Business

By David Shepardson

WASHINGTON (Reuters) – Volkswagen AG’s top U.S. executive said on Thursday the United States faces major challenges in ramping up battery production to facilitate a shift to electric vehicles including attracting skilled workers, mining for key metals and supply chain issues.

Scott Keogh, chief executive of Volkswagen Group of America, told an Automotive News forum in Washington that the move to EVs is the single biggest “industrial transformation in America.”

Automakers and battery companies are committing tens of billions of dollars to building new battery plants and EV assembly plants throughout North America as they scale up electric vehicle production. This move, focusing on vehicles powered by advanced new batteries rather than gasoline, requires the United States to overcome a series of challenges, Keogh said.

These challenges include attracting enough skilled workers, dramatically boosting and facilitating U.S. mining for critical minerals to produce the lithium batteries for EVs, supply chain issues and more broadly addressing healthcare, education and infrastructure, Keogh said.

Keogh told Reuters on the sidelines of the forum that potentially hundreds of thousands of people could be employed by 2030 in U.S. battery industry production.

“It comes down to labor, it comes down to the infrastructure, it comes down to the investment,” Keogh said.

President Joe Biden has set a goal of 50% of new-vehicle sales being electric or plug-in electric by 2030, but has not endorsed phasing out gasoline-powered vehicle sales by any specific date.

Keogh estimated that the United States is making 150,000-200,000 batteries a year and that seven years from now “we need to be making 8.5 million batteries” annually.

“This is a scale of investment that honestly is going to make the industrial revolution look like a cake walk. It’s massive,” Keogh said.

Keogh also said the United States needs to do more to boost manufacturing capacity. The U.S. manufacturing sector has fallen from than 17 million jobs in 2000 to 12.8 million today, which has rebounded to about pre-COVID-19 pandemic levels.

“We need to build a collective ecosystem turning America into a manufacturing society again. I think America has become a service economy,” Keogh said. “The challenge of getting somebody who’s been working at a Starbucks taking 20-minute breaks, smoking a cigarette out back and is now jumping into a factory … is a whole new world.”

Keogh said long shifts for factory workers are much different.

“This is brutal, difficult, challenging work,” Keogh said.

(Reporting by David Shepardson; Editing by Will Dunham)

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NEW YORK (Reuters) – U.S. housing finance giant Freddie Mac said on Thursday the average contract rate on a 30-year fixed-rate mortgage rose by more than half a percentage point to 5.78%, the greatest one-week jump in 35 years.

Rates on the most popular type of U.S. home loan surged after the Federal Reserve announced it was raising interest rates by 75 basis points in an attempt to slow the economy and quell inflation, which is at 40-year-highs.

“These higher (mortgage) rates are the result of a shift in expectations about inflation and the course of monetary policy,” said Sam Khater, Freddie Mac’s chief economist. “Higher mortgage rates will lead to moderation from the blistering pace of housing activity that we have experienced coming out of the pandemic, ultimately resulting in a more balanced housing market.”

Mortgage rates have risen sharply since this time last year when the average rate on a 30-year fixed-rate mortgage was 2.93%.

Still, more homebuyers sought properties compared to a week earlier, perhaps signaling a flurry of activity before aggressive tightening by the Federal Reserve further impacts the sector, the Mortgage Bankers Association (MBA) said on Wednesday.

The MBA’s Purchase Composite Index, which covers mortgage loan applications for single family homes, increased 8.1% from a week ago. The MBA’s Refinance Index rose 3.7%.

Purchase applications, however, were down more than 15% from last year as low housing stock and lack of affordability, alongside climbing rates, appeared to have impacted demand.

(Reporting by Elizabeth Dilts Marshall; Editing by David Gregorio)

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By Jody Godoy and Jonathan Stempel

(Reuters) -Lyft Inc has reached a $25 million settlement to resolve shareholder claims that the ride-hailing company concealed safety problems, including sexual assaults by drivers, prior to its 2019 initial public offering.

The preliminary all-cash settlement was filed on Thursday with the federal court in Oakland, California, and requires approval by U.S. District Judge Haywood Gilliam Jr.

Lyft denied wrongdoing in agreeing to settle.

The San Francisco-based company raised $2.34 billion in its IPO, becoming the first ride-hailing business to go public.

But its share price fell below the $72 IPO price less than two weeks after trading began on March 29, 2019, and never recovered.

Shareholders accused Lyft of trying to appear more socially responsible than rival Uber Technologies Inc by failing to disclose known problems in its IPO registration statement, and that its share price fell as the problems surfaced.

The shareholders said dozens of people brought claims against Lyft related to driver sexual misconduct in the months after the IPO, an “existential risk” to its brand that should have been disclosed.

Lyft was also accused of concealing braking issues plaguing its bike-share program, which surfaced in April 2019 when the company pulled its electric bike fleet from the New York, San Francisco and Washington, D.C. markets.

Shareholders said Lyft also concealed its dependence on promotions to boost market share, resulting in a price war that saw Uber reclaim market share it had lost.

The shareholders’ lawyers called the settlement an “excellent” result given the “exceedingly unlikely” prospect of recovering up to $777 million of potential damages at trial.

They expect to seek up to $6.25 million from the settlement for legal fees.

Lyft shares closed Thursday down 8.4% at $13.88. They have fallen 78% since last July, as tight labor supply forces greater spending to hire drivers.

(Reporting by Jody Godoy in Santa Ana, California and Jonathan Stempel in New York; Editing by Leslie Adler and Lisa Shumaker)

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By Jihoon Lee and Cynthia Kim

SEOUL (Reuters) -South Korea’s economy will grow at its slowest pace in three years in 2022 as the world faces supply bottlenecks, surging inflation and rapidly rising interest rates, the finance ministry said on Thursday.

Setting out its first economic policy initiatives, the new government of President Yoon Suk-yeol said it had lowered this year’s growth forecast to 2.6% from 3.1% and raised the inflation forecast from 2.2% to 4.7%, the fastest since 2008.

“Our economy and markets are being shaken as we are thrown into a complex crisis amid fears of stagflation,” Yoon said in a speech on Thursday.

“We will make bold moves to remove any regulations that hampers corporate competitiveness and entrepreneur spirit and take action against unfair practices that disrupt market order in accordance with laws and principles.”

To help South Korean businesses facing inflationary pressures, the government proposed to lower the maximum corporate tax rate to 22%, the average of countries in the Organization for Economic Cooperation and Development (OECD).

The rate on about 100 of the largest companies has been 25% since 2018, when the former government increased it to pay for more social welfare.

South Korea’s economy, Asia’s fourth largest, last year recorded its fastest annual expansion since 2010. But as the Yoon administration came to office last month, the country was suddenly facing global supply chain disruptions and resulting difficulty in sustaining exports.

The ministry said the global economy was suffering from bottlenecks, plus the Ukraine crisis, inflation, faster monetary tightening in major countries, and COVID-19 lockdowns in China.

Yoon pledged in his election campaign to support a “private-sector-led economy”. His measures would help corporate South Korea cope with higher minimum wages, rising borrowing costs and the previous administration’s limits on working hours.

Markets are predicting the Bank of Korea will keep moving aggressively after hiking interest rates by 125 basis points since mid-2021. The expected further rises will likely hit private consumption for households saddled with the world’s highest debt loads.

On Thursday, the ministry said boosting capital investment in key technology sectors was one of its main policy initiatives. Between 8% and 12% of big conglomerates’ investment in making semiconductors and organic light-emitting diodes will be deductible from corporate tax, up from the current 6% to 10%.

Separately, South Korea would improve foreign dealers’ access to U.S. dollar/Korean won (USD/KRW) trading. This will help the country in its quest for inclusion in the MSCI developed markets index.

The government plans to extend trading time of the USD/KRW spot market to 17 hours — 0000 GMT to 1700 GMT. It will also allow dealers based abroad to participate, with details to be disclosed in the third quarter.

Currently, onshore USD/KRW trading hours are 0000 GMT to 0630 GMT and only locally licensed financial institutions can participate.

To revive share prices after the market’s fall of almost 18% this year, the government has decided to remove capital gains taxes on retail stock investors, except for holdings worth more than 10 billion won ($7.74 million) in any one stock.

The government also plans to cut tax on stock transactions to 0.20% from 0.23% beginning next year.

($1 = 1,291.1900 won)

(Reporting by Jihoon Lee and Cynthia Kim; Editing by Bradley Perrett and Kim Coghill)

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By Florence Tan

SINGAPORE (Reuters) -Oil prices recovered on Thursday from a steep drop in the previous session, supported by tight oil supply and peak summer consumption, after a hefty U.S. rate hike sparked fears of slower economic growth and less fuel demand.

Brent crude futures rose 86 cents, or 0.7%, to $119.37 a barrel by 0644 GMT while U.S. West Texas Intermediate (WTI) crude futures climbed to $116.27 a barrel, up 96 cents, or 0.8%.

Prices slipped more than 2% overnight after the Federal Reserve raised its key interest rate by three-quarters of a percentage point, the biggest hike since 1994.

The dollar index retreated from a 20-year high, easing downward pressure on oil prices. A stronger greenback makes U.S. dollar-priced oil more expensive for holders of other currencies, curtailing demand.

Investors remained focused on tight supplies and robust demand as Western sanctions restricted access to Russian oil.

“It was overall a volatile session across almost all markets yesterday,” said Howie Lee, an economist at Singapore’s OCBC bank.

“Tight fundamentals suggest any dips in oil prices are likely to be short-lived, or shallow, or possibly both.”

In Libya, oil output has collapsed due to the shutdown of production and export facilities as a tactic in the country’s political stalemate. Production fell to 100,000-150,000 barrels per day, a spokesman for the oil ministry said on Tuesday, a fraction of the 1.2 million bpd seen last year.

Also, optimism that China’s oil demand will rebound as it eases COVID-19 restrictions supported the price outlook.

“A rebound in China demand sentiment, and expected seasonal ramp-up in OECD oil demand into August leaves price risk to the upside through 3Q 2022,” said Baden Moore, head of commodities research at the National Australia Bank.

U.S. crude production, which has been largely stagnant over the last few months, edged up 100,000 barrels per day last week to 12 million bpd, its highest level since April 2020, data from the Energy Information Administration showed. [EIA/S]

U.S. crude stocks and distillate inventories rose while gasoline inventories fell in the week through June 10, the EIA said.

(Reporting by Florence Tan in Singapore and Sonali Paul in Melbourne; editing by Richard Pullin and Kim Coghill)

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By John O’Donnell, Huw Jones and Marc Jones

LONDON (Reuters) – A markets sell-off has brought back memories of the euro zone debt crisis more than a decade ago, highlighting divisions that have plagued the currency bloc’s efforts to forge a closer bond.

While the years since the debt crisis have seen the 19 countries in Europe’s euro area centralise and toughen bank controls, many planned economic reforms in Italy and elsewhere were watered down as vast money printing buoyed the economy.

Spurred by fears higher borrowing costs will choke economic growth, the markets rout has exposed cracks in the uneasy alliance which – unlike the United States – is held together largely by the central bank rather than a government with power to tax and spend.

Two events this week expose the fragility of the union: the ECB’s efforts to restore confidence in weaker states facing surging borrowing costs as its debt-buying programme ends, and ministers’ decade-long failure to put the bloc’s savers on a solid footing.

After a rare emergency meeting on Wednesday, the ECB promised fresh measures to temper the market selloff but the lack of a concrete plan to help debt-laden countries like Italy and Greece disappointed some.

This was in sharp contrast to 2012, when then ECB president Mario Draghi tackled a crisis of confidence in the currency’s future with a pledge to do “whatever it takes”, followed by a vast programme of money printing.

Now, however, rocketing prices, triggered by that money printing, as well as soaring energy costs in the wake of Russia’s invasion of Ukraine and pandemic lockdowns in China, makes this feat difficult to repeat.

“It was easy to do whatever it takes when inflation was low,” said Guntram Wolff of think-tank Bruegel, adding that rising prices would push the ECB to reverse course.

“The emergency meeting created a lot of expectations that the ECB cannot ultimately meet,” he said. “Only governments can address the real economic divergence and incomplete set up of the euro zone.”

GRAPHIC: ECB interest rates and balance sheet (https://fingfx.thomsonreuters.com/gfx/mkt/egvbkwrngpq/Pasted%20image%201654781200997.png)

French Finance Minister Bruno Le Maire cautioned against a fragmentation of the bloc, the type of public warning once common but that largely disappeared since vast money printing eased the debt crisis.

Speaking to students in London, Lagarde gave no further clues as to how ECB action could look, talking instead about climate change and the impact of war on global grain supplies.

‘GONE BACKWARDS’

The divisions in the euro zone are likely to come to the fore at a ministers’ meeting later on Thursday to discuss a deadlocked plan to reinforce the bloc’s financial system.

A central pillar of financial crisis reform, the so-called banking union remains mired in debate, with the critical question of region-wide protection of deposits still unresolved.

“We have gone backwards rather than forwards,” said Karel Lannoo of the Centre for European Policy Studies.

“If there is a bank failure, it will be the same as 2008,” he said, adding that individual states rather than the wider bloc would be left to shoulder the burden. “The Draghi period is over.”

The ministers are expected to further delay plans for the single safety net for the bank deposits, long opposed by Germany which did not want to be on the hook for problems elsewhere, prolonging the decade-long push to unify the sector to better withstand crises.

Thomas Huertas, a former alternate chair of the EU’s banking watchdog and now at the Leibniz Institute, said the absence of such a safety net put European banks at a disadvantage to American rivals.

“It is one of those benefits that the person can see and recognise. It’s an important element not only for finance, but I think also of the Union itself,” he added, commenting on the need for cross-border saver protection.

That lack of progress with a banking union, in turn, has weighed on the stocks of Europe’s banks, which have been trailing their U.S. rivals for years.

The ministers’ debate takes place against the backdrop of a rise in Italy’s borrowing costs, exacerbated by the ECB’s plans to raise interest rates and wind down its debt-buying to temper rising prices. Spanish, Portuguese and Greek bonds are under similar pressure.

GRAPHIC: Euro zone yields (https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnxnmwpq/Pasted%20image%201655281213512.png)

How Europe responds is being closely watched by bankers and investors.

“So much of what we do is a confidence game,” said Vis Raghavan, CEO of EMEA and Co-Head of Global Investment Banking at JPMorgan. “A lot of what we are seeing is about confidence in policy and achieving an orderly route out of stagflation.”

But with the ECB running out of road to keep investors happy, the ball is back in the court of politicians to act.

“While the ECB could keep markets happy with a bazooka, it’s getting harder to do this in a time when it has to fight inflation,” said Carsten Brzeski, an economist with Dutch bank ING.

“That leaves it up to the governments to finally get their act together in finding a proper union.”

(Writing By John O’Donnell; additional reporting by Leigh Thomas in Paris and Sinead Cruise in London; editing by Emelia Sithole-Matarise)

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By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) – The Federal Reserve raised its target interest rate by three-quarters of a percentage point on Wednesday to stem a disruptive surge in inflation, and projected a slowing economy and rising unemployment in the months to come.

The rate hike was the biggest made by the U.S. central bank since 1994, and was delivered after recent data showed little progress in its inflation battle.

U.S. central bank officials flagged a faster path of increases in borrowing costs to come as well, more closely aligning monetary policy with a rapid shift this week in financial market views of what it will take to bring price pressures under control.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices and broader price pressures,” the central bank’s policy-setting Federal Open Market Committee said in a statement at the end of its latest two-day meeting in Washington. “The committee is strongly committed to returning inflation to its 2% objective.”

The statement continued to cite the Ukraine war and China lockdown policies as sources of inflation.

The action raised the short-term federal funds rate to a range of 1.50% to 1.75%, and Fed officials at the median projected the rate increasing to 3.4% by the end of this year and to 3.8% in 2023 – a substantial shift from projections in March that saw the rate rising to 1.9% this year.

The stricter monetary policy was accompanied with a downgrade to the Fed’s economic outlook, with the economy now seen slowing to a below-trend 1.7% rate of growth this year, unemployment rising to 3.7% by the end of this year, and continuing to rise to 4.1% through 2024.

While no policymaker projected an outright recession, the range of economic growth forecasts edged toward zero in 2023 and the federal funds rate was seen falling in 2024.

The projections are a break with recent Fed efforts to cast tighter monetary policy and inflation control as consistent with steady and low unemployment. The 4.1% jobless rate seen in 2024 is now slightly above the level Fed officials generally see as consistent with full employment.

Since March, when Fed officials projected they could raise rates and control inflation with the unemployment rate remaining around 3.5%, inflation has stubbornly remained at a 40-year high, with no sign of it reaching the peak Fed policymakers hoped would arrive this spring.

Even with the more aggressive interest rate measures taken on Wednesday, policymakers nevertheless see inflation as measured by the personal consumption expenditures price index at 5.2% through this year and slowing only gradually to 2.2% in 2024.

Kansas City Fed President Esther George was the only policymaker to dissent in Wednesday’s decision in preference for a half-percentage-point hike.

Fed Chair Jerome Powell is scheduled to hold a news conference at 2:30 p.m. EDT (1830 GMT) to elaborate on the latest policy meeting.

Inflation has become the most pressing economic issue for the Fed and begun to shape the political landscape as well, with household sentiment worsening amid rising food and gasoline prices.

(Reporting by Howard Schneider; Editing by Paul Simao)

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By Yoruk Bahceli and Dhara Ranasinghe

LONDON (Reuters) – Rather than invent a radical new instrument to ease bond market strains across the euro bloc, investors reckon the European Central Bank might get away with cobbling together the best parts of schemes already contained in its policy toolkit.

The ECB on Wednesday promised fresh support and the design of a potential new scheme to temper a market rout that has fanned fears of a new debt crisis on the euro currency area’s southern rim.

Its statement sent 10-year borrowing costs in Italy and Greece sliding as much as 40 basis points, the biggest daily move since March 2020 for the latter. In a week when yields across the bloc hit multi-year highs, the immediate reaction was one of relief.

Yet, it was not really the whatever-it-takes pledge ex-ECB president Mario Draghi delivered almost exactly a decade ago, signalling his determination to rescue the euro from collapse.

“I hope that they have the intelligence to design (a new tool) in a way that’s not too strict, keeping flexibility by purchases,” said Patrick Krizan, senior economist at Allianz.

“The biggest error would be to be too committed and put themselves in a straitjacket.”

The ECB has already drawn criticism for being too complacent over the risk that its plans to raise interest rates would lift borrowing costs for financially weaker nations such as Italy too far above those of safe-haven Germany.

With the bloc clearly facing that fragmentation problem, it is important for any new bond-buying tool from the ECB to be flexible, investors said.

So just like the pandemic-era PEPP emergency stimulus scheme, it would need to ditch the capital-key principle of buying bonds in relation to the size of economies, instead buying debt from countries which most need help.

Graphic: Italy-Greece-https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwbwyjvo/Pasted%20image%201655302743622.png

One suggestion is creating a new tool similar to the Outright Monetary Transactions (OMT) scheme, an unused crisis-time tool allowing for unlimited purchases of a country’s debt.

The main sticking point for the original OMT programme is the requirement to sign up for a European Union bailout, often with unpopular conditions.

“The political price is quite high for the current OMT, so the ECB cannot do this alone, there must be something on the political side to design an OMT-light, which allows a country to be a bit protected,” said Krizan.

Analysts said they would expect an OMT-like programme to come with conditions attached, but not as strict as those in the original programme.

Aside from fiscal requirements, “the size will be everything, the maturities of the bonds they will be looking at, these are the most important,” said ING Bank senior rates strategist Antoine Bouvet.

The original OMT programme focused on buying shorter-dated bonds.

Yet another option is to design a package with traits of the OMT’s precursor – the Securities Markets Programme (SMP), which did not include the OMT’s strict, formal conditionality.

The SMP’s positive was that it also allowed the ECB to buy bonds, without adding to stimulus already sloshing around the system, in a process economists refer to as sterilisation.

For this reason, France’s central bank governor Francois Villeroy de Galhau has said bond purchases could again feature sterilisation.

The bank could also buy debt during a market stress episode, then sell gradually as conditions improve, thus avoiding increasing its overall balance sheet size, Villeroy has said.

The SMP had limited success however, and was terminated with a value of just 209 billion euros, not long after Draghi’s July 2012 “whatever it takes” promise.

Still, Piet Christiansen, chief analyst at Danske Bank, expects something along the lines of the SMP.

“Sterilised purchases have been our baseline all throughout and I think that is what is to be expected, because the SMP programme was done in a way so it doesn’t interfere with the monetary policy stance and the only way they could do that is by sterilizing the purchases,” he said.

What’s certain is that the ECB has the firepower to calm frenzied markets.

On March 18, 2020, when the COVID-19 outbreak sent Italian/German bond spreads briefly above 300 bps, the Bank of Italy stepped up bond purchases on behalf of the ECB. Later that day, the ECB launched its PEPP scheme.

Investors urged the ECB to unveil detailed plans fast, warning that otherwise bond market relief would fade.

“At the end of the day people want to see action,” said Francois Savary, chief investment office Prime Partners.

(Reporting by Yoruk Bahceli and Dhara Ranasinghe; editing by Sujata Rao and xxx)

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(Corrects number of employees in Russia in 1st and 6th paragraph)

By Anna Ringstrom

STOCKHOLM (Reuters) -IKEA said on Wednesday it would sell factories, close offices and reduce its 15,000-strong workforce in Russia, the latest move by the world’s biggest furniture brand to cut its operations there following Moscow’s invasion of Ukraine.

The move comes after IKEA temporarily closed stores and paused sourcing in Russia, joining a mass corporate exodus as Western companies rushed to comply with Western sanctions and amid threats the Kremlin would seize foreign assets.

The Swedish company has continued paying employees and will do so until the end of August.

On Wednesday, it said it did not see any possibility to resume sales in the country, where it opened its first store in 2000, in the foreseeable future.

As a result, brand owner Inter IKEA, which is also in charge of supply, said it would now start looking for buyers for its four factories, permanently close two purchase and logistics offices in Moscow and Minsk and cut staff.

IKEA has 15,000 employees in the country, of which 12,500 work at Ingka Group which owns all IKEA stores in Russia.

“Unfortunately, the circumstances have not improved, and the devastating war continues. Businesses and supply chains across the world have been heavily impacted and we do not see that it is possible to resume operations any time soon,” Ingka Group said in a statement.

Still Ingka, also one of the world’s biggest shopping centre owners, is keeping its 14 malls in Russia, branded “MEGA”, open.

The company said it wants to ensure people have access to basics they need, including clothes, groceries, and pharmacies, but it is continuously evaluating the situation.

It also declined to comment on its plans for the 17 shuttered stores, saying in an email it was “exploring various options”.

The steps so far differ from some other major Western companies, such as McDonald’s and French carmaker Renault, which have sold their assets to local buyers and quit the country entirely.

The retail business remains paused, IKEA said, but hinted it may open the doors for Russians for a final time. “To ensure necessary business processes, we are organising the sale of homeware goods that are in our warehouses to employees and customers. Dates will be announced soon,” IKEA said.

It said it may donate some stock to people in need.

But selling surplus inventory and generating revenue there may raise eyebrows given the public and political pressure on companies not to make money from doing business in Russia.

“We considered a wide range of options before taking the decision to sell off the stock, and there was no other viable solution,” the company said in the email.

(Reporting by Anna RingstromWriting by Josephine Mason;Editing by Angus MacSwan and Mark Potter)

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By Sam Nussey

TOKYO (Reuters) – Proxy adviser Glass Lewis has urged SoftBank Group Corp shareholders to oppose the election of corporate lawyer Ken Siegel to the board of directors for a second consecutive year due to his professional ties to the tech conglomerate.

Siegel, who heads the mergers and acquisitions team at the Tokyo office of law firm Morrison & Foerster, has represented SoftBank in deals including the purchase of chip designer Arm and the collapsed sale of the Cambridge-based firm to Nvidia.

“We question the need for the company to engage in legal services with its directors. We view such relationships as creating conflicts for directors,” Glass Lewis said in a proxy paper ahead of the June 24 annual shareholder meeting.

Almost a third of shareholders opposed Siegel’s election last year, in an unusual display of disapproval at an event known for vocal expressions of admiration for Chief Executive Masayoshi Son from attendees.

Son will take the stage at this year’s event on the back foot amid concern over exposure by the conglomerate, whose Vision Fund unit booked a record loss in May, to high growth stocks as interest rates rise and tech valuations fall.

Proxy adviser Institutional Shareholder Services Inc (ISS) recommends election of Siegel, saying while he cannot be seen as independent, “voting against this nominee may run the risk of actually increasing management dominance of the board.”

Son’s dominant role in the company he founded has been brought into relief by the departure of top executives including Chief Operating Officer Marcelo Claure.

Both proxy advisers recommend the election of David Chao, general partner at venture capital firm DCM Ventures, who will become the fifth outside director on the nine person board.

SoftBank has not disclosed the amount of business it does with Chao’s firm, “preventing shareholders from assessing the materiality of the relationship,” ISS said in its proxy paper.

(Reporting by Sam Nussey; Editing by Christopher Cushing)

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