Fight Against McKesson CEO’s $292M Golden Parachute

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July 21 (Bloomberg) -- Bloomberg’s Dawn Kopecki examines McKesson Corp CEO John Hammergren’s golden parachute for two hundred ninety two million that will face a proxy fight in “On The Markets.” She speaks with Matt Miller on “Street Smart.” (Source: Bloomberg)

All right, it is time for the roundup, along with matt miller and others.

Worrying about the policies of vladimir putin in ukraine, leading to sanctions, but this is a culture of fear, and there are billionaires and analysts that are talking to bloomberg.

Well, obviously, if you have made $1 billion -- we have known this for a long time, but you want to get your money out of there?

If you find out he is going to punish you, sending you to siberia -- if you have made a couple billion dollars under the regime of vladimir putin, that is part of the cost of doing business?

This is one scary dude.

I read a book about a man with.

This guy is a bully.

He started off as a mid-level kgb, not even a diplomat, rises to the top, becoming one of the richest men in the world, which is normally a pretty cool story, meeting you come from nothing to something, but he had done it totally through intimidation.

From the russian perspective, it is a pretty cool story, because there was the annexation of crimea -- whether or not this is the point where russia becomes a pariah state, kind of the way lidia became that way after the lockerbie shootdown.

He is a big client.

Will you stop doing as much business with russia?

I do think it is a good story.

I also like michael kors lonie -- corleone, from "the godfather." ok.

You can see in this other story, this has increasingly become a political issue, but nonetheless, tragic with rick perry, tens of thousands of children, 56,000 that aren't there at the border and without family.

It is a really challenging problem.

If you talk to ranchers, it is not just the kids coming across, but the people who live on the border are scared, because people are cramming -- coming across the border and our arms.

On the other side of the tracks, so to speak, on the other side of the river, this is not such a good thing for them.

It is my -- not as nice and soft . i can get on a horse, and i guarantee you will see this, driving along the border.

I take your point.

There are dangers on the border, but it seems that the catalyst, the trigger, there are more than 50,000 children who have arrived, and now, governor perry is saying, oh, my god, children are coming, grab your guns.

Not just children.

56,000. but there are lots of adults that are coming across, and not so innocent as children.

The bottom line, it is against the law.


We have done that, haven't we?

Isn't that finished?

The subprime mortgage lending that led to the crisis.

According to the new york times investigation, subprime automotive loans, millions of americans with shoddy credit easily obtained loans from used car dealers.

I know you have been looking into this story, matt.

I have, and it is a fascinating story because you're getting kind of a mini replay of the mortgage crisis, but it is not as scary for the u.s. economy, because cars are much easier to take over and resell them homes, right?

If you have a bunch of homes on your balance sheet, you are in trouble.

Sold for a high yield.

Investors are boring money into this because they want yield, but with high yield comes high risk, so a lot of the loans are not going to be solid.

This is an area of the economy where we are taking advantage of a lot of people, because these are folks who cannot normally come to the bank and get it, and they are putting up their car as collateral and are having to pay 20 two percent on interest, high interest, and they never come out of the debt.

The car is collateral automatically, right, because they borrow money to buy the car.

They are adults, you know?

They can read, and they are taking a chance.

In a lot of cases, they need a car in order to get them to a place to earn money, so they are taking a chance, taking a high interest rate loan to get a car so they can get a job and pay that loan.

It does not always pay off, but the subprime lenders will argue that they are doing these people a favor by doing that.

By the way, if you do not have a car to get to work, you are not going to be able to get to work.

In this country.

All right, let's move on to new york knicks' carmelo anthony, who re-signed with the knicks for $125 million over five years.


I get it.

Everybody wants to be in consumer technology, and everybody has seen dr.

Dre, and they have seen that someone in their 20's can build snapchat, but does that mean that he can be a good investor?

Look who he is doing this with.

This guy has done really well.

He is on the board of wwe, putting his money into some of the big things out there, a smart move.

Playing sports together with a really smart guy.

Giving him the cash.

Carmelo's new part-time job.

What i admire about this guy, how much, 30 million, was it?


They are both very good though.

In your face.

All right, thanks so much, guys.

Good to see you.

I want to shoot it over to cory johnson who has some breaking news on texas instruments for us.


Texas instrument's reporting, and they announced all of the way back in april, and it turned out better than that.

Texas instruments announcing $.62 against the $.59 expected.

This is one of the rare i hate the discussion, how is tech doing.

Texas instruments actually is a company that informs us a lot on spending in information technology, because their chips go into so many agile technology items.

Yes, they are a beneficiary of subprime lending because their stuff goes into cars in a big way, but this is really a broader story of what is going on in terms of technology spending going forward, buying the chips, and what they are telling us about the next quarter is that it will be even better than what was expected in both revenues, earnings per share, free cash flow, about 25% of revenue, and all of those numbers for texas instruments, and it suggests a lot of spending by technology companies as well as by companies like ford and gm with the subprime stuff that matt does not seem to think matters but maybe actually does matter to the economy quite a bit.

All right, cory johnson from san francisco, thank you.

Coming up, one of the world's hottest tech teams, but will the momentum be curbed in that sector?

Some companies right after this.

"street smart" is back.

? time warner has removed a provision that allows shareholders to call special meetings, which could be used to pressure the company to sell.

The move could help time warner fend off a bit by rupert murdoch's 20th century fox.

Jon erlichman, ok, how is this going to work?

Investors saw that uptick in the stock price, and it seems like they want a deal.

And is -- and one yes, it is interesting.

It is not likely often that they have a provision in their documents that they will yank away, but that is what time warner is doing.

They have said that shareholders are not going to be able to mold a special meeting for a period of time.

What they said as they want to reinstate this for the 2015 annual meeting, so, basically, they are taking an auction off of the table in the short-term, and clearly the message here is that they are going to try to make life a little more difficult for fox.

What i think it's interesting, trisha, is when we saw jeff reacted to the fox offer, it is not as if he said this is a bid that undervalues our company.

He said, we are not interested in doing a deal with fox, so to take this extra step, whether this is a dance or a game that time warner is playing, this is a more serious way of saying, no, we do not want to have an offer by fox, so they will wake to the next card to fall in this game.

A polite way of saying it, but we will be watching.

Thank you so much.

Jon erlichman, there lies in l.a. coming up next, more tech startups than any other nation, and a global tech leader?

We will talk about that, next.

? israel currently has more high-tech startups and more venture capital per capita than any other country in the world, and israel has served up some m&a activity.

Last year, google purchased an israeli app for 1.1 billion dollars, but with the fighting, will it continue to thrive?

Joining is a guest who founded a 3-d printing company and a cofounder of a company which has partnered with american express to create interactive advertising kiosks, and a man who spent three years in the israeli defense forces as a computer networking engineer.

Also, on the phone, a ceo, larry, who worked with is really investors to help people with spinal cord injuries for an exoskeleton system.

All right, the business in israel.

What is your concern right now in terms of the conflict we are seeing as this heats up?

Does this affect this?

Does it slow the economy down question requests well, in our case, raising capital investment, we reached out to israeli vc's, and i was there a few weeks ago just before this started, and the mood changes.

You cannot really go to someone and say, hey, i need your money.

It has to be very settled when you do that.

Finding is not as fluid, let's say.


And there are a lot of other partners on the software level, and they hinder some of the efforts, but you have to remember that 80,000 reserves are on the call.

That is something you have to consider.

On the positive side, actually, some of the experts from the israeli community here in new york have been very positive to try to get the word out.

I came from a meeting today with a group called hamas free wi-fi, which is to bring technology, three technology, the awareness to need three notation with the other side -- that may just get another into the conversation, as well.

What happens in terms of the economy there?

People's willingness to do business in light of all of this tension?

Yes, so back in december, we launched, and after kick started, there were distribution offers in israel.

The issues that recently kind of slowed down, so we have not had a chance to launch our product in israel yet, but we are hoping that the conflict dies down and we will be able to renegotiate.

Do you really feel like they are pulling out?

It depends.

It was about 80 years or so.

It is become sort of an everyday lifestyle.

You know, larry, have you seen any effect on your businesses as a result of this ground invasion in gaza?

No, nothing specific.

There are our contacts and our employees.

They have not missed anything at work or have been disconnected ever, so so far, the global nature of this has been focused.

I think one thing, larry, that is pretty incredible is that this is a country over the last 60 years which has obviously dealt with a lot of conflict, and yet, it has managed to build its economy so much.

Some of the stats that i gave earlier, per capita more tech up an event any other country in the world.

How are israelis able to do this amid the conflict and turmoil?

I think despite the conflict, they have a better environment.

I have done this one in israel, and we were able to get there quicker and more efficiently, and we had better support from the government and the industrial policy in israel banned in the states, and i think if they keep those policies up, israel will continue to develop products faster and less expensively than in other parts of the world.

What are some of the policies that seem to work so well there that are helpful to businesses?

I think there are two categories.

There are a lot of early-stage ones, the office of the chiefs, and they all in able at a higher level early-stage invention, and i think early-stage, some marketing grants, and we find a better environment for venture capital and amounts in israel then we saw in the united states.

Well, we are going to leave it there, and we hope that the economy continues to do well in this space.

Thank you so much for all of you.

That is it for this edition of "street smart." tomorrow, steve forbes is here, and we will talk about giving up control of his media empire to a hong kong-based group.

? ? time now for bloomberg television on the markets.

I am matt miller.

Stocks ended the day on this monday down across the board.

Not nearly as rough as it had been earlier this morning.

The dow jones industrial average at one point got 125 points, and it finishes down.

The s&p 500 down one quarter of one percent.

And one stock that we are watching ishares of a medical products company up more than 16% so far this year, and more than 500% since the ceo became ceo, and they have been given 292 million reasons to stay on the job, with a golden parachute.

Joining me now.

Actually, it is 292 million dollars if he leaves, right?


If there is a change in control, and it does not even have to be an acquisition.

If his duties are reduced in any way, if they change the headquarters of the company, you have to look at the fine print in the proxy statement.

If they change the headquarters more than 25 miles from where he is currently commuting, this provision kicks in, and then what has to follow is a termination, so not just is there a change in control, but if he leaves for some good reason on his own, and that is one of them, moving the headquarters is one, or if he is otherwise fired, he gets $292 million on top of the millions in already vested options in stock he has sitting in the bank.

Now, i can understand getting yourself an insurance policy for getting fired, or a company will often make shareholders even more money than you have already made them, and this guy, to be clear, has made the owners of this company very wealthy.

They owned large stakes.

Absolutely, absolutely.

He has done the right thing.

A lot of this is fine print, right?

This guy has been such a good ceo for the company, it is hard to imagine that he would demand $300 million if the company moved their headquarters several miles.

Interestingly enough, he actually reduced his own pension payment.

His pension is now 100 $14 billion, and he got a lot of backlash, and he voluntarily reduced its himself earlier this year around march or so, so this 290 $2 million includes $114 billion that were reduced, so he does have one of the richest golden parachutes that any current ceo has.

It is less than what jack welch had when he retired from ge, which was 400 17 million dollars, but that cause all sorts of public outrage, and shareholders are not happy about this package either.

Are they big shareholders?

Big shareholders made a lot of money.

They cannot be angry about this, right?

Yes, but they are not happy about how rich this package is because it ends up diluting their own value.

I mean, we are talking about almost two thirds of $1 billion.

That is going to hit the company whenever he decides to walk away, and so this is something that shareholders are can earn about.

The teamsters have a proxy vote that is taking place july 30. some voted against a similar

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