially hostile work environment…. Diemert endured years of harassment and racial discrimination in the workplace. Some incidents officially sanctioned by the city were so severe that they created a racially hostile working environment. For example:

  • He was pressured to resign from a position rather than take FMLA leave because he was told that taking FMLA leave would be an exercise of his “white privilege” and would deny a “person of color” an opportunity for promotion.
  • On multiple occasions, upper-level managers verbally told him and other department employees that new positions should be filled with people of color, particularly senior roles.
  • He was forced to attend training that demanded he acknowledge his complicity in racism, not based on his personal actions or beliefs but because he is white.
  • When he spoke up against egregiously racist messaging at a required workshop, his coworkers labeled him a white supremacist. And belligerent colleagues continuously

…

When it comes to FTX, I’ll let the crypto people talk about the implications for that space generally, and I’m sure we all have our opinions on Samuel Bankman-Fried’s conduct – both before the collapse, and his endless apology tour afterwards – but what will live on for me is not any of that, but the 14,000 word hagiography that Sequoia had published on its website until very recently; they took it down after the bankruptcy declaration, though of course you can’t erase anything from the internet.

Sequoia has gotten a lot of flak for it not only for the fawning coverage, but because it revealed that Bankman-Fried actually was playing a video game during his pitch meeting.  More than that, after FTX raised $1 billion in its B round, it apparently held a “meme round” of financing, and raised $420.69 million from 69 investors.

Such revelations have inspired a lot of criticisms of the due diligence process today, not only by Sequoia but also by other FTX investors like Ontario Teachers’ Pension Plan.

But what really stood out to me not just was the evidence of due diligence failure, but the fact that Sequoia intentionally, by their own…

In a press release issued today (here), “Florida Chief Financial Officer (CFO) Jimmy Patronis announced that the Florida Treasury will begin divesting $2 billion worth of assets currently under management by BlackRock.”  Stated Patronis:

Using our cash … to fund BlackRock’s social-engineering project isn’t something Florida ever signed up for. It’s got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do. Florida’s Treasury Division is divesting from BlackRock because they have openly stated they’ve got other goals than producing returns. As Larry Fink stated to CEOs “[A]ccess to capital is not a right. It is a privilege.” As Florida’s CFO I agree wholeheartedly, so we’ll be taking Larry up on his offer. There’s no lack of companies who will invest on our behalf, so the Florida Treasury will be taking its business elsewhere.

At some point, these millions/billions being divested from Blackrock are going to add up to real money.