May 26, 2017

New York Times Company to Pay a 4-Cent Dividend

The company’s board voted to approve a dividend of 4 cents a share to all shareholders of record as of Oct. 9, 2013. It will be paid on Oct. 24, the week before The Times announces its third-quarter earnings. The Times has not paid a dividend since Dec. 14, 2008.

The dividend, which applies to both Class A and Class B shares, will cost the company roughly $24 million a year.

In a statement, Mark Thompson, president and chief executive of The Times, said that the board had concluded “that the strength of the balance sheet justified the restoration of a dividend.”

But Mr. Thompson warned that the company would remain cautious in its financial strategy.

“Given the expectation of continued volatility in advertising revenue and the fact that our growth strategy is at an early stage of development, we will maintain a prudent view of both the balance sheet and free cash flow,” he said.

During recent earnings calls, analysts have repeatedly asked Times executives to issue a dividend. In the first quarter of 2013, analysts noted that there was a sell-off of the company’s stock after management announced it would not issue a dividend because of concern about the financial state of the media industry. But in August, The Times reported that it had swung to a profit from stronger circulation revenue and lower operating costs.

John Janedis, an analyst with UBS, said that it made sense for The Times to issue a dividend now because the company was selling its final noncore asset, The New England Media Group, which includes The Boston Globe. After that sale closes next month, The Times will be able to focus exclusively on building its core brand, The New York Times.

“You basically have a clean balance sheet, you have free cash flow at the company,” Mr. Janedis said. He added that a dividend also made sense “given how much the company has slimmed down in terms of assets.”

Mr. Janedis estimated that The Times could afford to pay shareholders the dividend despite the media industry’s financial challenges.

“Even if the ad market weakens further and there is virtually zero return on their growth initiatives, they can easily fund the dividend if not increase it,” Mr. Janedis said.

In its last earnings report, The Times reported that, as of June 30, it had cash and securities totaling about $918 million.

Article source: http://www.nytimes.com/2013/09/20/business/media/new-york-times-company-to-start-paying-dividend.html?partner=rss&emc=rss

Lansing Lamont, Journalist and Historian of Atomic Bomb, Dies at 82

Mr. Lamont, the author or editor of several books, was a Washington correspondent for Time magazine when he conducted the interviews and gathered the information he used in his book “Day of Trinity,” published in 1965, 20 years after the bombings, in August 1945, that brought about the end of World War II.

It described the personalities and sometimes conflicting emotions of the scientists involved in the American program to build the bomb, known as the Manhattan Project; the rudiments of the mineralogy, physics and chemistry required in engineering the device; and the first atomic bomb test at Alamogordo, N.M., conducted on July 16, 1945, three weeks before Hiroshima.

“A pinprick of brilliant light punctured the darkness, spurted upward in a flaming jet, then spilled into a dazzling cloche of fire that bleached the desert to a ghastly white,” Mr. Lamont wrote. “For a fraction of a second the light in that bell-shaped fire mass was greater than any ever before produced on earth. Its intensity was such that it could have been seen on another planet. The temperature at its center was four times that at the center of the sun, and more than 10,000 times that at the sun’s surface. The pressure, caving in the ground beneath, was over 100 billion atmospheres.”

An international best seller, the book included the first publicly available illustration of the interior of an atomic bomb.

Writing in The New York Times Book Review, William Laurence, a former Times science editor, praised Mr. Lamont for preserving the recollections of the aging “principal protagonists” of the Manhattan Project.

“In a few years these facts would no longer have been available as firsthand material,” he wrote. “The contemporary world, as well as the historian of the future, are, and will be, deeply indebted to Mr. Lamont.”

Most government documents relating to the project were not declassified until a decade after Mr. Lamont’s book was published.

Mr. Lamont wrote or edited seven other books, including works on national affairs and Canadian-American relations as well as a memoir, “You Must Remember This: A Reporter’s Odyssey From Camelot to Glasnost,” published in 2008.

After his stint in Washington, during which he covered the assassinations of President John F. Kennedy and Senator Robert F. Kennedy, Mr. Lamont was Time’s deputy bureau chief in London, its chief correspondent in Canada and its United Nations bureau chief.

Lance Lamont, as he was known, was born in Manhattan on March 13, 1931, to Thomas and Elinor Miner Lamont. His father was a banker.

After graduating from Milton Academy in Massachusetts, Harvard College and the Columbia School of Journalism, Mr. Lamont served in the Army from 1954 to 1957. He worked for The Washington Star and was the Congressional correspondent for The Worcester Gazette in Massachusetts before joining Time in 1960.

Besides his wife, he is survived by two sons, Douglas and Thomas; two daughters, Elisabeth Wolcott and Virginia Cazedessus; a brother, Edward; a sister, Elinor Hallowell; and 12 grandchildren.

Article source: http://www.nytimes.com/2013/09/16/business/media/lansing-lamont-journalist-and-historian-of-atomic-bomb-dies-at-82.html?partner=rss&emc=rss

New York Times Web Site Returns After Hours Offline

“The outage occurred within seconds of a scheduled maintenance update being pushed out and we believe that was the cause,” said Eileen Murphy, a spokeswoman for The New York Times Company.

The site went down about 11:10 a.m., and sporadically returned around 1:15 p.m., with new articles being published again by about 3 p.m. The failure took place during the peak hours for traffic to the site, between 10 a.m. and 4 p.m., Ms. Murphy said, adding that the site had more than 7.1 million visits on Monday.

In January, The Times reported that Chinese hackers had repeatedly attacked NYTimes.com and had obtained passwords for some reporters and other employees before being repelled by computer experts working for the company. Ms. Murphy said that based on what experts examining the failure had seen there was “no reason to believe this was the result of a cyberattack.”

It was a consequential day for international news, with reports that the Egyptian military had fired on protesters supporting the ousted president, Mohamed Morsi, leaving scores of people dead. The Times used Facebook Notes to publish a handful of articles, including two concerning the violent crackdown in Egypt.

With a let’s-put-out-a-newspaper attitude — for example, the Opinion section of the Times posted to Twitter: “Readers, don’t fret. If nytimes.com remains down, we are ready to tweet op-eds and editorials in 140-character increments” — the failure was reminiscent of power blackout. As it happens, Wednesday was the 10th anniversary of the East Coast blackout.

Others were there to fill the void – with some promoting their podcasts or articles. Coincidentally, Dow Jones sent a message via Twitter about its newspaper The Wall Street Journal: “Bonus lunchtime reading: WSJ.com is free to everyone for the next 2 hours.” The company said the offer was for its breaking-news coverage of Egypt, a practice it has done in the past.

For readers, the single biggest opportunity seemed to be the reaction on Twitter. Ezra Klein of The Washington Post posted: “What, you thought Jeff Bezos was going to buy the Post and play defense?”

Article source: http://www.nytimes.com/2013/08/15/business/media/new-york-times-web-site-returns-after-hours-offline.html?partner=rss&emc=rss

AOL Chief Apologizes Over Firing of Worker

A recording of the firing was leaked to news outlets and caused a firestorm around Mr. Armstrong, who has been trying to turn AOL from a struggling Internet portal into a successful media company.

The four-paragraph statement, sent to AOL employees at 4:30 p.m. and obtained by The New York Times, said, “I am writing you to acknowledge the mistake I made last Friday during the Patch all-hands meeting when I publicly fired Abel Lenz. It was an emotional response at the start of a difficult discussion dealing with many people’s careers and livelihoods. I am the C.E.O. and leader of the organization, and I take that responsibility seriously.”

The firing took place during a conference call with more than 1,000 employees of Patch, the local news service AOL runs for hundreds of towns. Mr. Armstrong had convened the meeting to emphasize the direness of Patch’s circumstances and prepare the staff for coming layoffs and management changes.

“If you think what is going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave Patch today,” Mr. Armstrong told the employees.

But right after that statement he can be heard reprimanding Mr. Lenz, Patch’s creative director, who was videotaping the meeting, then firing him.

“Abel, put that camera down right now! Abel, you’re fired. Out!” Five seconds later, to stunned silence, he proceeded with his message.

In his letter to the staff, Mr. Armstrong further explained the reason for the firing, saying confidential meetings should not be recorded and that Mr. Lenz had been warned previously not to make recordings. AOL said that Mr. Lenz would not be hired back but that Mr. Armstrong had contacted him to apologize.

AOL has spent hundreds of millions on the Patch service, but has acknowledged being disappointed with its financial performance. During a call with analysts last week Mr. Armstrong said he would sell off or seek partners for as many as 400 of Patch’s 900 local sites, a move that could result in hundreds of layoffs.

The extent of the layoffs are expected to be announced internally on Thursday or Friday.

Article source: http://www.nytimes.com/2013/08/14/business/media/aols-armstrong-apologizes-to-staff-for-firing-of-employee.html?partner=rss&emc=rss

New York Times Company Swings to a Profit

The company reported on Thursday that net income rose to $20.1 million, or 13 cents a share, from a loss of $87.6 million, or 58 cents a share, in the period a year earlier.

Last year’s second-quarter results were hurt by write-downs related to the sales of About.com and the company’s regional newspaper group. Excluding those items, income from continuing operations was $20.1 million, compared with $38.1 million in the period a year earlier.

Total revenue for the quarter declined less than 1 percent, to $485.4 million, from $489.8 million in the second quarter of 2012. Circulation revenue rose 5.1 percent, to $245.1 million, from $233.3 million. But that gain was largely offset by a 5.8 percent decline in advertising revenue, to $207.5 million.

Print advertising at the company’s newspapers, which include The New York Times, The Boston Globe and The International Herald Tribune, declined 6.8 percent, and digital advertising fell 2.7 percent. Digital advertising now accounts for 24.7 percent of the company’s total advertising revenue.

Operating costs declined 3.1 percent, to $431.9 million, from $445.7 million, mainly because of lower compensation and benefits costs, according to the company.

“Our improved results in the second quarter were an organizationwide effort — with contributions from more favorable revenue trends and strong cost performance,” Mark Thompson, the company’s president and chief executive, said in a statement.

The number of paid subscribers to the Web site, e-reader and other digital editions of The Times and The International Herald Tribune grew to 699,000, a jump of more than 35 percent from the period a year earlier. Digital subscriptions to The Boston Globe and BostonGlobe.com rose to 39,000, an increase of nearly 70 percent from 23,000 a year earlier.

Alexia S. Quadrani, an analyst at JPMorgan Chase, said that while she was pleased with the results, she was also aware of the challenges newspapers were facing.

“As nice it is to see slightly better-than-expected numbers, the fact that we are many years into these declines and they still persist just shows you the secular challenges this industry is facing,” said Ms. Quadrani. “The New York Times has a successful digital platform to help offset some of the ongoing newspaper advertising weakness. It’s still a headwind you’re going to try to offset every day.”

Since Mr. Thompson joined The Times in November, he has focused on rebranding The Times as a global operation. In February, the company announced it would sell the New England Media Group, which includes The Boston Globe, Boston.com, The Worcester Telegram Gazette and Globe Direct, a direct-mail marketing company. Bids for the properties were due in July but a sale has not been announced.

The Times also announced in February that it would rename The International Herald Tribune, its 125-year-old newspaper based in Paris, The International New York Times. It also will unveil a new Web site for international audiences in the coming months.

The company has also continued to increase its plans to charge readers for content. In June, the company started to charge nonsubscribers who want to read more than three articles a day on The New York Times apps for mobile devices.

“We are making good progress and are on track with our strategic growth initiatives,” Mr. Thompson said. “In particular, we are well under way in the ramp-up for the fall rebrand of The International Herald Tribune as The International New York Times and with the development work related to our new paid products.”

Article source: http://www.nytimes.com/2013/08/02/business/media/new-york-times-company-swings-to-a-profit.html?partner=rss&emc=rss

Obama Says Income Gap Is Fraying U.S. Social Fabric

Upward mobility, Mr. Obama said in a 40-minute interview with The New York Times, “was part and parcel of who we were as Americans.”

“And that’s what’s been eroding over the last 20, 30 years, well before the financial crisis,” he added.

“If we don’t do anything, then growth will be slower than it should be. Unemployment will not go down as fast as it should. Income inequality will continue to rise,” he said. “That’s not a future that we should accept.”

A few days after the acquittal in the Trayvon Martin case prompted him to speak about being a black man in America, Mr. Obama said the country’s struggle over race would not be eased until the political process in Washington began addressing the fear of many people that financial stability is unattainable.

“Racial tensions won’t get better; they may get worse, because people will feel as if they’ve got to compete with some other group to get scraps from a shrinking pot,” Mr. Obama said. “If the economy is growing, everybody feels invested. Everybody feels as if we’re rolling in the same direction.”

Mr. Obama, who this fall will choose a new chairman of the Federal Reserve to share economic stewardship, expressed confidence that the trends could be reversed with the right policies.

The economy is “far stronger” than four years ago, he said, yet many people who write to him still do not feel secure about their future, even as their current situation recovers.

“That’s what people sense,” he said. “That’s why people are anxious. That’s why people are frustrated.”

During much of the interview, Mr. Obama was philosophical about historical and economic forces that he said were tearing at communities across the country. He noted at one point that he has in the Oval Office a framed copy of the original program from the March on Washington for Jobs and Freedom 50 years ago, when the Rev. Dr. Martin Luther King Jr. gave his “I Have a Dream” speech.

He uses it, he said, to remind people “that was a march for jobs and justice; that there was a massive economic component to that. When you think about the coalition that brought about civil rights, it wasn’t just folks who believed in racial equality. It was people who believed in working folks having a fair shot.”

For decades after, Mr. Obama said, in places like Galesburg people “who wanted to find a job — they could go get a job.”

“They could go get it at the Maytag plant,” he said. “They could go get it with the railroad. It might be hard work, it might be tough work, but they could buy a house with it.”

Without a shift in Washington to encourage growth over “damaging” austerity, he added, not only would the middle class shrink, but in turn, contentious issues like trade, climate change and immigration could become harder to address.

Striking a feisty note at times, he vowed not to be cowed by his Republican adversaries in Congress and said he was willing to stretch the limits of his powers to change the direction of the debate in Washington.

“I will seize any opportunity I can find to work with Congress to strengthen the middle class, improve their prospects, improve their security,” Mr. Obama said. But he added, “I’m not just going to sit back if the only message from some of these folks is no on everything, and sit around and twiddle my thumbs for the next 1,200 days.”

Addressing for the first time one of his most anticipated decisions, Mr. Obama said he had narrowed his choice to succeed Ben S. Bernanke as chairman of the Federal Reserve to “some extraordinary candidates.” With current fiscal policy measurably slowing the recovery, many in business and finance have looked to the Fed to continue its expansionary monetary policies to offset the drag.

Mr. Obama said he wanted someone who would not just work abstractly to keep inflation in check and ensure stability in the markets. “The idea is to promote those things in service of the lives of ordinary Americans getting better,” he said. “I want a Fed chairman that can step back and look at that objectively and say, Let’s make sure that we’re growing the economy.”

The leading Fed candidates are believed to be Lawrence H. Summers, Mr. Obama’s former White House economic adviser and President Bill Clinton’s Treasury secretary, and Janet Yellen, the current Fed vice chairwoman and another former Clinton official. The president said he would announce his choice “over the next several months.”

Article source: http://www.nytimes.com/2013/07/28/us/politics/obama-says-income-gap-is-fraying-us-social-fabric.html?partner=rss&emc=rss

The House Edge: A Shuffle of Aluminum, but to Banks, Pure Gold

The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.

This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back–and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.

Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process “a merry-go-round of metal.”

Only a tenth of a cent or so of an aluminum can’s purchase price can be traced back to the strategy. But multiply that amount by the 90 billion aluminum cans consumed in the United States each year — and add the tons of aluminum used in things like cars, electronics and house siding — and the efforts by Goldman and other financial players has cost American consumers more than $5 billion over the last three years, say former industry executives, analysts and consultants.

The inflated aluminum pricing is just one way that Wall Street is flexing its financial muscle and capitalizing on loosened federal regulations to sway a variety of commodities markets, according to financial records, regulatory documents and interviews with people involved in the activities.

The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone. In the last year, federal authorities have accused three banks, including JPMorgan, of rigging electricity prices, and last week JPMorgan was trying to reach a settlement that could cost it $500 million.

Using special exemptions granted by the Federal Reserve Bank and relaxed regulations approved by Congress, the banks have bought huge swaths of infrastructure used to store commodities and deliver them to consumers — from pipelines and refineries in Oklahoma, Louisiana and Texas; to fleets of more than 100 double-hulled oil tankers at sea around the globe; to companies that control operations at major ports like Oakland, Calif., and Seattle.

In the case of aluminum, Goldman bought Metro International Trade Services, one of the country’s biggest storers of the metal. More than a quarter of the supply of aluminum available on the market is kept in the company’s Detroit-area warehouses.

Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than 20-fold — to more than 16 months, according to industry records.

Longer waits might be written off as an aggravation, but they also make aluminum more expensive nearly everywhere in the country because of the arcane formula used to determine the cost of the metal on the spot market. The delays are so acute that Coca-Cola and many other manufacturers avoid buying aluminum stored here. Nonetheless, they still pay the higher price.

Goldman Sachs says it complies with all industry standards, which are set by the London Metal Exchange, and there is no suggestion that these activities violate any laws or regulations. Metro International, which declined to comment for this article, in the past has attributed the delays to logistical problems, including a shortage of trucks and forklift drivers, and the administrative complications of tracking so much metal. But interviews with several current and former Metro employees, as well as someone with direct knowledge of the company’s business plan, suggest the longer waiting times are part of the company’s strategy and help Goldman increase its profits from the warehouses.

Gretchen Morgenson contributed reporting from New York. Alain Delaquérière contributed research from New York.

This article has been revised to reflect the following correction:

Correction: July 20, 2013

A previous version of this article misstated one of the financial institutions that received approval to buy up to 80 percent of the copper available on the market. It is BlackRock, not the Blackstone Group.

Article source: http://www.nytimes.com/2013/07/21/business/a-shuffle-of-aluminum-but-to-banks-pure-gold.html?partner=rss&emc=rss

DealBook: After Goldman and Before Trial, a Global Education for Fabrice Tourre

Fabrice P. Tourre spent time volunteering on a coffee farm in Rwanda.Fabrice P. Tourre spent time volunteering on a coffee farm in Rwanda.

Fabrice P. Tourre is best known as “Fabulous Fab,” the former Goldman Sachs trader whose e-mails about the mortgage crisis became a symbol of Wall Street hubris and will now highlight the government’s case against him. As the economy was on the brink of collapse, e-mails show Mr. Tourre joked to a girlfriend that he sold toxic real estate bonds to “widows and orphans.”

But an inner circle of friends knows Mr. Tourre from very different dispatches — e-mail updates he sent from Africa during a stint as a volunteer. It was there that “Fabulous Fab,” a nickname he earned from a friend in New York, became known simply as “Breezy.”

“Rwandan coffee yields have significant room for improvements,” he wrote in a March 2011 message to friends, describing his adventure a world away from Wall Street. “Plenty of ideas and projects to focus on, with the ultimate goal to improve coffee farmers’ income and living conditions!”

“Rwandan coffee yields have significant room for improvements,” Mr. Tourre wrote in a March 2011 message to friends.“Rwandan coffee yields have significant room for improvements,” Mr. Tourre wrote in a March 2011 message to friends.

The e-mail, reviewed by The New York Times, provides a rare glimpse into Mr. Tourre’s life after Goldman, and after the Securities and Exchange Commission accused him of misleading investors about a mortgage security that ultimately failed. After his trip to Africa, Mr. Tourre enrolled in an economics doctoral program at the University of Chicago, where professors described him as a “standout” whom they selected as a teaching assistant for more junior students.

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Mr. Tourre’s character will come into focus when his trial opens Monday in a federal courtroom in Lower Manhattan. The human elements of the case, which could be spotlighted when Mr. Tourre takes the witness stand, might sway a jury otherwise bogged down in the minutiae of high finance.

While Mr. Tourre’s time in Rwanda is unlikely to play a role in the trial, he may nonetheless come across as a dynamic professional. Working in his favor, he has already calmly faced a Senate committee. He speaks slowly, the hearing showed, careful to enunciate. Still, jurors may view him as another ambitious Wall Streeter, one with a distinctly foreign accent.

In what is considered the most prominent case stemming from the financial crisis, the S.E.C. is expected to paint Mr. Tourre as a brash up-and-comer at Goldman, willing to sell investors products that were sure to fail. Mr. Tourre’s lawyers, in contrast, could try to portray their client as a bit player in the crisis — a midlevel 28-year-old trader at the time of his actions — who has dedicated his time since Goldman to worthy causes and a life of the mind.

“Fabrice Tourre has done nothing wrong,” his lawyers, Pamela Chepiga and Sean Coffey, said in a statement. “He is confident that when all the evidence is considered, the jury will soundly reject the S.E.C.’s charge.”

Goldman was charged alongside Mr. Tourre, but chose to settle, paying what was at the time a record $550 million penalty, without admitting or denying guilt. That left Mr. Tourre to tackle the S.E.C. alone, though with Goldman’s resources financing his fight. Mr. Tourre no longer works for Goldman.

On the eve of trial, people close to Mr. Tourre say he remains calm. Douglas C. Weaver, a former Goldman executive who once supervised Mr. Tourre and had dinner with his former colleague a few months ago, said Mr. Tourre appeared upbeat.

“He is dealing with it fairly well,” he said. “He doesn’t feel he did anything wrong.” Mr. Weaver added, however, that the charges had upended Mr. Tourre’s life.

Mr. Tourre, now 34, was raised in a suburb of Paris, and went on to earn a degree in mathematics from the École Centrale Paris.

He first came to the United States in 1999, at age 20, taking a summer internship in Hamilton, Ohio, as a production worker on an assembly line producing heater cores and air-conditioning units for the French car-part manufacturer Valeo. He then attended Stanford, where he received a master’s degree in management science and engineering.

After college, he landed a summer intern spot at Goldman, a hypercompetitive program that leads to a full-time job for a select few. Mr. Tourre, among the survivors, began in Goldman’s corporate credit department, where he started out securitizing, or packaging and reselling, auto loans. He later moved into a troubleshooting role for financial institutions with soured loan portfolios.

Fabrice Tourre, formerly of Goldman, faces claims that he was part of a conspiracy to mislead investors on a mortgage security.Doug Mills/The New York TimesFabrice Tourre, formerly of Goldman, faces claims that he was part of a conspiracy to mislead investors on a mortgage security.

Within the firm, Mr. Tourre was known as a statistical wizard. One former co-worker, who spoke on the condition of anonymity because of a Goldman policy against speaking to the media, described Mr. Tourre as an “analytical nerd.”

In 2004, Mr. Tourre landed a job in Goldman’s mortgage department, then a thriving unit of the bank, and a year later was making enough money to afford a $3,250-a-month apartment in Manhattan’s West Village. In the mortgage unit, Mr. Tourre was tasked with creating synthetic collateralized debt obligations, or C.D.O.’s.

It was a big business on Wall Street. From 2005 through 2007, at least $1.03 trillion in C.D.O.’s were issued, according to Dealogic, a financial data firm. Goldman, during this period, was the sixth-largest issuer in the world.

A C.D.O., in essence, compiles a package of mortgage-backed bonds into one deal for investors to buy. A synthetic version of a C.D.O. is one that, rather than selling securities with the actual bonds, is arranged through an insurance contract that is linked to the bonds’ performance. One investor bets the bonds will fail; another bets they will succeed.

It was one of these deals that landed Mr. Tourre on the S.E.C.’s radar.

The agency’s case centers on the contention that in 2007 Mr. Tourre and Goldman sold investors a synthetic C.D.O. known as Abacus, while omitting a crucial fact: a hedge fund run by the billionaire John A. Paulson helped construct Abacus and then bet against it. When the mortgage market soured, a handful of sophisticated investors lost more than $1 billion on the deal.

Mr. Tourre’s defense team will counter that synthetic C.D.O.’s required someone to bet on a decline in value, a fact well known to the marketplace. The lawyers will argue that investors on both sides of the deal — those betting for and against it — knew what it contained.

In early 2011, after the S.E.C. announced its case, Mr. Tourre arrived in Kigali, Rwanda’s capital, with the task of creating business plans for local farmers. He would walk a dirt road to work, one roommate recalled, and was often the last to leave the office.

On weekends, the roommate said, Mr. Tourre would play in a local soccer game. Other times, he would watch European soccer at a bar, kicking back with a Mützig beer, a favorite, and meat brochettes.

Not unlike his tenure at Goldman, in Africa Mr. Tourre appeared to have a knack for innovation, except there it was in farming. The March 2011 e-mail to friends describes technology developments for Rwandan farmers, like using “spy-like chips” hidden in coffee beans to track whether crops are being stolen.

His e-mail to friends is also laden with exclamation points, a hallmark of his infamous Goldman missives. In describing a trip to Rwanda’s stock exchange, he recalled arriving on “the trading floor of the exchange on a Friday morning, in the middle of the trading day, to see … nobody!” The scarcity of people, he said, stemmed from the lack of local companies listing their shares. “The visit was a great experience over all, as it is rather unique to witness the birth of local capital markets.”

When he left Rwanda that July, Mr. Tourre returned to the United States to enter the Ph.D. program at the University of Chicago. He also joined an intramural soccer team there, the Bootstrappers, until an Achilles’ tendon injury that required surgery sidelined him for a period of time.

As with many of the people who met him in Chicago, Nancy L. Stokey, an economics professor, initially had no idea of Mr. Tourre’s legal woes. She found out only after he had served as a teaching assistant in one of her undergraduate classes. “He was one of my best students,” she said.

Robert Shimer, another of Mr. Tourre’s economics professors, agreed. “He’s someone who, if he continues on the same track, is going to be one of our top job market candidates.”

Article source: http://dealbook.nytimes.com/2013/07/14/after-goldman-and-before-trial-a-global-education-for-fabrice-tourre/?partner=rss&emc=rss

You’re the Boss Blog: The Questions to Ask Before Adopting an ESOP

Creating Value

Are you getting the most out of your business?

When I talk with a business owner about succession planning, the idea of an employee stock ownership plan, or ESOP, always comes up.

It’s a method of leaving a business that many business owners are fascinated with, and one that could potentially leave a business in the hands of those who have a deep-seeded interest in maintaining its prosperity: its hard-working employees. Gar Alperovitz, a professor at the University of Maryland, recently extolled the virtues of ESOP’s in an Op-Ed in The New York Times. As he describes, companies in which employees have a direct ownership stake typically have higher productivity, profits and other benefits.

The bottom line, however, is that the structures of such programs are complicated. The Web site of the National Center for Employee Ownership, which endorses ESOPs, can give an overview of just how complicated they are. That’s not to say that business owners should shy away from such plans. But before settling on starting an ESOP, there are several factors to first consider:

Is you company big enough? An ESOP is expensive to put in place. It will likely cost at least $150,000 and can easily cost $250,000 to establish. For an ESOP to be a cost-effective transaction, you need to have a company that has at least 40 employees and has over $5 million in annual sales.

To establish an ESOP, a company is going to need at least two lawyers, a valuation expert and a trustee for the program. Then, there are continuing compliance and costs for extra tax returns and annual valuations. This is not a strategy for an owner who just wants a simple exit.

Are you ready to share your financials? At the very least, you will have to allow your employees access to the annual valuation of the company. And companies that use best practices go much further than the minimal requirement.

For example, King Arthur Flour, which converted to an ESOP in 1996, spend lots of time and money teaching employees to be financially literate. Steve Voigt, chief executive, says he believes that effort is one of the drivers of the company’s success. He believes that when you combine employee ownership with financial understanding employees take steps to make a better and more sustainable company.

Does your company have growth prospects? Mr. Voigt feels strongly about this point. Employees are beneficiaries of the stock value of the company. If your company isn’t growing and doesn’t increase in value, the ESOP could become a negative in the eyes of your employees.

Do you have a good nonfinancial reason to form an ESOP?
ESOPs are strong financial tools, and they have great tax benefits. But companies that undertake them for financial reasons only will often run into trouble.

Will Raap, the former owner of Gardener’s Supply Company, a gardening company that sells products through mail order and the Web, wanted to keep the jobs he had created in Burlington, Vt. He knew that if he sold the company to the suitors that were knocking on this door, there was a good chance the jobs would leave the state.

Mr. Raap started out having the program owning a minority of the shares. He hoped the ESOP would work well enough that he would feel comfortable having the ESOP take control of the company and keep the jobs he created in Vermont. As of December 2009, the company became 100 percent employee-owned.

I believe one of the reasons Gardener’s ESOP is successful is because Mr. Raap had more than a financial reason to start an ESOP at his company.

Do you have good management in place to take over? A successful ESOP should last for more than one generation of managers. The owner needs to establish a method for identifying and training the next generation before starting an ESOP.

Chris Mercer from Mercer Capital had a good reason to find a new shareholder for his company. He had a partner who had reached retirement age and needed to be bought out. Mr. Mercer, an expert in business transition issues, chose an ESOP as a good way to buy out his partner and start moving management of his valuation and advisory firm to the next generation of managers.

Like Gardener’s Supply, the ESOP at Mercer Capital became a minority shareholder. This allowed him to test his new managers to see whether they could run the company. It turns out Mr. Mercer is happy with the next generation of mangers, and he’s now thinking about having the ESOP buy more of his stock so he can start his own transition out of the company he founded.

Do you have managerial training in place? An ESOP is intended to last for several generations. This will only happen if there is an active training program to help create future managers.

Mr. Voigt of King Arthur Flour has instituted several programs to address this. Cross-training across various job functions is the norm. Management seminars are offered to employees who want to advance.

Mr. Voigt points out that a good reason to grow the company is to provide opportunities for younger employees who want to grow into more responsible positions, and thus creating a deep bench for leadership.

Are you in a rush? King Arthur Flour, Gardener’s Supply and Mercer Capital – three very different businesses – all started out by having their ESOP’s take minority positions. This allowed them the opportunity to unwind the structure if the ESOP’s weren’t working out.

An ESOP is not a quick succession strategy for selling shareholders. In all three cases, the owners took years, sometimes more than 20 years, to complete the sale of the company to the ESOP. You must have patience and time to make such a plan work. Many owners I’ve spoken with have decided against ESOP’s simply because of the time necessary for them to separate from their business. If you want a fast exit, an ESOP is probably not for you.

Many business owners who start a business make all of the decisions by themselves and don’t want to share information with anyone. These owners are not going to try an ESOP. But those who like the idea of including employees in the success of the company and are willing to get more people involved in decision-making should explore the strategy.

Do you think an ESOP would work for your company? Have I missed any questions that should be asked?

Josh Patrick is a founder and principal at Stage 2 Planning Partners, where he works with private business owners on creating personal and business value.

Article source: http://boss.blogs.nytimes.com/2013/07/11/the-questions-to-ask-before-adopting-an-esop/?partner=rss&emc=rss

Austin Goodrich, Spy Who Posed as Journalist, Dies at 87

The cause was Alzheimer’s disease, his daughter Kristina Goodrich said.

In the 1950s and 1960s, Mr. Goodrich was far from the only journalist doubling as a secret agent. Several who did so, along with some top news executives, later said that during the cold war the separation between the news media and the government was considerably more negotiable than it subsequently became.

However, it was not until the 1970s, after the Senate Select Committee on Intelligence investigated the Central Intelligence Agency, that reports by Rolling Stone magazine and The New York Times revealed that journalists from myriad news organizations had served the agency in various capacities, sometimes with the full knowledge of their employers.

The Times reported that at least 22 American news organizations, including CBS News and Time, Life and Newsweek magazines, as well as The Times itself, “had employed, though sometimes only on a casual basis, American journalists who were also working for the C.I.A.,” and that “in a few instances the organizations were aware of the C.I.A. connection, but most of them appear not to have been.”

Mr. Goodrich joined the C.I.A. straight out of college in 1949, two years after President Harry S. Truman signed the National Security Act, which created it. Having spent part of his college career studying in Stockholm, he was returned there by the fledgling agency. “They said ‘Goodbye, good luck, and work your way into a job in Stockholm, and take it from there,’ ” he recalled in a video recorded by his daughter. “I was given a slip of paper with a phone number on it, and I was told, ‘If you’re really in trouble, call that number. Otherwise, we’ve got your bank account and we’ll put your salary in there, and you go out and develop your own cover.’ ”

He set himself up as a freelance writer and reporter, sending back dispatches, largely to Midwestern newspapers, about Scandinavia, including reports from Finland as it held on to its independence in the ominous shadow of the Soviet Union. He wrote about sports for the Paris edition of The New York Herald Tribune contributed to The Christian Science Monitor and Yachting magazine and served as a correspondent for Swedish radio stations.

At the same time, he was foraging among local Communists for dissatisfied party members and performing other clandestine tasks. His daughter said he told of planting ham radios in the forests of Finland so the Finns would have access to communications devices in the event of a Soviet invasion.

“My specialty was recruiting to our service disillusioned and unhappy members of the Communist Party,” Mr. Goodrich said, “people who were strongly motivated to noble purposes, which they felt had been betrayed by the party apparatus.”

Mr. Goodrich began contributing pieces to CBS as a stringer in the 1950s, and for a time the network brought him back to New York to serve as a news writer, but he was fired in 1954 after CBS learned of his connection to the C.I.A. In 1958, however, he appeared as a reporter on an installment of the CBS News program “The Twentieth Century,” anchored by Walter Cronkite, about Soviet propaganda in Finland.

Mr. Goodrich was born in Battle Creek, Mich., on Aug. 30, 1925, the son of Marjorie Austin and Cyrus Goodrich, a lawyer. He enlisted in the Army at 18 and served in the infantry in Europe during World War II. Afterward, he studied political science at the University of Michigan and spent his junior year in Stockholm.

His first marriage, to Eva Rosenberg, whom he met in Oslo, ended in divorce. In addition to his daughter Kristina, survivors include his wife, the former Mona Stender, whom he married in the early 1990s; four other children, Britt V. Weaver and Austin, Timothy and Sammy Goodrich; three sisters, Ethel Ackerson, Eleanor Guilbert and Helen Putnam; seven grandchildren; and seven great-grandchildren.

After his time in Stockholm, Mr. Goodrich went on to agency assignments in the Netherlands and once again in Scandinavia, where he continued to work as a journalist. In 1964 he returned for a time to the United States. His subsequent postings, in Thailand and West Germany, did not require a cover.

Mr. Goodrich retired from the C.I.A. in 1976 and was awarded the Intelligence Medal of Merit by the future president George H. W. Bush, then the director of central intelligence. Unlike some reporters whose C.I.A. work was a sideline and who cooperated out of a sense of patriotism or, in some cases, for the money, Mr. Goodrich was first and foremost a spy.

“I think he took pride in the journalism he did, but in the final analysis that was not his full-time commitment,” Kristina Goodrich said. “He really believed in the importance of the democratic way of life and the danger of any system that could lead to totalitarian control over people.”

Article source: http://www.nytimes.com/2013/07/10/us/austin-goodrich-spy-who-posed-as-journalist-dies-at-87.html?partner=rss&emc=rss