Two Chinese executives awarded $600m for US pork deal

WH Group's Yang Zhijun (left) and Wan Long (right) at a press conference in Hong Kong. Photograph: Bobby Yip/Reuters

Two executives at the Chinese company that bought the US firm Smithfield Foods, the world's biggest pork producer, last September have been awarded more than $600m (£360m) of shares for their part in the $4.9bn deal.

WH Group and some of its shareholders launched an initial public offering for up to $5.3bn in Hong Kong last week, the second biggest ever listing by a food and beverage company.

Wan Long, the company's 73-year-old chief executive and chairman, sometimes known as China's "chief butcher", and Yang Zhijun, an executive director in charge of investment, merger and acquisitions and financing, were granted shares with an estimated value of $597m, the filing showed.

David Webb, a Hong Kong-based corporate governance advocate, said: "This is very unusual. Normally you would incentivise management for overall long-term performance and not simply for executing a transaction, which is part of their job. Especially given there's no evidence yet that the transaction is value-accreting. Let's hope they don't continue that kind of remuneration policy after they go public."

In three decades, Wan has turned WH Group, previously known as Shuanghui International Holdings, from a small, loss-making meat processor into the world's largest pork company. Along the way, he has had the backing of Goldman Sachs, the Singaporean state investor Temasek Holdings and Wen Yunsong, or Winston Wen, son of China's former premier Wen Jiabao, among others, Reuters has reported.

More than half of the 107m tons of pork eaten worldwide in 2013 were consumed in China.

Ukraine crisis: this does not feel like a doomsday scenario – or not yet

Donald Tusk, Poland’s prime minister, may think the world stands on the brink of conflict, but the markets are not really listening. Photograph: Kacper Pempel/Reuters

Events that took place a century ago offer a salutary lesson for those who think the tension between Ukraine and Russia will remain a purely local affair. That's what people assumed when Archduke Franz Ferdinand was assassinated at Sarajevo in June 1914. Seemingly small events can have dramatic consequences.

Financial markets have yet fully to price in the risk of matters spiralling out of control. To be sure, shares in Europe had a bit of a wobble on Monday and the price of oil rose slightly, but Wall Street opened higher on the back of a bounce back in retail sales following the harsh winter in the US. Donald Tusk, Poland's prime minister, may think the world stands on the brink of conflict, but the markets are not really listening.

For now, that seems a defensible approach. For the situation in Ukraine to turn really nasty, Kiev would need to get tough with the separatist protestors occupying buildings and Moscow would then have to retaliate with a show of force. This may happen, although neither Ukraine nor Russia seem keen at present to up the ante.

Were a conflict to break out, there are two main channels through which the rest of the global economy would be affected.

The first is through the blow that it would cause to consumer and business confidence, still relatively fragile after the Great Recession of 2008-09.

It is worth noting, though, that the build up to war in Iraq in 2002-03 had only a brief and limited view on sentiment, perhaps because, as now, money was cheap and readily available to borrow.

The second channel would be through energy shortages in Europe if Russia decided to turn off supplies in response to tougher Western sanctions.

But, as Capital Economics points out, even a country such as Germany, seen as the most vulnerable Western European country, gets only 8% of its total energy supply from Russia. And, with demand for energy falling as summer approaches, this is a poor time to play the energy card.

Financial markets are likely to remain choppy. Concern that Vladimir Putin will put Russian nationalism above economic self-interest means the price of Brent crude may rise and demand for gold is likely to remain strong. This may prove to be a doomsday scenario that plunges the global economy back into recession, but it doesn't feel like it. At least not yet.

Google increased its UK advertising spending by 50% to £45m in 2013

Much of Google's increased spending on UK advertising last year was on promoting its Nexus 7 tablet, above, and its Chromecast media player. Photograph: Josh Edelson/AFP/Getty Images

It may take the lion's share of advertising spending online, but Google is also raising its spending on adverts in the UK, which was up by 50% last year to £45m, ahead of telecoms firm O2, National Lottery operator Camelot and confectionery firm Mars.

After five years of advertising in Britain Google is at No 31 in the top 100 UK advertisers, according to Nielsen Ad Dynamix – which monitors ad spending on TV and radio, in print, online and direct mail.

Google may be using technology that can track the "viewability" of online adverts to help it lure big brand advertisers away from television but according to industry estimates in 2013 it spent £15m on traditional TV adverts. But it does not give a breakdown on where its ad spending goes and declined to comment.

Google began advertising on television in 2009. Since then it has used traditional media to promote products such as its Chrome browser, although it still pursues a "digital first" approach to marketing and advertising.

Much of last year's increase in Google's ad spend was on promoting its Chromecast media player and Nexus 7 tablet, particularly in the Christmas period.

According to Nielsen's Rob Tavendale there was a marked rise in the advertising of smartphones and tablets in 2013, with Google and Microsoft both increasing their year-on-year spending by 50%, and Sony Mobile by 108%.

Google's spending on promoting the Nexus 7 rose by 170%, while Sony and Microsoft increased their smartphone advertising by 162% and 484% respectively, Tavendale said.

Last year, Microsoft spent £60m on advertising in the UK – putting it in 18th place. Sony Mobile came in at 77th in UK ad spend with £24m.

The biggest UK advertiser in 2013 was BSkyB, spending £264m.

Tavendale said: "In the fiercely competitive telecoms sector, BSkyB's spend was up 10%, as it faced increased competition from BT, while TalkTalk recorded a 90% increase."

But despite the launch of its sports channels, BT reduced its spending by 16% to £150m, putting it in third place – behind household products group Procter & Gamble (£177m) and ahead of Unilever (£119m)

Neilsen's research also revealed that the total amount spent on UK advertising fell by 2.35% compared with a year earlier. In 2012 spending had increased 2.4% on the previous year.

Peugeot Citroen boss pledges return to profit by 2018

Chinese employees at Peugeot’s state-of-the-art factory in Wuhan in central China, which was opened in July last year. Photograph: Shepherd Zhou/EPA

Peugeot Citroen's new chief executive has vowed to return the struggling French carmaker to profit on car manufacturing by 2018, as he set out a long-awaited recovery plan.

Unveiling a programme labelled Back in the Race, Carlos Tavares said the group would draw on its recent rescue by Chinese investors and the French state. He promised to reverse losses in Europe and emerging markets by reducing costs, excess plant capacity and the number of models on offer.

Peugeot Citroen has struggled to adapt to the shrinking European car market, with sales falling 5.4% last year in a global market that grew 4.2%.

After losing more than €7.3bn (£6bn) in two years, Peugeot struck a rescue deal in February to sell two 14% stakes – one to the French government and one to China's Dongfeng motor group – as part of a €3bn cash infusion.

Investors welcomed a return to positive earnings goals but were sceptical regarding the size of the task.

"While they see themselves as back in the race, they don't seem to realise that the competition is moving forward just as quickly," said Barclays analyst Kristina Church.

Facebook prepares to launch e-money transfer service in Europe

Facebook's Sheryl Sandberg addresses a conference in San Francisco in 2013. The firm already has permission for some forms of money transfer in the US. Photograph: Bloomberg/Getty Images

Facebook is preparing a money transfer service in Europe that would allow it to compete with the likes of Western Union, while giving users the option of storing money with the social network or buying items online.

The US tech firm is seeking regulatory approval in its European base inIreland for "e-money" status, which would see it issue digital credits that can be converted into cash by recipients.

The firm already has permission for some forms of money transfer in the US, which allow payments within apps, including the Candy Crush Saga and Farmville games, from which Facebook takes a 30% cut. The company facilitated $2.1bn (£1.3bn) in transactions across Facebook in 2013, primarily to games publishers.

Approval in Ireland would allow Facebook to operate an e-money service throughout Europe using "passporting", which allows digital payments to be used across EU member states without having to gain regulatory approval from each one.

Facebook declined to comment on the development, which first emerged in the Financial Times, but the move highlights the scale of the global money transfer market. "The market for money transfer is very, very large," said Taavet Hinrikus, co-founder of TransferWise – one of three payment services reportedly in partnership discussions with Facebook.

Hinrikus declined to comment on the reported partnership discussions but said:

"For remittance alone the market is worth around $500bn, according to the World Bank, but for money moved between developed nations, as well as between developed and developing individuals and business, the market is valued at an estimated $5tn to $10tn, based on our analysis of global money flow data."

Facebook has made mobile platforms the focus of its expansion strategy in developing markets such as India, which accounts for more than 100 million of the firm's 1.2 billion users. Mobile broadband subscribers far outstrip fixed-line ones in developing nations.

"Could Facebook become some sort of utility in the emerging markets? It's certainly possible," said Brian Blau, a director at the research firm Gartner.

"Facebook has a lot of ambition here and they certainly see the benefits of helping the next 2 billion people make it on to the internet, which they're happy to subsidise for a while, but at some point they have to become paying customers."

In developed nations, Facebook is in competition with established technology platforms such as Apple's iTunes and Amazon's online stores, which have millions of customers with credit cards attached to their service.

"Payment schemes are the equivalent to credit cards in emerging markets and here is where Facebook can make progress … especially in those places where banking infrastructure is not as mature as it is in Europe or the US," said Blau.

Regulatory approval from Ireland would subject Facebook to the same controls as a bank, requiring it to segregate funds equivalent to the amount of e-money it issues.

Payments and e-money services are an expanding area of the financial services and technology market, though Facebook's rivals have been more focused on payment systems than money transfers.

Amazon's chief executive, Jeff Bezos, has reportedly made payment systems a priority focus, saying his company's payments team should "go faster" in its efforts to be successful in the space.

Google has made strides in mobile payments, with its Google Wallet services in the US. The search firm is registered as a payments provider in the UK, similar to the authorisation Facebook is seeking in Ireland, although its services have yet to see widespread adoption by consumers.

PayPal has also been moving towards mobile payments with its apps and one-touch payment services, most recently using the fingerprint scanner in the latest Samsung Galaxy S5 smartphone to authorise payment.

Co-op risks tighter control by banks without reform, warns Lord Myners

Comments by Lord Myners come in the week that he Co-operative Group is poised to report at least £2bn in losses. Photograph: Oli Scarff/Getty Images

The City grandee brought in to reform the crisis-stricken Co-operative Group fears his plan will be rejected unless the owners of the loss-making chain of supermarkets, pharmacies and funeral homes understand the serious need for a radical overhaul of the way it is run.

Lord Myners resigned from the Co-op board last Wednesday as opposition mounted against his initial proposal to scrap the current boardroom. He warned that the banks, which Co-op owes £1.2bn, could take a tougher stance without change.

The group, which is being rocked by warring factions over the proposed shakeup, is poised to report at least £2bn of losses on Thursday. Its financial results have been delayed twice following the resignation of chief executive Euan Sutherland after details of his £6.6m two-year pay deal were leaked to the Observer.

Myners' proposals are to be voted on at the annual meeting of Co-op's owner-members next month, when he will step down as the only independent director on the board, which contains 20 members from the co-operative movement.

Appointed only in December following the drugs scandal surrounding the former Co-operative Bank chairman Paul Flowers, Myners said: "I think the possibility of my proposals being accepted by the membership in May is quite low."

The comments were made before the publication of a comment piece in the Guardian in which he responds to critics who have accused him of trying to impose "Plc-style" reforms to the UK's biggest mutual.

Myners argues that he is "a strong supporter of co-operatives and mutuality" but the reforms are needed in the long term. "[Otherwise] the banks could conclude that they have to tighten their grip on the Co-op and the government would probably accept that it would have to launch a full inquiry into the way the Co-op Group has been run over several years.

"I see these as being very real possibilities if the Co-operative Group does not reform its governance and become more business-like while remaining true to co-operative values and principles."

Myners was chairman of Guardian Media Group before becoming City minister in 2008 during the banking crisis.

When he hastily published an outline of his ideas in the days after Sutherland's resignation, Myners warned that the Co-op risked running out of money unless it reformed.

A number of investigations – including by City regulators – are under way into what went wrong at its bank, which is just 30% owned by the group after it had to be rescued last year. The group hired former civil servant Sir Christopher Kelly to investigate and he is expected to publish a damning report shortly.

The bank has also warned that the wider group's problems mean it might not pay the £263m it owes the banks as its share of emergency fundraisings.

The crisis is expected to be discussed by the Treasury select committee which has called Myners to give evidence next month.

His resignation followed remarks by Patrick Gray, president of the largest independent co-op, the Midcounties, who said his board had voted against the proposals. Gray had written a comment piece for the Guardian's website a week earlier in which he criticised Myners, triggering the Labour peer's decision to write his own rebuttal.

Myners argues: "The Co-operative Group now confronts profound financial and strategic challenges. It urgently needs governance that is fit for purpose. The consequences of not addressing this do not bear contemplation by those who care about the group or for those who depend upon it, like our 90,000 colleagues.

"I represent no one except common sense. For this reason, it is a matter of deep regret that my proposals cannot be voted upon by the entire membership."

The votes at the annual meeting will be cast by representatives of the regional boards – which represent up to eight million members and control 78% of the votes – and independent societies such as Midcounties, which together control the rest.

The vacated chief executive role is being filled by Richard Pennycook, who is also receiving the contentious retention pay packages that bolstered Sutherland's pay along with that of seven others. Pennycook is expected to become chief operating officer once a successor is found.

Myners added that Ben Reid, boss of the Midcounties, had made clear his willingness to serve as group chief executive if asked, which the peer signalled would probably require Midcounties to merge into the Co-operative Group.

Reid would not respond to Myners' comments, but a spokesman for Midcounties said: "Our board fundamentally believes in strong, independent, regional societies. It has absolutely no aspirations to merge with the Co-op Group."

Myners would not comment on the reason for his resignation but said he was "saddened" by the extent of opposition that emerged even before he had published his final report.

No intention of selling handset business: BlackBerry CEO

BlackBerry has no plans to sell its devices business even as the Canadian smartphone maker faces losses and inventory pile up.

"I want to assure you that I have no intention of selling off or abandoning this business any time soon... Our focus today is on finding a way to make this business profitable," BlackBerry CEO John Chen said.

"I know you still love your BlackBerry devices. I love them too and I know they created the foundation of this company," he added.
Recent reports suggested that Ontario-headquartered firm was leaving the handset market.

"BlackBerry is not a handset-only company. We offer an end-to-end solution and devices are an important part of that equation," Chen said in the company's blog post.

He added that the company is "complementing" its devices business with other revenue streams from enterprise services and software to messaging.

"We are also investing in emerging solutions such as Machine to Machine technologies that will help to power the backbone of the Internet of Things," he said.

Chen said the company will do "everything in our power" to continue to rebuild business and deliver devices with the iconic keyboard and other features that users associate with the BlackBerry brand.

"Rest assured, we continue to fight. We have not given up and we are not leaving the Devices business," Chen reiterated.

For its fourth quarter ended February, BlackBerry reported a net loss of USD 423 million, while its revenue declined 64 per cent to USD 976 million.
Its revenues stood at USD 2.7 billion in the year-ago, December 2012-February 2013, quarter.

The firm sold about 3.4 million smartphones in Q4, including shipments made and recognised prior to the fourth quarter, which reduced the company's inventory in channel.

Of the BlackBerry smartphones sold through to end customers in the fourth quarter, about 2.3 million were BlackBerry 7 devices.

For the full financial year, its net loss widened to USD 5.9 billion from USD 646 million in the previous fiscal, while revenue fell 38 per cent to USD 6.8 billion.

Once a leader in the global smartphone market, BlackBerry lost market share steadily and now trails Samsung and Apple.

BlackBerry has also said it would sell most of its real estate holding in Canada to improve operational efficiencies in the face of mounting losses and unsold handset inventory.

Besides, it has already sold its US headquarters in Texas to Canadian Brookfield Property Group.