Wendy’s gave its new CEO a pay package worth $4.6 million for the last four months of 2011.
Emil Brolick was hired last September after Wendy’s split from fellow fast-food chain Arby’s. The 63-year-old Brolick has been on a mission to reinvent Wendy’s as a higher-end burger chain by improving ingredients and remodeling restaurants.
An Associated Press analysis of a regulatory filing finds Brolick’s compensation included salary of $338,462, a bonus of $500,000, stock and option awards worth $3.2 million and an incentive-based bonus of $533,026.
Other compensation covered legal expenses related to the negotiation of his contract.
Wendy’s previous CEO, Roland Smith, received $16.5 million for the first part of 2011, including $11.3 million in severance pay.
The AP’s calculation includes salary, bonuses, perks and stock and option awards.
U.S. stocks drifted lower but rebounded in later trading Thursday to end at nearly breakeven.
A string of weak economic reports — including jobless claims that fell below expectations — failed to inspire investors to move off the sidelines.
Both the S&P 500 and the Nasdaq closed in the red for the third straight day, while the Dow broke a two-day losing streak.
The Dow Jones industrial average () added 20 points, or 0.2%. The S&P 500 () dropped 2 points, or 0.2%. The Nasdaq () was down 10 points, or 0.3%.
Even with a few days of losses, all three indexes are up more than 10% in 2012. But investors are continuing to seek economic reports that beat expectations in order to justify that run up.
On Thursday the number of Americans filing for unemployment benefits only narrowly missed economists’ forecasts, but that still pushed stocks mostly lower.
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"There’s a general sense in the market that we’re at lofty levels, so investors get worried when disappointments pop up," said Bruce McCain, chief investment strategist at Key Private Bank.
The week has been filled with a string of disappointing economic numbers on durable goods orders, consumer confidence and home prices. Ongoing concerns about a growth slowdown in China have added pressure on world markets.
"I think, overall, the market has had a good run, and investors are trimming some exposure," said Paul Powers, head of U.S. equity trading at Raymond James.
Most large financial stocks dropped more than 1% Thursday, including Bank of America (, Fortune 500), JPMorgan Chase (, Fortune 500), Citigroup (, Fortune 500), Morgan Stanley (, Fortune 500) and Goldman Sachs (, Fortune 500).
While stocks are suffering, the initial public offering market has been buoyant and is on track for a record week with 10 companies set to debut.
Still, it was a mixed bags for the three companies that started trading Thursday. Millennial Media’s () shares nearly doubled, but T-shirt maker Cafe Press () ended the day roughly flat after an initial surge. Both companies priced above their initial trading range. Merrimack Pharmaceuticals () ended the day down roughly 14% after it started trading.
Stocks closed in the red Wednesday amid worries about slowing growth overseas and in the U.S.
Economy: First-time claims for unemployment benefits in the week ended March 24 fell to 359,000 — a four-year low — from 364,000 the previous week. But that was still higher than the 350,000 forecasted.
U.S. gross domestic product — the broadest reading of economic growth –increased at an annual rate of 3% in the fourth quarter, according to the Bureau of Economic Analysis. That was the third revision, and was in line with analysts’ estimates.
Companies: Best Buy’s (, Fortune 500) stock dropped after the company narrowly missed expectations and said it would close 50 stores.
Sears Holdings’ (, Fortune 500) stock rose but closed lower on reports that the retailer was shopping its Lands’ End brand for $2 billion.
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Red Hat’s () stock jumped after the software maker reported quarterly earnings that beat expectations and a stock buyback of $133 million.
Research in Motion () shares dropped after hours as the BlackBerry maker missed expectations on revenues and earnings. The company said it’s considering strategic alternatives, and one director left its board.
World markets: European stocks closed down. Britain’s FTSE 100 () was off 1.2%, the DAX () in Germany lost 1.8% and France’s CAC 40 () was down 1.4%.
Asian markets ended lower. The Shanghai Composite () declined 1.4%, the Hang Seng () in Hong Kong dropped 1.3% and Japan’s Nikkei () lost 0.7%.
Currencies and commodities: The dollar lost ground against the Japanese yen, but strengthened against the euro and the British pound.
Oil for May delivery slipped $2.63 to $102.78 a barrel.
Gold futures for April delivery rose $2.20 to $1,660.40 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, sending yields down to 2.16% from 2.20% late Wednesday.
The Consumer Confidence Index is released each month by the Conference Board, a private research group. It is based on a survey of five questions that haven’t changed since the index started in 1967.
The Conference Board surveys about 500 people during the first two weeks of the month, and then comes up with a preliminary number. That number is revised in the following month’s report to reflect a total of about 3,000 people. The revision isn’t statistically significant, says Lynn Franco, director of The Conference Board Consumer Research Center. For example, September’s preliminary figure, announced last month was revised to 46.4 from 45.4.
Each question counts for 20 percent of the index. The responses are used in figuring out the index’s two main components:
_ PRESENT SITUATION: Assesses how people feel about the economy now fast cash now. It’s made up of two questions, one that asks if the person thinks business conditions are “good,” “bad” or “normal,” and one that asks whether jobs are “plentiful,” “not so plentiful” or “hard to get.”
_ EXPECTATIONS: Assesses respondents’ outlook for the next six months. It asks similar questions to the Present Situation about business conditions and job outlook. It also adds a third question on whether the person thinks his or her income will increase, decrease or stay the same.
The index hit its all-time high of 144.7 in 2000. Its record low was 25.3 in February 2009.
Oil prices fell to near $106 a barrel Monday in Asia as investors mulled how much the conflict over Iran’s nuclear program might disrupt global crude supplies.
Benchmark oil for May delivery was down 44 cents to $106.43 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.52 to $106.87 per barrel in New York on Friday.
Brent crude for May delivery was down 42 cents at $124.71 per barrel in London.
Crude has hovered between $105 and $110 for the last month, up from $75 in October, amid worries that a military strike by Israel or the U.S. on Iran’s nuclear facilities could disrupt supplies from the oil-rich Middle East. On Friday, reports said Iran’s crude exports fell sharply last month, suggesting sanctions imposed by Western powers have begun to impact that country’s economy.
President Barack Obama said Sunday that there is still time to resolve the dispute over Iran nuclear program diplomatically, but that the window is closing.
“A sizable risk premium is likely to remain in place for some time while the Iranian situation goes unresolved,” National Australia Bank said in a report. It “suggests that prices through 2012 will continue to sit north of $100.”
Signs of tepid crude demand in the U.S. and Europe and slowing economic growth in China were weighing on prices. Analysts are also concerned higher fuel costs will undermine consumer spending and trigger inflation.
“Elevated oil prices are beginning to take a toll on emerging market economies,” Morgan Stanley said in a report.
In other energy trading, heating oil was down 0.4 cent at $3.22 per gallon and gasoline futures fell 0.2 cents at $3.37 per gallon. Natural gas gained 1.4 cents at $2.29 per 1,000 cubic feet.
Sotheby’s auction house says News Corp. executive James Murdoch is stepping down from its board.
In a filing to the U.S. Securities and Exchange Commission on Friday, the auctioneer said Murdoch had decided not to stand for re-election at Sotheby’s May 8 annual meeting in order to focus on his role as News Corp.’s deputy chief operating officer.
Murdoch, he younger son of media mogul Rupert Murdoch, has been shedding posts to concentrate on his role in his father’s television business.
Last month he quit as chairman of News International, News Corp.’s British newspaper division.
He has repeatedly denied knowing about widespread phone hacking at the now-shuttered News of the World tabloid, though his account has been contradicted by former associates.
U.S. stock futures are up ahead of another round of economic data that should shed further light on whether the recovery in the world’s largest economy is still picking up steam.
Dow Jones industrial futures rose 23 points to 13,195. The broader Standard & Poor’s 500 futures are up 2 points to 1,398. Nasdaq 100 futures are up 4 points to 2,716.
The market has rallied on upbeat U.S. economic data and easing worries about European debt, despite some concern over the rise in oil prices. On Thursday, the Standard & Poor’s 500 index closed above 1,400 for the first time since June 2008.
Later Friday, the focus will be on consumer inflation and industrial production figures as well as the closely watched University of Michigan consumer confidence survey.
A U.K. house-price index rose to a 19-month high in February as first-time buyers moved to beat the expiration of a property-tax exemption, according to the Royal Institution of Chartered Surveyors.
The gauge based on a survey by London-based RICS increased 3 points from the previous month to minus 13, the strongest reading since July 2010, it said in a statement today. Still, with the measure below zero, that indicates more surveyors saw price declines than gains last month.
The figures partly reflect Britons looking to take advantage of a two-year stamp-duty exemption for first-time buyers purchasing a home for less than 250,000 pounds ($390,800) before it ends on March 24. While such
Australia needs to find
Some experts say Boeing
You know that investing can be tough. Andrew Lo says it’s even tougher than you think.
Lo, an economist and finance professor at M.I.T.’s Sloan School of Management, challenges a core idea of financial theory: that markets are "efficient," meaning there’s no point in trying to time your moves in and out of stocks, since everything you could know about them is already baked into the price.
Plenty of smart people think that Lo knows what he’s talking about. In addition to teaching, he has advised the government on ways to limit the damage from future financial crises. He also runs a money-management firm that seeks to put his ideas to work.
Lo argues that the buy-and-hold method of investing (long considered gospel by index fund managers and this magazine) doesn’t effectively limit the risks of today’s markets. He explained his theories to contributor Charles P. Wallace; the conversation has been edited.
You reject the theory of efficient markets in favor of what you call adaptive markets. Meaning?
I don’t entirely reject the idea of efficient markets. It needs updating. The adaptive markets hypothesis says that all economic institutions, like our own species, develop and change over time, depending on the population of investors that are engaged with them.
So what does that mean for investors?
In a normal market, you get the independent valuations of millions of buyers and sellers trying to evaluate a given security.
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During periods of extreme fear or greed, you don’t have the proper balance between those two to generate market efficiency and you get extremes in behavior.
When there’s a strong trend upward, for example, the kind of skepticism that produces reasonable and accurate valuations of securities is not at work, and a bubble develops. It’s very exciting when you’re in the midst of it, but at some point the valuations aren’t justifiable.
It seems as if big market shifts are becoming more common.
Yes. If you rank the top 50 one-day moves in the S&P 500, a fair number of those happened within the last five or 10 years. That tells you that we’re in a different, riskier market now.
What’s going on?
A combination of a lot of smart guys and technology. People have the ability to enact a trade instantaneously. And they have a lot of complex new tools, such as hedge funds and derivatives, at their disposal.
Technological innovations often have unintended consequences. My analogy is someone clearing some brush using a handsaw. You can clear a lot more brush using a chainsaw, but you might lose a finger, or suffer other attendant consequences. We now have everybody with chainsaws going after all sorts of opportunities, and that’s really where the potential for crises can emerge.
Until we’ve learned how to develop better technologies, I think we’re going to keep seeing more crises. There’s a good chance we’ll see a pretty important shock wave coming out of Europe if they don’t get their act together with regard to European sovereign debt payday advance low fees.
But doesn’t a simple buy-and-hold strategy address a lot of these issues of risk?
Buy-and-hold doesn’t work anymore. The volatility is too significant. Almost any asset can suddenly become much more risky. Buying into a mutual fund and holding it for 10 years is no longer going to deliver the same kind of expected return that we saw over the course of the last seven decades, simply because of the nature of financial markets and how complex it’s gotten.
Okay, but even during the so-called lost decade (2000 to 2010) someone who regularly put money into a 60% stock/40% bond portfolio would have had about a 4% return. Why isn’t that good enough?
Think about how that person earned 4%. He lost 30%, saw a big bounce-back, and so on, and the compound rate of return over the period was 4%. But most investors did not wait for the dust to settle. After the first 25% loss, they probably reduced their holdings, and only got part way back in after the market somewhat recovered.
It’s human behavior. Ask actual individual investors what their net rate of return was over the last three years, and see if it’s the same rate returned by the market. I bet you it’s not.
So what choice do I have instead?
We’re in an awkward period of our industry where we haven’t developed good alternatives. Your best bet is to hold a variety of mutual funds that have relatively low fees and try to manage the volatility within a reasonable range. You should be diversified not just with stocks and bonds but across the entire spectrum of investment opportunities: stocks, bonds, currencies, commodities, and domestically and internationally.
Most of us didn’t sign up for the kind of volatility we’re seeing right now. So keep in mind that if you’re holding equities, you are probably taking more risk than you thought.
Does the government have a role in preventing these crises?
It’s not possible to prevent financial crises. But we can better understand what they are caused by, when they are likely to occur, and how we can prepare for them when they do happen.
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In the same way you cannot legislate away hurricanes, but you can do a lot to prepare for the worst of their effects. I believe we should have an independent agency to study crises, the way the National Transportation Safety Board looks at airline crashes.
Some 2,000 pages of regulations came out of the last crisis.
The Dodd-Frank Bill [which significantly strengthened financial regulations] was like a "Fire, ready, aim." It was a reaction. Now, some of that reaction was quite useful. But the laws that have been proposed, like the Volcker Rule [which would prevent banks from making some speculative investments], have hosts of unintended consequences that we won’t really understand for years until after those laws are actually implemented.
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