) and Dillard's (DDS
) may get a chance to do something few investors can: oust bad directors. Like most other U.S. companies, the two allow directors in uncontested elections to take board seats regardless of how few votes they receive. Now both plan to adopt a new policy: Boot out directors who fail to win a majority of shareholder votes.
The companies agreed to make the change after the United Brotherhood of Carpenters consented to withdraw shareholder resolutions seeking the new election standard. Dillard's is expected to seek board approval on May 21. Lowe's is expected to put the policy to a shareholder vote in May, 2006. Dillard's declined to comment, but Lowe's says the new standard is consistent with its policies governing majority voting on other matters.
The idea is spreading. The union proposal, submitted at 81 companies, has garnered a 41% yes vote at Citigroup (C
) and a 48% vote at Gannett (GCI
). And 13 companies, including Intel (INTC
) and Merrill Lynch (MER
), have formed a group to study the issue. More companies may switch to majority voting soon. An unreleased State Dept. audit has found another private contractor in Iraq allegedly involved in fraud. BusinessWeek has learned that DynCorp International (CSC
) employees overcharged the U.S. government $685,000 to provide fuel for a police academy in Jordan used to train Iraqi security forces.
In December a government report alleged that Halliburton (HAL
) may have overcharged by up to $61 million for importing fuel from Kuwait to Iraq. Halliburton denied any wrongdoing.
U.S. officials give DynCorp, which has a $500 million contract to help train Iraqi police, high marks for its work. But the audit found that a DynCorp driver, in collusion with two other employees, inflated the amount of fuel delivered. Diesel fuel is brought several times a day to the facility to power generators.
DynCorp says the three workers were fired. The company has reimbursed the State Dept. and filed suit to recover the money in a Jordanian court. Do consumers need another online music store? MTV Networks says: Duh. According to a recent SEC filing by parent Viacom, (VIA
) MTV is planning to launch a digital music service by yearend. The company is mum on details, but the filing says it will include music downloads, Internet radio, and on-demand music streaming to a PC or other device.
The online music service isn't to be confused with MTV Overdrive, a new broadband service that launches on Apr. 25. Overdrive will have six channels of programming that include music videos and live music performances, movie trailers, and celebrity interviews, as well as MTV show footage and MTV News -- all delivered via a high-speed Web connection.
This isn't MTV's first foray into digital music. In 2001, an effort to sell music downloads through its short-lived MTVI Internet unit fizzled. Now, MTV faces a field of more than a dozen online music stores, dominated by Apple's (AAPL
) popular iTunes service. But MTV isn't likely to go it alone. It already offers an online music service provided by Loudeye on several of its European Web sites. Analysts expect MTV will likewise outsource the new U.S. service to either Loudeye or rival MusicNet. Both Loudeye and MusicNet declined comment. On Apr. 11, Intel (INTC
) offered a $10,000 bounty on eBay for a pristine copy of the 1965 issue of Electronics magazine in which co-founder Gordon Moore outlined his famous theory about transistors doubling on a chip every 18 months. To mark the law's 40th year, Intel sought only original owners or libraries willing to sell. Still, some worried about thefts from libraries. Sure enough, an issue from the University of Illinois' library went missing a day later. So far, Intel says it hasn't turned up. Corporate America's broad retreat from stock options continues. With mandatory expensing on the horizon, a new Lehman Brothers (LEH
) study finds that companies in every industry are awarding fewer grants -- a trend it expects to continue through 2006.
Who's leading the charge? Microsoft (MSFT
), which abandoned options altogether, tops the list with a $2.5 billion cut in expenses in 2004. Next is Agilent Technologies (A
), which slashed costs by $709 million, and JDS Uniphase (JDSU
), with a $336 million savings. Are options dead? No, but the outlook isn't rosy. Virgin Chairman Richard Branson's reality-TV foray, Rebel Billionaire, was a ratings flop for Fox. But for winner Shawn Nelson, 28, the prize was anything but. He's due a cool $1 million from the network and is spending three months as "acting president of Virgin companies."
That isn't a mere sinecure. So far, Nelson has talked strategy with Virgin execs around the globe. After he settled into Virgin's Beverly Hills office, he devised ways to jazz up its Megastores. The solution: use caf?s and listening stations to give them a more relaxed feel, selling a "lifestyle," not just CDs.
Says Nelson, who founded LoveSac, a foam-beanbag retailer, when he was 18: "I've learned that risk-taking never ends -- it only gets more zeros behind it."
Whether Virgin execs heed Nelson's advice, the Utah native has made an impression: Virgin may invest in LoveSac. But first, Virgin Mobile is sending him on a consulting trip to China, where his fluent Mandarin will come in handy. It sounds like a scene out of a sci-fi thriller: British authorities recently disclosed that cybercriminals tried to steal $410 million from the London headquarters of Sumitomo Bank. How? By turning the bank's PCs into so-called bots -- computers infected by malicious software that turns them into zombies from which hackers can secretly send spam, launch viruses, or steal personal data. What's scary about the Sumitomo case is that the bad guys allegedly used an army of zombie PCs inside the bank to carry out a big-time heist.
Bots are rampaging across the Web, according to a new study by the German Honeynet Project at Aachen University. With cyber con artists hungry for ways to launch attacks incognito, the study found that at least 1 million computers were under their control worldwide. Often linked together into powerful networks called botnets and rented to fellow scammers for as little as 2.5 cents per bot per week, some number 150,000 PCs.
Even Microsoft is worried. On Apr. 11 the software giant kicked off a three-day seminar in Prague to train at least 85 cybercrime fighters from 20 countries in techniques to combat the threat. "Botnets are one of the most powerful weapons on the Internet," says Felix Freiling, professor of computer science at Aachen.
Israeli police arrested a suspect in the Sumitomo case after an attempt to transfer $26 million into his account. Sumitomo called the break-in attempt a "complete failure." A spokeswoman for Britain's National Hi-Tech Crime Unit investigating the case declined to comment. Drivers have been easing up on insurance claims. In the past year, the frequency of accident claims dropped by nearly 5%, and bodily injury claims by 1%, according to the Insurance Information Institute.
That may sound small, but more than three straight years of such declines have helped push up profits for auto insurers. In 2000, insurers paid out $1.10 for every $1 they took in. Now it's more like 95 cents for each $1.
What's fueling the drop? Car safety features such as antilock brakes and rumble strips on roads have made driving safer. Plus, savvy consumers are raising their deductibles. Also, baby boomers are in their safest driving years, statistically speaking -- their 40s and 50s. 59
The percentage of U.S. adults who believe they pay more federal income tax as a percentage of income than Donald Trump does** Almost all surveyed are in a lower tax bracket than what is believed to be 35% for Trump
Data: Tax Foundation survey of 2,013 adults taken Mar. 28-Apr. 1 by Harris Interactive