Oct 7, 2018 - Business

Danger zone: Shareholder and CEO wars take their toll

Photo: David McNew/AFP via Getty Images

The stock market might look as though it's effortlessly gliding to record highs, but there's a lot of turmoil right below the surface, much of it related to tensions between shareholders and management.

Driving the news: At Tesla, CEO Elon Musk seems to be constitutionally incapable of dialing down the tweets that have cost him and his shareholders billions of dollars in wealth.

  • His calls for short selling to be made illegal will be music to the ears of, well, short sellers like David Einhorn, who smell blood in the water.

At Unilever, lame-duck CEO Paul Polman wanted to cement his legacy by finally getting rid of the company's anachronistic and confusing structure of having dual listings and dual headquarters in London and Rotterdam.

  • He failed: The move would have been good for the company as a whole, but bad for U.K. shareholders, many of whom would have been forced to sell their stock once Unilever became a Dutch company headquartered solely in the Netherlands.
  • What happens next is anyone's guess, especially after the U.K. leaves the EU in March.

At GE, CEO John Flannery was unceremoniously defenestrated on Monday, after just one year running the troubled conglomerate.

  • The company took the opportunity to take a $23 billion write-down on the value of its power unit, most of it related to the disastrous $10.6 billion acquisition of Alstom's power business in 2015. Amazingly, the write-down on that single acquisition is likely to be substantially greater than the purchase price.
  • If his history is any indication, new CEO Larry Culp is likely to lower the company's dividend.
  • To make matters worse, Culp has no experience at GE beyond a short stint on its board.
  • GE shares rose on the news, but the real story is told in the bond markets, where GE debt continues to trade at deeply depressed levels and where S&P just downgraded the company to a mere three notches above junk. It's a far cry from the perfect AAA rating that GE enjoyed in March 2009.

What's next

Honoring Kobe Bryant: Sports stars, politicians and celebrities mourn NBA great

Kobe Bryant on court for the Los Angeles Lakers during the Sprite Slam Dunk Contest on All-Star Saturday Night, part of 2010 NBA All-Star Weekend at American Airlines Center in Dallas in February 2010. Photo: Jed Jacobsohn/Getty Images

Sports stars, politicians and celebrities paid tribute to NBA legend Kobe Bryant, who was killed in a California helicopter crash alongside his 13-year-old daughter, Gianna, and seven others on Saturday. He was 41.

What they're saying: Lakers great Shaquille O'Neal said in an Instagram post of his former teammate, "There's no words to express the pain I'm going through now with this tragic and sad moment of losing my friend, my brother, my partner in winning championships, my dude and my homie. I love you brother and you will be missed."

Bolton alleges in book that Trump tied Ukraine aid to investigations

Photo: Alex Wong/Getty Images

President Trump's former national security adviser John Bolton alleges in his forthcoming book that the president explicitly told him "he wanted to continue freezing $391 million in security assistance to Ukraine until officials there helped with investigations into Democrats including the Bidens," the New York Times first reported.

Why this matters: The revelations present a dramatic 11th hour turn in Trump's Senate impeachment trial. They directly contradict Trump's claim that he never tied the hold-up of Ukrainian aid to his demands for investigations into his political opponent Joe Biden.

Impeachment: Then & now

Illustration: Sarah Grillo/Axios

We are living in a measurably different political and media landscape than when the Senate acquitted President Bill Clinton of impeachment charges in 1999.

The big picture: These dynamics are setting the pace as President Trump’s legal team speeds through arguments to seek a fast acquittal.