CFO Minute: Top News Week Ending March 1
Sequester Takes Effect
Congress called it quits late Thursday night and opened the gates to a floor of sequestration cuts to a variety of federal and state agencies.
President Barack Obama is meeting with congressional leaders on Friday, but few anticipate the officials will find a last-minute solution to avoid the budget decreases. Politico anticipates the discussion will kick off a month's work of complex negotiation attempts between Congress and the White House as lawmakers decide how to administer $85 billion in mandated cuts. In addition, legislators are tasked with finding a way to keep the government funded through the end of the fiscal year.
The budget reductions mandated by the sequester include $42.7 billion in discretionary defense, $26.4 billion in discretionary nondefense, $11 billion in Medicare and another $5.2 billion in other miscellaneous cuts, The Wall Street Journal reports.
Education is among the most controversial departments due for a funding trim. Most states face losing millions in funding for their districts, and thousands of teaching and aide jobs across the U.S. could be jeopardized. Unions and agencies have already started talking about possible furloughs.
In spite of the media's focus on the sequester, a recent study by the Pew Research Center shows only one-quarter of Americans were following related news this week.
Groupon Fires CEO
On Thursday, the digital couponing pioneer announced it dismissed CEO Andrew Mason. One day earlier, Groupon announced sobering fourth-quarter results, which decreased the company's value in investors' eyes and brought down stock prices, The New York Times states.
Mason's letter to Groupon employees admits the company's recent performance gave the board good reason to cut him from the C-suite. After failing to meet expectations two quarters in a row and "a stock price that's hovering around one-quarter of our listing price," Groupon needs to take a different direction, he wrote.
The letter captured Mason's comical style, and begins with, "After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding - I was fired today."
While Groupon was once among the top thriving tech businesses, its business model offered little protection and opened the door to incredible competition.
Marissa Mayer Closes Home Office
After Yahoo's ban on telecommuting went public, CEO Marissa Mayer received a smorgasbord of mixed reviews - from virtual pats on the back from fellow executives to being called anti-working mom.
The announcement came in the form of a somewhat sugar-coated email from Yahoo's HR director, Jackie Reses. "To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side," the letter stated. "That is why it is critical that we are all present in our offices."
While giving employees flexibility can increase worker engagement, the efficiency of virtual interactions has limits, Forbes explains. Working side-by-side and communicating face-to-face creates experiential capital, which is crucial to successful business. Being together fosters cohesion.
Meanwhile, in response to claims that Mayer's policies are archaic and disrespectful to families, The Atlantic pointed out as CEO, her job is not to be the spokesperson for working mothers, but to improve Yahoo's internal efficiency.
RBS Sells Assets
After announcing net losses worth £5.97 million ($ 9 billion), the Royal Bank of Scotland (RBS) said Thursday it plans to sell its stake in U.S. lender Citizens Financial Group and trim much of its investment banking business.
The British government, which owns 82 percent of RBS, had publicly urged the bank financial institution to make take such action.
RBS acquired Citizens Financial Group in 1988 and plans to sell it through an initial public offering in the next two years.
Like many other European banks, RBS has suffered significantly since the financial crisis and a slew of legal allegations following the London Interbank Offered Rate (LIBOR) scandal. In a public statement, CEO Stephen Hester said RBS is in its fourth year of recovery and is expected to regain its footing in 2013.
Pope Steps Down
Within one month, Pope Benedict XVI announced his decision to retire and stepped down from his position as one of most important religious leaders in the world. On Thursday, the former pope packed up his things and left the Vatican for retirement.
Cardinal members are now tasked with determining when to hold the conclave. The Vatican has reportedly ordered the phones of certain members be wiretapped in connection with an investigation into information leaks, according to The New York Times.
Informal talks are scheduled for Monday, and Vatican members are seemingly anxious to elect a new leader and figure out how the organization will be governed in the meantime. The election will likely take place in mid-March and the new pope is expected to slip on the red shoes before March 24, Palm Sunday, Reuters reports.