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TECHNOLOGY: AMAZON AND GOOGLE WANT TO BE YOUR HOME PHONE B6
BUSINESS &FINANCE
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THE WALL STREET JOURNAL.
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BofA Misses Big Options Payday
BY LIZ HOFFMAN
AND TOM MCGINTY
Bank of America Corp.’s
top executives were sitting on
the right to buy 400,000
shares of the bank’s stock at
$53.85, a perk handed out by
its board a decade ago.
The problem is, the stock
trades at $24.58.
Those stock options expired
worthless on Wednesday, a
sign of the lingering effects of
the financial crisis and the
huge gap between banks that
have recovered fully from that
era and those still far from
the targets set during Wall
Street’s better times.
Unlike executives at Goldman Sachs Group Inc. and
J.P. Morgan Chase & Co.,
whose options have by and
large paid out, Bank of America Chief Executive Officer
Brian Moynihan this week will
forgo 200,000 options, which
accounted for about one-fifth
of his total pay in 2006.
Banks, like other public companies, detail options grants
and their terms in public filings with the Securities and
Exchange Commission.
Stock options, which guarantee executives the right to
buy shares at a fixed
price in the future, have long
driven tech-industry paydays
and were once a large part of
Wall Street bonus packages.
The idea was to motivate officials to boost the stock
price, thereby giving them the
right to get stock at a discount years later.
Options have become less
popular recently in response
to shareholder pressure, accounting-rule changes and the
financial crisis, which left employees at many companies
holding the equivalent of
$53.85
Strike price of options forgone by
BofA executives on Wednesday
worthless lottery tickets. The
main concern: Options generated an obsession with the
stock price that led to risky
behavior.
But some old options doled
out in the middle part of the
last decade—some of the last
large options grants that remain on Wall Street—are now
expiring, an event that separates executives into winners
and losers.
In the former camp are
those at Goldman and J.P.
Morgan, whose shares both
hit closing highs Wednesday.
The recent rally has pushed
millions of dollars of options
at those banks “into the
money,” that is, exercisable
for the executive at a gain.
Rivals at Bank of America,
Citigroup Inc. and Morgan
Stanley, meanwhile, have
watched millions of options
expire worthless as the firms’
share prices languish below
targets set during peak years
for bank profits.
Of 182 sets of options is-
Under Siege
Fortress Investment Group’s
weekly share price
sued by the five largest Wall
Street firms since 2003, more
than half have expired worthless because the banks’ shares
were trading below what executives would have had to pay
to take hold of the shares.
The best options batting
average belongs to Goldman.
Out of seven options series
the bank has granted since
2003, five have expired and all
of them were in the money on
their expiration dates, though
about $200 million of options
that expired in late November
needed the stock-market rally
that followed the 2016 presidential election to give them
value.
The group laggard is Morgan Stanley. Just one of its 19
options grants since 2003 that
Please see OPTIONS page B8
‘Chicken Tax’ Looms Over Imported Trucks
If Nafta is gutted,
LBJ-era tariff could
raise price of pickups
made in Mexico
Verizon
Pares Price
Of Yahoo
Acquisition
BY RYAN KNUTSON
AND DEEPA SEETHARAMAN
Verizon Communications
Inc. and Yahoo Inc. are closing
in on a revised deal that would
reduce the price Verizon
would pay for the internet
company’s core business by
about $300 million, people familiar with the matter said.
The two companies also are
discussing an agreement to
share any future liabilities as a
result of two massive data
breaches Yahoo disclosed after
the companies struck their
original $4.8 billion deal in
July, people familiar with the
matter said.
An agreement could come
even though Verizon’s investigation into the breaches isn’t
complete, one of the people
said. Executives at the telecommunications company want to
move forward despite some remaining uncertainty to get to
work on integrating Yahoo with
its AOL unit, the person said.
Separately, Yahoo said it is
Please see YAHOO page B2
Fiat Chrysler’s Ram trucks shipped to the U.S. are exempt from an import tax under the North American Free Trade Agreement.
Pickup Trucks From Mexico
2016 production, in thousands
1 Toyota
1
Tijuana,
Baja California
Models: Tacoma
Juárez
U.S.
Value of trucks imported from
Mexico that would be subject
to the 25% Chicken Tax:
MEXICO
97
$15 billion
2 Fiat Chrysler
Models: Various Ram trucks
P ac i fi c
O ce a n
281
3 General Motors
300 miles
Models: Chevrolet Silverado, GMC Sierra
398
300 km
Saltillo, Chihuahua 2
10
5
Silao, Guanajuato 3
0
2011 ’12
Sources: the companies (plant locations, truck types); WardsAuto.com (2016 production); International Trade Commission, Cato Institute (truck values)
’13 ’14 ’15
’16
THE WALL STREET JOURNAL.
PERSONAL TECHNOLOGY | Geoffrey A. Fowler
Tech to Help You Hear the TV Better
This is a
safe space for
tech troubles,
so I’m not
embarrassed
to share: I
have a hard time hearing
voices on my TV. I had to
turn on subtitles just to follow “Westworld.” (Even with
them, I’m still not entirely
sure what happened.)
Mishearing the TV can be
a sign of hearing loss, but
ears aren’t the only culprit.
TVs have gotten harder to
understand.
TV makers often treat
sound as an afterthought, in
their quest to make everthinner screens. Nowadays,
you’d be hard-pressed find a
model that has speakers
even facing you: Most TV
speakers point down or toward the back, where sound
can get muffled. Between
your cable box, Blu-ray
player, Apple TV and PlayStation, volume levels can be
all over the map.
Show creators aren’t helping. As dramas get more cinematic, the sound mixing can
get ahead of itself, masking
Wednesday
$7.99
Daily change
20
s29%
10
0
2007
’10
’15
’17
Source: Thomson Reuters
THE WALL STREET JOURNAL.
Fortress
Deal Shows
SoftBank’s
Grand Plan
BY LIZ HOFFMAN
AND SARAH KROUSE
Late last year, Fortress Investment Group co-Chairman
Peter Briger talked to an old
friend about a deal for his
firm.
On the line was Rajeev
Misra, who left Fortress in
2014 for a senior post at
SoftBank Group, the Japanese
telecommunications
company. The New York firm
was being undervalued by the
public markets and wanted to
go private, Mr. Briger said
during the call, according to
people familiar with the matter.
The deal that quickly followed is the latest surprise
from SoftBank. The firm’s
founder, Masayoshi Son, is a
fast-moving billionaire who
has aspirations of turning the
firm into a global behemoth
with arms in finance, technology and communications.
The deal’s success hinges
largely on whether Mr. Son
and his team of investment
professionals can use Fortress’s collection of privateequity and other investment
businesses to build a broad financial-services pillar in the
U.S. SoftBank also gains personnel and support services
for its Vision Fund, a $100
billion investment fund that
is expected to close by the
end of this month.
SoftBank agreed to pay
$3.3 billion for Fortress, offering Class A stockholders
$8.08 a share. That is a 39%
premium to a beaten-down
stock price as of Monday but
a far cry from the $13.4 billion market value that Fortress, the first U.S. hedgefund manager to go public,
Please see DEAL page B8
Snap Sets
Valuation
Of Up to
$22 Billion
BY MAUREEN FARRELL
DANIEL HERTZBERG
MEXICO CITY—While the
Trump administration talks of
new import tariffs, there is already one in place that would
slam manufacturers of pickup
trucks in Mexico if the U.S.
scuttles the North American
Free Trade Agreement.
Under the so-called Chicken
Tax first imposed more than a
half-century ago, the U.S. levies a 25% duty on all pickups
and some work vans made outside the country. Trucks produced in Mexico by the likes of
General Motors Co., Toyota
Motor Corp. and Fiat Chrysler
Automobiles NV have been exempt from the tariff under the
23-year-old Nafta agreement,
which erased tariffs and other
trade barriers between the
U.S., Mexico and Canada.
The tariff’s name comes
from an early-1960s trade dispute that arose after U.S.
chicken farmers flooded European markets with inexpensive
poultry. Some countries, including then-West Germany,
taxed U.S. chickens, and President Lyndon B. Johnson retaliated with a tariff on pickup
trucks made by Volkswagen AG
and others.
Should the Trump administration gut Nafta, the Chicken
Tax would apply to trucks imported from Mexico, economists and trade analysts say.
“You’re looking at a potential massive hit to any truck
maker if Mexican trucks are
considered an import,” said
Please see TRUCKS page B2
SAUL LOEB/AGENCE FRANCE-PRESSE/GETTY IMAGES
BY ROBBIE WHELAN
$30
voices with rustling leaves
or a soaring score.
There are things you can
do to hear dialogue better,
short of turning up the volume to 11. Here are some
proven strategies and some
new ones for anyone with
moderate hearing loss.
Adjust the TV
Before you spend a dime,
try moving the TV. When I
went to visit the engineers
at Dolby, which makes audio
and video tech, they helped
me set up an experiment:
Using a microphone and
sound meter, we compared
the speaker output of the
same popular-model TV
mounted on a wall and sitting on a table.
In the lab, setting the TV
on the table made dialogue
clearer. Why? Because the
TV’s down-facing speakers
Please see FOWLER page B6
Snap Inc. set a valuation
for itself between $19.5 billion and $22.2 billion, according to people familiar with
the matter, as the disappearing-message app company
nears its landmark initial
public offering.
The valuation range, which
equates to $14 to $16 a share,
is near the low end of the
$20 billion to $25 billion
range the Snapchat parent
company had earlier targeted. The company and its
underwriters will set a final
IPO price based on feedback
from investors in a roadshow
that is about to begin.
Even at the low end of the
expected valuation range, it
would be the largest U.S.listed tech offering since Alibaba Group Holding Ltd.’s IPO
in 2014, according to Dealogic.
Last year was the slowest
Please see SNAP page B6