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Oil company owes billions in clean-up costs -

Oil company owes billions in clean-up costs



Oil company owes billions in clean-up costs


A natural gas filtration system sits on top of a gas well drilled by Anadarko Petroleum Corporation in Mifflin Township, Penn.

Oil driller Anadarko has been ordered to pay billions of dollars in clean-up costs after a judge ruled that the firm's Kerr-McGee unit tried to shed these liabilities in a spin-off deal.

A federal bankruptcy court in New York ruled that Anadarko owes damages between $5.15 billion and $14.12 billion, with the precise amount to be determined in future legal proceedings. The Justice Department said Friday that the judgment was "one of the largest environmental enforcement awards ever."

The formerly independent Kerr-McGee operated a variety of chemical and resource extraction businesses that left contamination across the country over more than eight decades, including radioactive uranium waste in the Navajo Nation and radioactive thorium in Illinois.

In 2005 and 2006, the company transferred its valuable oil and gas exploration assets to a new corporate entity that was later acquired by Anadarko. The environmental liabilities were left with the old company, which was renamed Tronox (TROX).

Weighed down by these debts, Tronox filed for bankruptcy protection in 2009. The U.S. government and the Tronox bankruptcy estate later sued Anadarko, charging that Kerr-McGee split its business with the intention of ducking its clean-up costs.

"The United States will not let polluters evade their environmental liabilities through a corporate shell game," Manhattan U.S. Attorney Preet Bharara said in a statement.

Anadarko (APC, Fortune 500) shares slipped 6.4% on the news Friday, while Tronox(TROX) shares surged 7.5%.

Anadarko CEO Al Walker said his company planned to appeal the ruling.

"Given the significant factual evidence supporting our position, we vehemently disagree" with the judge's opinion, Walker said in a statement.

Mexico's Pemex oil welcomes foreign partners

Anadarko was also on the hook for huge clean-up costs following the 2010 oil spill disaster in the Gulf of Mexico. Anadarko owned a 25% stake in the ill-fated well, and agreed to pay well operator and majority shareholder BP (BP) $4 billion in 2011 to cover its share. To top of page

Fuente CNN Money




Bank of America advises China default contracts to hedge debt storm

Chinese bond yields have already risen to the highest in a decade yet markets remain “complacent” about the implications

Chinese groom-to-be attracts criticism for lavish gift of 8.88 million yuan in cash, weighing 224 pounds, to his future wife
Bank of America's Bin Yao says markets have underestimated the risk of a monetary squeeze

Bank of America has advised clients to take out default insurance against Chinese debt, warning that monetary tightening by China’s central bank risks setting off a bout of serious credit stress in 2014.

Bin Yao, the bank’s credit strategist in Asia, said Chinese bond yields have already risen to the highest in a decade as the authorities seek to rein in rampant growth of the M2 money supply and excess credit, yet markets remain “complacent” about the implications.

He recommends buying credit default swaps (CDS) on five-year Chinese debt as the easiest way to “hedge the China tail risk”. These contracts spiked to 266 after the Lehman crisis and again to 206 during the ‘hard-landing scare’ of late 2011. They have since settled down to stable levels, trading this week near 66.

Bin Yao said the markets have underestimated the risk of a monetary squeeze. The central bank has already raised interest rates by three quarters of a point over the last year. Rising yields are pushing the shadow banking system closer to the brink. “We find trust loans especially troubling,” he said.

Short-term debt issuance by trust companies has jumped to $320bn from almost zero two years ago. A new study by the China Academy of Financial Research warned that the trusts face a redemption shock after promising returns of 10pc to 15pc that may be impossible to deliver.

The pattern has echoes of what happened to Icelandic banks and Northern Rock, which relied on fickle capital markets during the credit boom. They were caught in a vice when funding suddenly dried up. The Academy said Jilin Trust, AsAc, and Taipingyang Municipal, are among the most overextended. All three have had trouble rolling over debt or covering payouts over recent days.

Fitch Ratings says the explosive growth of loans over the last five years in China is unprecedented in any major country in recorded history. Credit has risen from 125pc to 200pc of GDP, if all forms wealth products and offshore banking are included. The Chinese credit system has grown to $24 trillion from $9 trillion in late 2008, equivalent to adding the entire US commercial banking system.

The pace of credit growth over the five-year period exceeds the extremes seen before Japan’s Nikkei bubble burst in 1990, or before the onset of the US housing crash in 2007.

China’s banking system is ultimately controlled by the state. Any post-bubble credit purge is likely to play out in a different way, with less risk of a dramatic crisis and more risk of a chronic malaise.

China’s central bank seems determined to cool the credit boom under its so-called “flexible opaque” policy before it reaches unmanageable extremes. It has targeted M2 growth of 13pc, which will require further tightening. It has also pushed real interest rates up to a range of 1pc to 2pc, an unpleasant surprise for those relying on negative rates to fund high leverage.

Investors do not usually buy CDS insurance because they think a country will default. The contracts are used as a hedge by ‘real money’ funds or companies with heavy exposure to an economy, often in fixed plant or other illiquid assets. The CDS market acts as a stabilising force, reducing the risk of asset fire-sales in a crisis.

The contracts are also used by traders as a proxy for betting on political and financial stress. Volatile spikes can yield turbocharged gains for those who time it right.


RBS: We may have made

bad decisions but that

doesn't mean we acted


RBS defends itself against £4bn lawsuit that accuses the bank of misleading investors over its financial strength in a rights issue prospectus

City workers arrive at The Royal Bank of Scotland headquarters on February 9, 2009 in London, England
The Royal Bank of Scotland Shareholder Action Group is suing the bank and four former directors on behalf of about 100 institutions and 10,000 private shareholders Photo: Getty Images

RBS has denied misleading investors as it lodged a detailed defence against a £4bn shareholder lawsuit, which centres on the financial health of the bank just months before the Government was forced to bail it out.

The state-controlled bank has filed its defence against the lawsuit in the High Court, some nine months after the orginal claim was lodged by the RBS Shareholder Action Group.

The group claims they were misled about the background to the bank’s £12bn rights issue in April 2008, six months before the Government’s first capital injection.

RBS robustly denies the claims made by the shareholders, made up of approximately 100 institutions, including Prudential, Standard Life and Legal & General - and 10,000 private investors.

The lawsuit names the bank and four former directors, including ex-chief executive Fred Goodwin and ex-chairman Tom McKillop.

Investors claim the directors gave a false impression by suggesting that the bank was financially sound at the time of the fundraising.

The bank’s full defence is not yet publicly available but an RBS spokesman said: “While RBS and its former directors made some business decisions that have been criticised, this does not mean that they misled investors or acted illegally.

“We believe we have strong defences to the claims that are being brought against the Group and that is why we intend to defend these vigorously and to protect the interests of our shareholders, including UK taxpayers.”

The full defence document is expected to be available as early as Monday.



Housebuilding surge

boosts construction


A stampede in demand for new homes puts construction output at a two-year high

Construction output rise 2.2pc driven by housebuilding
Construction output rose 2.2pc on the month in October after a fall of 0.5pc in September.


Construction output rose 2.2pc to £9.8bn in October, the highest level since December 2011, according to latest figures from the Office for National Statsitics (ONS). Year-on-year, output grew 5.3pc.

An upward revision to construction output in the three months to September is also likely to add an extra 0.1 percentage point to third quarter gross domestic product growth, said the ONS.

Construction output revised up: Source: ONS

Housebuilding output has been the key driver in construction growth this year. It is currently 18.6pc higher than it was in October 2012, more than offsetting falling levels of infrastructure output over the past year. Total new housing rose to its highest level since the fourth quarter of 2007.

The ONS said construction was the strongest performing sector of the economy over the last year, marking a dramatic turnaround from 2012, when output fell by 7.5pc and was a major drag on overall growth, even though it accounts for just 6pc of the economy.

Britain's housing market has staged a recovery in the last 12 months, driven by government schemes to boost lending and help buyers secure mortgages on low deposits.

Housebuilders have benefited substantially from the Government's Help to Buy scheme, which until next year only applies to buyers of new-builds.

Construction as a proportion of GDP and industry breakdown. Source: ONS

On Friday Bellway said nearly a third of reservations had used Help to Buy, as it upgraded its profit forecast partly thanks to increased demand under the scheme. The housebuilder said it expected to achieve pre-tax profits of more than £190m in the year to July.

A Treasury spokesman hailed the figures as "further evidence that Britain’s economic plan is working", though sharply rising house prices, which are up 8pc on the year according to Halifax, have stoked concerns the Government schemes are creating a housing bubble.

The Bank of England intervened to cool demand in the housing market last month when it decided to scrap the mortgage component of its cheap credit scheme, known as Funding for Lending. However, it left other mortgage schemes in place, and house prices are still expected to climb a further 5pc next year and by 7pc in 2015.

Nonetheless, construction output is still well below its pre-crisis peak. Just 135,000 homes were built in the year to April 2013, down from the more than 200,000 homes a year that were built in the years running up to the financial crisis, government figures show.


Companies told to

improve account


Financial Reporting Council says companies must improve or face being ordered by a court to clean up their act

Publicly listed companies must improve the way they present their company accounts or face being ordered by a court to clean up their act, the UK’s accountancy watchdog has warned.

The Financial Reporting Council (FRC), which is chaired by Baroness Hogg, has warned companies quoted on the London Stock Exchange and other UK markets that they need to improve the way their report their numbers in relation to exceptional items.

The FRC’s Financial Review Reporting Panel (FRRP) said that it had found a “significant number” of companies reporting exceptionals - meant to be one-off items - on the face of their profit and loss statement.

The FRC said that it had identified a number of situations “where the disclosure falls short of the consistency and clarity required, with a consequential effect on the profit reported before such items.”

The FRRP looks at up to 300 company accounts each year to check they’re prepared in the right way, as part of its general corporate reporting review.t

Richard Fleck, chairman of the FRRP, said that it was vital investors should be able to understand company profitability.

“This announcement draws attention to the importance of providing information in a way that enables users to assess the quality of a company’s profitability.”

Bad behaviour includes the use of additional items in a profit and loss statement, and the uneven treatment of the way gains and losses are handled.

The watchdog also said that where the same category of material items recur year after year, the company should consider whether such items should be included as part of underlying profit.

The FRC reminded companies that in extreme circumstances, the FRC’s conduct committee can take corrective action, including applying to the High Court to force a revision of the accounts.

However it pointed out that, to date, no court applications have been made.



Business news and

markets: as it happened

- December 13, 2013

Ireland will become the first eurozone nation to exit its bailout on Sunday but the country's finance minister says it must continue with its austerity policies



17.00 That's where we leave our live blog for today. We'll be back on Monday. Thanks for reading.

European markets close

16.52 Stock markets across Europe have closed. The FTSE 100 fell 0.1pc to 6,440.56; the CAC dropped 0.2pc to 4,061.06; the DAX ended down 0.1pc at 9,010.41; the MIB was flat at 17,805.73 and the IBEXrose 0.1pc to 9,281.

How we can all be Minted

16.15 Economist Jim O'Neill has revealed how the UK can share in the success of emerging markets.

QuoteAs our Prime Minister now seems to realise, you have to listen to what these countries think their problems really are rather then simply telling them what you think.

UK will see low rates for a while

15.58 Spencer Dale, a member of the Bank of England's Monetary Policy Committee, has said that the central bank will not raise interest rates until Britain has enjoyed a "prolonged period of strong growth.

QuoteAbstracting from the details of thresholds and knockouts, our message to you – the businessmen and women driving this recovery – is clear. You can plan for the future in the knowledge that the MPC intends to keep interest rates low until we have seen a prolonged period of strong growth, unemployment is significantly lower, real incomes are higher.

Chinese leaders: Economy faces 'downward pressure'

15.29 Chinese leaders have warned that the world's second-largest economy faces "downward pressure" and have called for boldness in carrying out promised reforms aimed at reviving slowing growth.

In a report issued after an annual planning meeting, the Communist Party cited an array of problems, including a glut of unneeded production capacity in some industries, environmental degradation and concerns about the quality of food and drugs.

QuoteWe must clearly recognize there is downward pressure on the economy," the statement said. "The thoughts should be bold and the steps should be firm in carrying out reforms and the people should have real benefits.

There was no immediate word on whether the meeting set a growth target for next year. Investors and analysts were watching to see whether the party would cut its target from this year's 7.5pc.

Carney warns of threat from shadow banking in emerging markets

15.06 The Bank of England Governor has said he sees a threat to global financial stability from huge amount of assets in informal banking sector in emerging markets

For Mr Carney, "the biggest risks at the moment are in the parallel banking sectors in the emerging markets".

QuoteReforms are required not only in developed countries but also in emerging countries," he said during a conference organised by the French economy and finance ministry.

As regulators tighten rules on the banking sector to avoid a repeat of the 2008 world financial crisis, massive amounts of assets have shifted to the so-called shadow banking sector.

The sector, estimated to be worth $67 trillion in 2011, includes hedge funds and finance companies or securities entities that provide credit or credit guarantees without being regulated like a bank.

BoE Mark Carney

Spanish bank debt to ECB hits new low

14.53 Over to Spain for some good(ish) news.

Debt owed by Spanish banks to the European Central Bank fell again in November to its lowest level since February 2012.

Net debt to the ECB totalled €220.5bn last month, a 35.3pc drop from the level 12 months ago, the central bank said, a sign that Spanish banks were finding it easier to raise funds on the debt market.

It was the lowest amount since February 2012 but the amount is still almost double the €118.9bn owed at the end of 2011.

Ireland leaves its bailout behind

14.38 Three years after going cap in hand to international lenders to avert bankruptcy, Ireland has officially ended its bailout in a landmark for the eurozone's efforts to resolve its debt crisis.

The country has cut spending and raised taxes to rebalance the economy since seeking emergency help from the European Union and International Monetary Fund, meeting every major target under the €85bn.

The country of 4.6 million is funded into 2015 thanks to debt issuance over the last 18 months.

Ireland is so confident of its position that it has exited its bailout without a precautionary credit line.

It is showing the way to Greece, Portugal and Cyprus - which have also had sovereign bailouts - and Spain, which has had help for its banking system.

With more than €22bn of cash in hand, almost twice the amount initially envisaged by its lenders, Ireland has insulation against market shocks and the economy is forecast to grow by about 2pc next year, Reuters reports.

Ireland's unemployment hit a peak of 15.1pc in 2012 but has since fallen back to 13pc.

In a sign of European admiration for Ireland's efforts, Noonan received an award from the German-Irish chamber of commerce for his role in the bailout exit and "huge positive impact" on relations between the countries.

How Ireland's debt crisis unfolded - in pictures

14.14 Ireland went Celtic Tiger to recession to an embarrassing EU bail-out in the space of three years.

It's seen a propery crash, harsh austerity measures and the agony of recession.

We have summed it up in this picture gallery which you can view here.

An unfinished housing estate in Dublin

Pound outperforms majority of global currencies in 2013

13.33 Improving economic conditions for the UK have contributed to the pound outperforming the majority of global currencies in the past year1, according to latest research from Lloyds Bank Private Banking.

The research shows tha during the last 12 months the pound rose against 53 of the 74 currencies analysed.

And it bodes well for those looking to jet off on a long-haul trip.

The Venezuela bolivar has recorded the largest decline against the pound (falling by 48pc); others include the Papua New Guinean kina(26.3pc), South African rand (15.6pc), Jamaican dollar (14.1pc) and the Egyptian pound (14pc). For travellers to these countries, the depreciation of these currencies will be welcome news as they can potentially get more for their pound.

But that trip to the Seychelles may have to wait as the country's rupee is one of the top performing currencies against the pound.

The UK housing market is like a microwave

13.12 In the same speech Dale cautioned on the dangerous"microwave quality" of the UK housing market, which has "a tendency to turn from lukewarm to scalding hot in a matter of a few economic seconds".

Sharply rising house prices in London and the South East have stoked fears that the Government's Help to Buy scheme, aimed at easing first-time buyers on to the housing ladder, has created a bubble.

However Mr Dale said the Bank of England, which has been given the power to veto an extension of the scheme beyond the three years it was originally planned for, mean that it is "far better equipped to respond to these types of risks than in the past".

BoE's Dale: businesses trust in banks is broken

12.34 Chief economist of the Bank of England Spencer Dale is speaking at the CBI Midwinter lunch where he said a "breakdown of trust" in banks by businesses could hamper Britain's economic recovery.

The monetary policy committee member said the "scarring effects of the financial crisis" are likely to weigh on the economy for several more years as companies, unsure whether they can depend on their banks for financial support, remain reluctant to invest.

Irish used their vote to protest

12.18 As Ambrose mentions below, the Irish took the austerity stoically, with no street violence.

In the same press conference as Noonan, Brendan Howlin, Minister for public expenditure and reform, says the people used their vote as their form of protest.

Ireland breaks free of Troika shackles but not safe yet

11.52 The "poster child" of EU austerity has taken its medicine stoically but there are risks to going it alone in the market, arguesAmrbose Evans-Pritchard

 Ireland is to regain its sovereignty after three years under the thumb of the EU-IMF Troika, the first of the eurozone crisis states to return to the free market.

The crippled Celtic Tiger has been subject to intrusive controls after a banking collapse forced it to seek a €78bn loan package from the EU and the International Monetary Fund in November 2010, compelled to cut wages and inflict a fiscal squeeze of 19pc of GDP.

The country will not break free of its shackles entirely. Inspectors will continue to carry out visits twice a year until 2031 “at the earliest” under a surveillance mechanism. Ireland will face binding constraints under Europe’s deflationary Fiscal Compact.

The "poster child" of EU austerity, Ireland has taken its medicine stoically without street violence or a lurch towards extremism, thanks to a close-knit tripartite system of trade unions, business and the government working together.

Ireland's housing market is recovering

11.39 In Dublin at least...


Barosso welcomes Ireland exit

11.30 He's not being unfriendly. The European Commission President has thanked Ireland for its "efforts and sacrifices".

He goes on to say the coutry's exit would not be possible without the "without the solidarity and significant financial support of the other EU Member States".

He says he is "proud" of the Commission's efforts and contribution as well.

QuoteWe have stood by Ireland throughout, including through our insistence on the lengthening of maturities and on the reduction of the interest rate.

Ireland's success sends an important message – that with determination and support from partner countries we can and will emerge stronger from this deep crisis.


Fuente The Telegraph



bond flows 121213

Investors have been rushing out of bonds ever since Ben Bernanke first hinted in May that the Fed may taper.

Forget about the bond bloodbath in 1994. This is shaping up to be the worst year in history for bond funds.

Investors have pulled out $72 billion from bond mutual funds this year through the first week of December, according to data from TrimTabs.

This is the first time in nearly a decade that investors have taken more money out bond funds than they've put in -- and it tops the previous record from 1994 when investors withdrew almost $63 billion. That year, the 10-year Treasury yield rose from just under 6% to over 8%. (Bond yields rise when investors are selling bonds and pushing prices lower.)

Rising interest rates have also been the catalyst for the rush out of bonds this year.

"The 'taper talk' that started in May proved to be a huge inflection point for the credit markets," said CEO of TrimTabs David Santschi, referring to Federal Reserve chief Ben Bernanke's hints that the central bank could begin to scale back, or taper, its $85 billion a month in bond purchases.

Related: Tapering or tap dancing?

The Fed began the first of three massive bond buying programs at the end of 2008 in the aftermath of the financial crisis. The goal of this quantitative easing was to keep long-term interest rates low, and in turn, stimulate the economy and the stock market.

But ever since Bernanke mentioned the possibility of tapering, bond investors have been spooked. The 10-year Treasury yield rose from 1.6% May to almost 3% by September, when economists and investors initially expected the Fed to take action. In fact, investors had continued to plow money into bonds up until May. The outflows have all occurred in the final seven months of the year.

When the Fed chose not to taper, the 10-year Treasury yield fell back to around 2.5% by October. But rates have crept higher again as taper talk has resumed. The 10-year currently is yielding around 2.88%.

"The reaction to the prospect of 'tapering' among retail investors has been pretty violent even though the Fed hasn't made any changes to its bond buying program," said Santschi. "What will happen when the Fed actually takes action?"

Related: Improving economy: Is it for real?

Citing the recent strength in the economy, particularly the job market, some experts think there's a chance the Fed could announce plans to begin tapering at its next policy meeting on December 18. But most anticipate the central bank will wait to pull the trigger until early next year, after Bernanke's term is up and Janet Yellen assumes the role as Fed chair.

Bond investors aren't the only ones getting hurt by the tapering fears. Big investment firms with a focus on the bond market have suffered too -- especially Pimco and its "bond king" Bill Gross.

His Pimco Total Return fund (PTTRX), which is down 1.6% in value this year (see correction below), has lost nearly $37 billion of its assets this year. That's the most among bond funds according to Morningstar.

The second biggest loser, Vanguard Inflation-Protected Securities fund (VIPSX), has lost almost $14 billion in assets.

Market up on good news? Pinch me!

Earlier this year, Pimco Total Return lost its title as biggest mutual fund in the world to theVanguard Total Stock Market Index Fund (VITSX), which now boasts nearly $300 billion in assets.

But Gross isn't the only bond guru having a tough time.

Rival bond fund manager Jeffrey Gundlach's DoubleLine Total Return Bond Fund(DBLTX) has lost nearly $4 billion this year.

But while bond mutual funds have been bleeding assets, bond exchange traded funds have managed to pull in $6 billion. Still, that's the weakest level of inflows since 2007, when ETFs, and bond ETFs in particular, were still in their infancy.

Correction: An earlier version incorrectly stated the change in Pimco Total Return's Net Asset Value as its year-to-date return. To top of page


Ford set for most aggressive expansion in 50 years

ford jobs

Workers install a Ford EcoBoost engine into a 2014 F150 truck chassis on the assembly line at Ford's Dearborn Truck Plant in Michigan.

Ford is gearing up for a big 2014.

The Michigan-based automaker said Thursday it's on the brink of "the fastest and most aggressive manufacturing expansion the company has undergone in 50 years." It plans to add 5,000 new jobs in the U.S. next year, including 3,300 salaried positions.

The company also plans to open new factories in Brazil and China, and will introduce 23 new vehicles globally.

"The last time Ford (F, Fortune 500) was growing like this, Dwight D. Eisenhower was the U.S. president," John Fleming, Ford's executive vice president for manufacturing, said in a statement.

Related: GM names Mary Barra as CEO

Unlike rivals General Motors (GM, Fortune 500) and Chrysler, Ford avoided a taking a federal bailout following the financial crisis. However it has had its own struggles, laying off and buying out tens of thousands of workers over the past decade.

But in recent months things have been looking up for the industry, which has been buoyed by low gas prices, increased access to credit and pent-up demand.

Ford's November sales rose 7% versus last year, and the company says it's gaining U.S. market share at a faster rate than any of its competitors. To top of page


Average American inheritance: $177,000

map inheritance call
  • 110

The United States is lagging behind other parts of the world when it comes to leaving inheritances for future generations.

American retirees expect to leave an average inheritance of almost $177,000 to their heirs, the sixth highest of any country, according to an HSBC survey of more than 16,000 people in 15 countries.

Australian retirees are the most generous, with inheritances averaging more than $500,000, thanks in part to the country's high real estate prices. Singapore was second at nearly $371,000, and the United Kingdom, France and Taiwan followed.

Around the world, 69% of retirees plan to leave an inheritance to their offspring, at an average of $148,000. Retirees in India were most likely to do so -- with 86% expecting to leave money behind -- while American retirees were the least likely, with only 56% expecting to give inheritances to their children.

Even though the United States doesn't stack up to some of the more generous countries, any inheritance is a nice extra buffer for those who are nearing retirement themselves when they receive the money. Plus, many retirees give money to their children before they die. HSBC found that about 35% of working-age Americans have already received money from a family member -- averaging $24,000.

About two-thirds of U.S. respondents said the inheritances they receive will at least partly fund their retirement, and 10% said they will rely on their inheritance completely to retire.

"These findings show that many Americans expect to leave an inheritance," said Andy Ireland, head of premier banking and wealth management at HSBC. "However, it's vital that people don't rely on these potential windfalls to fund their retirement."

Will you leave money for your kids?

Anything can happen to change a retiree's inheritance plans -- like unexpected medical expenses. A recent study from Ameriprise Financial found that retirees lose an average of $117,000 to unplanned events.

"[Y]ou cannot predict what may happen between now and receiving an inheritance," said Ireland. "The earlier you start preparing, the more financially secure your own retirement is likely to be." To top of page


Fuente CNN Money


For Women in the Boardroom, Bigger Companies Do Better

When General Motors (GM) appointed its first female chief executive this week, just days after Twitter (TWTR) added the first woman to its board of directors, the moves triggered a wave of commentary about ongoing gender imbalance in pay and power in the still male-dominated U.S. workplace.

Let’s state the obvious: Women still have a long way to go when it comes to pay and representation in the senior ranks of corporate America. Less appreciated, though, is the fact that the biggest corporations are the most progressive force for change inside the nation’s boardrooms. The data show pretty resoundingly that female executives are most likely to serve as directors at larger companies than at smaller ones.

And it’s not just by total numbers. Smaller companies naturally have fewer employees, so fewer women in total will be represented. But the percentage of representation by women remains lower—and it gets even smaller as the companies in question get smaller.

All the analysis below is based on publicly traded companies in the U.S., with at least $50 million in annual sales, market cap or more than $50 million, and more than 50 employees. That gives us 2,060 companies to work with. Split into deciles by market cap, each of the 10 groups contains 206 companies. The largest companies, in Group 1, average 35,000 and a market cap of $37 billion; the smallest companies, in Group 10, average 400 employees and $107 million in market cap.

Here’s the most interesting chart, showing that the percentage of women represented on boards is related to the size of the company: Bigger companies have more women, as a percentage of their boards.

You might think that’s because there are simply more spots to fill at big companies, but that’s not the reason. For context, here are the total number of board seats for each set of 206 companies:

And below are the total number of women on those boards:

So when you look at the percentage of women represented, they fare better at the biggest companies and do gradually worse at smaller companies.

If you look at the median number of female board members at these companies, the median number at most size levels is one—a single woman on the board—while at the biggest companies the median number is two. At the smallest companies, however, that number is zero. Look at the bar that doesn’t exist for Group 10:

This effect is not true when you look only at chief executives. There’s doesn’t appear to be a link between female CEOs and the size of the company, as you see here:

What are the reasons for this dynamic in board seats? Some experts believe that larger companies face more scrutiny around good-governance practices. Courteney Keatinge, of shareholder proxy firm Glass-Lewis, argues that “larger companies face more investor pressure and reputation risk” and that “people pay more attention to bigger companies.” Keatinge, author of an annual “Board Gender Diversity” report, notes that smaller companies might have fewer governance standards and may not use recruiters to find board members in the same way that larger companies might.

Her research shows that consumer-staples companies tend to do a better job of hiring more women on their boards, as it may relate to better positioning for their customer base, who tend to be women. Interestingly enough, even in that industry, size still matters:


IBM Shareholder Sues the Company Over NSA Cooperation

Spying is not good for business. That’s been the message from many U.S. tech companies and industry groups in recent months following revelations last summer that several companies were cooperating with the National Security Agency over its Prism surveillance program. The industry says it stands to lose tens of billions of dollars as customers in other countries turn to homegrown technology instead.

Now one such company, IBM (IBM), is facing a lawsuit over its cooperation with the NSA. IBM was sued yesterday by a shareholder claiming it violated federal securities laws in seeking to hide losses that stemmed from disclosures of its relationship with the NSA.

In a complaint filed in federal district court in Manhattan on Thursday, the Louisiana Sheriffs’ Pension and Relief Fund claims IBM defrauded investors by allegedly concealing a decline in hardware sales in China following reports in theGuardian about the NSA program.

“IBM knew that disclosures of the Prism scandal and IBM’s involvement in Cispa [the Cyber Intelligence Sharing and Protection Act] caused the Chinese government to abruptly halt its business with the Company, and that the Country forced businesses in China to stop contracting with IBM, leading to an immediate and precipitous decline in sales,” the complaint states. “As a result, the security and privacy breaches that IBM couched as potential risks had already materialized with drastic consequences for the Company’s business.”

The plaintiff alleges that IBM lobbied in favor of Cispa, a bill that would allow it to share customers’ personal data, including data from customers in China.

IBM’s cooperation with the NSA presented a “material risk” to the company’s sales, especially in China for its Systems and Technology hardware division, the pension fund says in the complaint. “The company knew but misrepresented or concealed from investors that the disclosures of its lobbying and its association with the Prism and NSA spying scandal caused businesses in China as well as the Chinese government to abruptly halt doing business with IBM, leading to an immediate, and precipitous decline in sales.”

IBM reported in the Guardian a 22 percent drop in sales in China compared with the previous quarter as a result of disclosures about its relationship with the NSA last summer, the complaint says.

The lawsuit—brought as a class action representing all IBM shareholders who purchased common stock from June 25 to Oct. 16 of this year—is seeking compensatory damages for losses sustained as a result of IBM’s alleged wrongdoing, as well as lawyers’ fees and expenses, and other injunctive relief the court deems appropriate.

IBM spokesman Doug Shelton wrote in an e-mail: “These allegations are ludicrous and irresponsible, and IBM will vigorously defend itself in court.”


Fuente Bloomberg