Latest news with #publicbacklash
Yahoo
a day ago
- Business
- Yahoo
Tariff-hit firms should review bonuses or risk backlash, US lawyers warn
Businesses hit by tariffs should start reviewing their bonus policies and how deeply they may need to cut executive payouts if they hope to avoid a public backlash, lawyers have said. Partners at the Silicon Valley law firm Cooley said that while pay was probably the last thing on bosses' minds as they scramble to adapt to Donald Trump's unpredictable tariff policies, pay committees should start assessing their options soon. 'Many will encounter rising material costs and reduced profit margins, particularly given the significant pressure on the supply chain,' a memo by its top lawyers said. 'Taken together with the recent stock market volatility, companies (both public and private) will need to address the impact of these challenges on their business and, importantly, consider the effects on director and executive compensation programs.' Related: US firms say Trump trade war is hitting production as dollar nears three-year low Cooley – whose clients have included Netflix, Apple, Meta, and Twitter before its takeover by Elon Musk and rebrand as X – said that without a proper review of pay policies, companies may end up handing big bonuses to bosses while the rest of the workforce suffers from cost cuts and job losses. That may be due to remuneration policies that do not automatically account for the impact of so-called 'black swan events', such as a dramatic U-turn in US trade policy or a global pandemic. Michael Bergmann, a partner at Cooley, told the Guardian: 'There is a meaningful risk that rank-and-file employees are going to suffer here, and that could take the form of layoffs, folks losing their jobs or wages.' The memo said: 'Given the overall macroeconomic and sociopolitical climate, there is a strong risk that any accommodation for those [tariff] impacts will be viewed as unduly rewarding executives, particularly if rank-and-file employees do not benefit in a proportionate way. Accordingly, compensation committees and boards must tread deliberately and carefully.' Cooley lawyers said there was also a possibility that executives might be unduly punished for tariff impacts that were beyond their control, and that this should also be considered by remuneration committees. It is likely that pay packets will start to reflect tariff impacts from early next year. Trump rolled out sweeping tariffs against most countries in April, in a shock move that left companies looking at how they could offset a potential hit to trade and revenues. The US president later paused and then reduced most tariffs, but last week he refocused attention on steel and aluminium imports, doubling tariffs for all countries except the UK to 50%. Tech companies have also suffered as a result of Trump's trade war with Beijing, which has included an order restricting AI chip exports to China. While Cooley's original memo was aimed at US companies, Bergman said the warning was relevant to others around the world, including in the UK, with the ripple effects also due to hurt businesses even if they do not directly trade with US companies. 'The company's nationality is not really the driving question here,' he said. Luke Hildyard, the director of the High Pay Centre thinktank, suggested the tariff fallout should prompt a more fundamental review of executives' multimillion-pound pay packets. 'The entire flawed premise of vast executive pay awards is that business success is driven by a tiny number of business leaders, and that companies should pay whatever it takes to attract and retain the best ones,' he said. 'The tariff furore is only the latest example – following energy supply challenges in Europe, the pandemic or the supply chain issues in its aftermath – of business leaders being pretty powerless in the face of wider events. Maybe the most useful lesson here is that they are mortals like the rest of us and more moderate pay awards that reflect that fact would be appropriate.' Sign in to access your portfolio
The Guardian
a day ago
- Business
- The Guardian
Tariff-hit firms should review bonuses or risk backlash, US lawyers warn
Businesses hit by tariffs should start reviewing their bonus policies and how deeply they may need to cut executive payouts if they hope to avoid a public backlash, lawyers have said. Partners at the Silicon Valley law firm Cooley said that while pay was probably the last thing on bosses' minds as they scramble to adapt to Donald Trump's unpredictable tariff policies, pay committees should start assessing their options soon. 'Many will encounter rising material costs and reduced profit margins, particularly given the significant pressure on the supply chain,' a memo by its top lawyers said. 'Taken together with the recent stock market volatility, companies (both public and private) will need to address the impact of these challenges on their business and, importantly, consider the effects on director and executive compensation programs.' Cooley – whose clients have included Netflix, Apple, Meta, and Twitter before its takeover by Elon Musk and rebrand as X – said that without a proper review of pay policies, companies may end up handing big bonuses to bosses while the rest of the workforce suffers from cost cuts and job losses. That may be due to remuneration policies that do not automatically account for the impact of so-called 'black swan events', such as a dramatic U-turn in US trade policy or a global pandemic. Michael Bergmann, a partner at Cooley, told the Guardian: 'There is a meaningful risk that rank-and-file employees are going to suffer here, and that could take the form of layoffs, folks losing their jobs or wages.' The memo said: 'Given the overall macroeconomic and sociopolitical climate, there is a strong risk that any accommodation for those [tariff] impacts will be viewed as unduly rewarding executives, particularly if rank-and-file employees do not benefit in a proportionate way. Accordingly, compensation committees and boards must tread deliberately and carefully.' Cooley lawyers said there was also a possibility that executives might be unduly punished for tariff impacts that were beyond their control, and that this should also be considered by remuneration committees. It is likely that pay packets will start to reflect tariff impacts from early next year. Trump rolled out sweeping tariffs against most countries in April, in a shock move that left companies looking at how they could offset a potential hit to trade and revenues. The US president later paused and then reduced most tariffs, but last week he refocused attention on steel and aluminium imports, doubling tariffs for all countries except the UK to 50%. Tech companies have also suffered as a result of Trump's trade war with Beijing, which has included an order restricting AI chip exports to China. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion While Cooley's original memo was aimed at US companies, Bergman said the warning was relevant to others around the world, including in the UK, with the ripple effects also due to hurt businesses even if they do not directly trade with US companies. 'The company's nationality is not really the driving question here,' he said. Luke Hildyard, the director of the High Pay Centre thinktank, suggested the tariff fallout should prompt a more fundamental review of executives' multimillion-pound pay packets. 'The entire flawed premise of vast executive pay awards is that business success is driven by a tiny number of business leaders, and that companies should pay whatever it takes to attract and retain the best ones,' he said. 'The tariff furore is only the latest example – following energy supply challenges in Europe, the pandemic or the supply chain issues in its aftermath – of business leaders being pretty powerless in the face of wider events. Maybe the most useful lesson here is that they are mortals like the rest of us and more moderate pay awards that reflect that fact would be appropriate.'
Times
5 days ago
- Business
- Times
Winter fuel payment U-turn: how will Labour balance the books?
Next week Rachel Reeves will unveil one of the government's biggest U-turns so far — reinstating winter fuel payments for millions of pensioners. Scrapping them is widely seen as one of the chancellor's biggest mistakes, and the government hopes the change of tack will help stem the pubic backlash over it. But the reinstatement will not be universal — there will be clear winners and losers — and the decision to claw back money from richer households through the tax system is likely to be controversial. Why is the government changing course? In one her first acts as chancellor, Reeves made an unexpected announcement. In July last year she scrapped winter fuel payments for ten million pensioners. She argued that the policy was a matter of necessity. The economic inheritance was so dire that the payments, worth between £200 and £300, were unaffordable. In doing so she made a moral and fiscal case. It was fundamentally wrong, she said, for wealthier households — including millionaires — to get the payments. At the same time she said that the £1.5 billion saved from the policy was necessary to balance the books and repair the public finances. Only those in receipt of pensions credit — those with an income of £11,500 — were entitled to the payments. The move was politically disastrous and contributed to Labour's collapse in the polls, which suggested it had endured the worst start of any government in history. There was a widespread backlash in both the cabinet and among Labour MPs. During the local elections the scale of the problem became tangible — voters repeatedly raised the issue on the doorstep — and Sir Keir Starmer decided he had no choice but to change course. After weeks of denials and obfuscation he announced that he would make a partial U-turn. What is the new policy? After Starmer announced a U-turn last month, Reeves said she would set out a new 'means test' at her spending review next week. Ministers say this is designed to protect pensioners on lower incomes without giving 'payments to millionaires'. The Times understands this will focus on restoring payments to the lower-income half by setting a new threshold based on average household disposable income, which is about £37,000. However, to implement the change, payments will have to be restored to all pensioners and then reclaimed from the better off through the tax system. How will this affect my tax bill? If you are a pensioner with an income above the new threshold, you are likely to get a payment this winter, which will then be clawed back by HM Revenue & Customs next year. This could come through self-assessment for those who complete a tax return, while others will see their tax code adjusted so they pay about £17-£25 more tax every month next year. Does this mean more power or data for HMRC? No — it relies on existing data sharing arrangements between HMRC and the Department for Work and Pensions. Child benefit is already clawed back from higher earners in a similar way through tax, and the taxman is attempting to simplify systems so that a 'reconciliation' happens automatically at the end of the tax year in April without the need to fill in tax returns. What if my partner is eligible for winter fuel payments and I'm not? One of the messy aspects of the new policy is that tax is paid by individuals but winter fuel payments are given on a household basis — a pensioner couple only gets one payment. In theory, a high-earning pensioner might be required to pay higher tax because their lower-earning partner gets a winter fuel payment, but it is unclear how HMRC will know when to apply this. Similarly, two higher-earning pensioners should not be taxed twice, but it's not clear that HMRC has robust records of household income. What if someone dies after receiving a winter fuel payment but before a tax bill? It is likely that their estate will have to repay the money. It is normal practice for executors to settle outstanding tax bills for people who die during a financial year, and an extra £300 is likely to be marginal for many higher earners. But the appearance of taxing dead pensioners may have outsize political impact. How much does the government save? Restoring payments to the poorer half of pensioners would cost about £750 million, half the amount saved by the original cut. This is far more expensive than an alternative option of expanding eligibility to pensioners on other benefits, which would cost about £300 million and give 1.3 million back their payments. However, a campaign to improve uptake of pension credit has led to more pensioners claiming, at a cost of £200 million — which will remain even if more pensioners get their payments back. It may well be that after all the political pain of the original policy and a protracted U-turn, Reeves only has a net saving of half a billion left to show for it. Will this revive Starmer's fortunes? The government's decision to broaden eligibility for winter fuel payments is unsurprisingly popular. However, critics question the approach given that Labour has already taken the hit for removing the universal payment in the first place. How much will voters thank Starmer for reinstating the payments to some voters? When payments are clawed back from wealthier pensioners next year, it is likely to be depicted by opponents as a stealth tax. Perhaps the biggest benefit for Starmer will come in the form of managing his party. With challenging votes on welfare and difficult decisions to come in the Budget, the prime minister needs to do all he can to keep his backbenchers in line.
South China Morning Post
19-05-2025
- South China Morning Post
Chinese ambulance uses siren to clear way for tourists, sparks public outrage
An emergency crew in China which illegitimately used its ambulance siren and flashing lights to clear a way on a popular tourist highway in Tibet has triggered a public backlash. Advertisement The incident happened on the 117km long road that connects the rest of China to the remote county of Medog in the mountainous autonomous region in the western part of the country. Medog used to be known as China's last roadless county because of its difficult geological conditions before the highway opened in 2013. The road has been popular among tourists nationwide for the beautiful scenery along the route. The driver of the ambulance claimed only the police could stop him from using his flashing lights and siren. Photo: On May 12, a driving tour enthusiast from Shandong province in eastern China posted a video online criticising an ambulance crew for using their siren to clear their way on the highway.
