CNOOC’s Nexen Bid: For Chinese Acquirers, the Challenges Never End Is Sandy Weill Right? Hal Singer: Libor and What’s Next for Big Banks How To Respond When Digital Social Activists Have You In Their Crosshairs The Marissa Mayer Saga: What Yahoo! Seems To Have Learned From Playboy’s Christie Hefner

1. EDITION 2
Weekly August 3, 2012
CNOOC’s Nexen Bid: For Chinese
Acquirers, the Challenges Never End
Is Sandy Weill Right?
Hal Singer: Libor and
What’s Next for Big Banks
How To Respond When Digital
Social Activists Have You
In Their Crosshairs
The Marissa Mayer Saga:
What Yahoo! Seems To Have
Learned From Playboy’s
Christie Hefner
Waj/shutterstock.com

2. CNOOC’s Nexen Bid:
For Chinese Acquirers
the Challenges Never End
Richard S. Levick, Esq.
Originally Published on Forbes.com
The timing was exquisite. until the Chinese provide more trade reciproc-
ity. (Never mind that CIFIUS’ specific charge is
On Friday, Senator Charles Schumer of New
national security and not marketplace access.)
York sent a letter to Treasury Secretary Timo-
thy Geithner urging him, in his capacity as But Schumer wasn’t the only one making
chairman of the Committee for Foreign Invest- CNOOC/Nexen-related news last week. Also on
ment in the United States (CFIUS), to withhold Friday, the SEC filed an insider trading com-
approval of the acquisition of Nexen by the plaint against a Hong Kong entity that pur-
Chinese National Offshore Oil Corporation chased $14.3 million in Nexen shares four days
(CNOOC), China’s state-owned and third-largest before the CNOOC bid. (That entity has a long-
oil company. standing cooperative agreement with CNOOC.)
The complaint obviously fuels the political
Nexen, which has significant holdings in tar
fires, as does the reminder, duly echoed in
sands and shale drilling expertise, is a Cana-
early media reports, that the “insider culture”
dian company but its Gulf of Mexico assets
is ingrained in Chinese business culture.
subject the deal to U.S. approval.
Schumer’s insistence on reciprocity may or
If approved, that deal would be the largest
may not be a red herring; the threads here
overseas acquisition to date by a Chinese en-
wind well beyond that single issue in any
tity: $15.1 billion in cash, which includes a 61%
event. There is the national security issue of
premium. The stakes are high as CNOOC would
which CNOOC became painfully aware after its
become a major player in the North American
hostile 2005 bid for Unocal was torpedoed by
energy market, toe-to-toe with the brand-
legislators on those very grounds. In turn, the
name energy companies of the Western world.
security issue mirrors the pandemic public dis-
Schumer, though, wants Geithner to hold off
trust of the Chinese in the U.S. that has been in-
zhuda/shutterstock.com

3. Weekly
maximum public reassurance in Canada. In but publicly visible allies are also essential.
addition to the big premium, CNOCC secured When, for example, Borse Dubai merged with
the full support of Nexen’s board ahead of NASDAQ in 2009 – another instance in which
need. The company has promised continu- public phobias could have played a decisively
ous capital investment and ongoing energy negative part – those allies included New York
research in North America. Shares will be Mayor Michael Bloomberg, who articulated the
listed in Toronto. CNOCC has certainly vowed benefits of the deal in terms of both jobs and
to preserve jobs. It will also make Calgary the U.S. competitiveness. That message was insis-
headquarters for North and Central American tently reiterated in every appropriate context
operations, buttressing that city’s position as so that, by day’s end, CIFIUS approved the deal
Canada’s energy industry hub. without mandating a single divestiture.
The company has most certainly learned its In some situations, foreign acquirers can even
lesson from the Unocal mishap. (The potentially go further. Are there union jobs in the offing?
Jaochainoi/shutterstock.com
devastating insider trading charge must be all Can those unions be enlisted on behalf of an
the more irritating for CNOOC in light of how it acquisition or other investment? If so, that
flamed by defective and dangerous product im- from a strategic communications standpoint, has done so many other things right.) Of course, means direct leverage with CIFIUS, at least
ports as well as a myriad of trade and intellectual the committee is the ultimate audience in a strategy that works in Canada won’t necessar- while a Democrat is still in the White House.
property issues. The insider trading allegation is any campaign to mount support for a foreign ily work in the U.S., especially during an elec-
Yet whoever the spokesperson and whatever
all the more serious a threat to the CNOOC/Nexen acquisition, or to block one. The criticism of tion year. Yet CNOOC has sounded the best and
the tactics, there is only one viable strategy to
deal simply because it further confirms such Schumer that’s already been made, for arbi- only themes it can, in any country—a counter-
advance the interests of controversial foreign
deep-seated public apprehensions. trarily targeting this particular acquisition, narrative to xenophobia and demagoguery that
companies in the U.S. Such companies (or
and for political opportunism in general, may is effective because it speaks so directly to the
At a time of falling asset prices, there is also countries) cannot reason people out of fears
not be particularly useful to CNOOC. Chances practical concerns of all stakeholders.
the sub-textual fear that the Chinese can now nurtured through decades of political animos-
are, no one’s telling Mr. Geithner anything he
simply buy us up. In terms of energy, they do The biggest theme is, of course, job creation. ity and some undeniably cutthroat competi-
doesn’t already know.
indeed have a “once in 100 years” buying op- But that message has to be credibly bolstered tive practices. They can only offer something
portunity, as the investment bank Sanford C. Meanwhile, Schumer’s agenda is just one of by an assurance of ongoing investment in the more compelling than those fears, which is the
Bernstein and Co. put it. Whether the CNOOC/ many that impinge on the CNOOC-Nexen deal. acquired entity, such that job growth stateside demonstrable hope that, if you work with us,
Nexen deal goes through or not, expect the Other lawmakers like North Dakota Senator is sustained rather than outsourced sooner or tomorrow will be sunnier than today.
Chinese buying spree to continue in energy John Hoeven focus on Keystone, and how ap- later. In case you missed it, outsourcing is a hot
American workers will hear that message.
markets throughout the world. proval of that pipeline is all the more exigent topic these days and, at this sensitive moment,
They don’t really have much of a choice. L
in light of China’s intended entry into the Cana- it is essential for any foreign company entering
In terms of a go/no-go impact on any such deal
dian market. the U.S. to be on the right side of this domestic Richard Levick, Esq., President and CEO of LEVICK,
in the U.S., Schumer’s letter is a reminder that, represents countries and companies in the highest-stakes
issue. CNOOC seems to be.
as the linchpin for foreign companies buying Amid such dueling agendas, CNOOC has actu- global communications matters — from the Wall Street
up American assets, CIFIUS is not necessar- ally played the communications card very CNOOC has reportedly deployed an army of crisis and the Gulf oil spill to Guantanamo Bay and the
Catholic Church.
ily impervious to public mood swings. In fact, smartly. The deal itself is structured to provide lobbyists to support the Nexen acquisition,

4. Is Sandy
Weill Right? Thomas Pajot/shutterstock.com
The former chairman of Citigroup (C) — who was the
architect of the 1998 mega-merger between Citicorp and The provisions of Glass-Steagall, which stem Weill now suggests that the best way to make
from the Banking Act enacted in 1933 at the money as a bank is as a “pure-play company”
Travelers Group and its subsidiary, Salomon Smith Barney end of the Great Depression, imposed banking that can operate consumer and proprietary
— called this week for the equivalent of readoption of the reforms intended to control speculation. The units without fear of running afoul of new
Act limited commercial banks’ securities activi- regulations. Certainly, that might improve
Glass-Steagall Act. ties and affiliations between commercial banks bank valuations. The three largest U.S. diversi-
and securities firms. Weills’ alliances caused fied banks with both commercial and invest-
Kathleen Wailes President Bill Clinton to declare, “The Glass- ment banking operations trade well below
Originally Published on Seekingalpha.com
Steagall Act is no longer relevant.” their peers that lack these operations.
In March of 2009, Citigroup Inc qualified as a Without consideration to the macroeconomic
financial holding company, among the first to impacts of breaking up the big banks, investors
take advantage of the new Gramm-Leach-Bliley in these companies surely would benefit from
Act, the Financial Services Modernization Act splitting their operations. Citi, BofA (BAC) and
signed by President Clinton in November 1999. JPMorgan (JPM) trade either at or well below
tangible book value. Relative to the SPX, this
Undoubtedly, many wish Mr. Weill had
group of three, combined with Morgan Stanley
reached the conclusion that giant diversified
(MS) and Goldman Sachs (GS), have underper-
banks are too big, sooner, as the lack of bank
formed so far this year by 2%. From their Oc-
regulation and creation of “too-big-to-fail”
tober 2011 lows, their price performance has
institutions were the proximate causes of the
been positive by 14% but has underperformed
2008 financial crisis.
the SPX by 7%. Meanwhile, the Large
AshDesign/shutterstock.com

5. Weekly
qingqing/shutterstock.com
Investors already have perceived the attrac- ing the targets of activist investors - who aren’t
Cap Regionals and Mid-Caps are significantly investors, who therefore loathe committing.
tiveness of regional and mid-cap banks, and hesitating to take on the big guys. Just look at
off their lows and outperforming the index for Michael Mayo, an analyst at CLSA LTd., re-
have priced in to the big banks’ share prices Procter & Gamble (PG) for evidence of that. L
the year. cently wrote that Morgan Stanley is trading at
the risks and uncertainties under which they
Disclosure: I have no positions in any stocks mentioned,
less than half of its liquidation value and could
These combined commercial banks/investment labor. Managements of the underperforming and no plans to initiate any positions within the next 72
double if broken up. While Morgan Stanley is
companies need to listen actively to their inves- companies need to give financial engineer- hours.
relying on a strategy of shrinking some of its
tors and take action to avoid being targeted by ing a serious look because they cannot grow
Kathleen Wailes, Senior Vice President & Chair, Financial
operations and reducing riskier assets, Mayo
activist investors who will force the changes their way out of the current situation. Nor can Communications Practice
calls for stronger action. The firm’s second
necessary to build shareholder value. they cut their way to stellar profitability. They
quarter results bear him out, as results sig-
should consider restructuring their capital
The deck is stacked against the big banks right nificantly lagged consensus due to a reduced
in ways that can be better appreciated by the
now because growth is slowing, Europe’s finan- top line. The 5-year historical growth rate for
market, giving their investors the enhanced
cial health remains a giant question mark, and Morgan Stanley is a negative 16.5% according
performance they seek.
investors are nervous. The issue of regulatory to Zack’s Investment Research, and the firm’s
reform - in an election year when nothing is risk level is rated above average. The shares Perhaps most importantly, the managements
likely to be resolved - continues to loom over the are trading on a price-to-book ratio of 0.4 x — of these firms need to listen to investors and
group. That, too, translates to uncertainty for about 70% below the industry average of 1.3 x. clearly articulate their plans for increasing
shareholder value. Otherwise they risk becom-

6. Weekly
Hal Singer
“ In an age when social media is top dog, the pursuit
of likes, shares, and re-tweets has resulted in an
activist community that looks a lot more like
Occupy Wall Street than the one the Ralph Nadars
of the world used to define...”
Libor and What’s Next for Big Banks
3. Take ownership of the issue at hand. The times have changed and activists have
changed right along with them. When their
Total victory in companies’ eternal struggle
credibility cedes ground to sensationalism with
with adversarial NGOs and other activist
stunts, prank, and hoax, companies—tradition-
groups rarely comes from winning the argu-
ally on the defensive—have the opportunity
ment. Rather, it is secured when companies
to assume the mantles of idealism and justice.
make their adversaries’ issues their own. In
The companies that take advantage of that fact
the digital age, that means Search Engine Op-
are those that will position themselves to be
timization (SEO) and Marketing (SEM) strate-
seen not as part of the problem; but necessary
gies that co-opt the visibility activists are so
to the solution. L
desperately seeking. Target companies need to
purchase the terms associated with an activ- Richard Levick, Esq., President and CEO of LEVICK,
represents countries and companies in the highest-stakes
ist campaign (be it a website title, a slogan, or In this edition of the Levick Daily Interview, tion against major financial institutions. At the
global communications matters — from the Wall Street
a twitter handle) and use those top-ranked Hal Singer, Managing Director and Principal same time, Mr. Singer outlines several steps
crisis and the Gulf oil spill to Guantanamo Bay and the
links to highlight their own messages about Catholic Church.
at Navigant Economics, discusses the Libor that banks can take to help restore faith in
social responsibility. Again, it’s preferable to scandal, how it is eroding public confidence in their practices and fairness in the system.
undertake this task before an activist salvo is big banks, and why it will lead to more litiga-
launched by anticipating the most likely areas
of exposure. The search engines are where the
bulk of that all-important cascade of audienc-
es—consumers, regulators, bloggers, plaintiffs,
journalists, etc. (alluded to above) will turn
for the real story. When a target company
takes control of those venues, it takes control
VISIT
of the narrative.

7. HOW TO
RESPOND
When Digital Social
Activists Have You
In Their Crosshairs Three tactics for turning social-media fueled
haters’ antics against them.
Richard S. Levick, Esq.
Originally Published on Fastcompany.com
ra2 studio/shutterstock.com

8. Weekly
Social activists are upgrading their ap- event gone horribly wrong that went viral on sort trade credibility for visibility. Before long, Litigation—while perfectly justified in cases
proach to pressuring the companies they YouTube. Finally, a fake Shell social media re- the law of diminishing returns kicks in and the where activists are using a target’s own in-
see as less than socially responsible. Take sponse team took to Twitter under the handle most important audiences stop paying atten- tellectual property against it (logos, slogans,
what’s happened to Shell this summer. As @ShellIsPrepared to urge followers not to tion to the boy that cries wolf. etc.)—usually won’t solve the problem either.
the global energy giant moves forward with share the damaging content cited above, know- The speed and inter-connected nature of the
All that notwithstanding, a trend seems to be
plans to drill in the Arctic Ocean, Green- ing that such a corporate censorship attempt social media space means that no court order
emerging among groups that see these stunts
peace, the Yes Men, and the Occupy move- would only encourage followers to share more. could ever hope to close Pandora’s Box quickly
as “ends justify the means” propositions. In an
ment have teamed up to take their efforts to enough to have any real impact. Even if a com-
More than a few traditional journalists and age when social media is top dog, the pursuit
another level. pany wins an injunction and forces one site
influential social media mavens have been of likes, shares, and re-tweets has resulted in
or social media account to close shop, it won’t
First, the activist triumvirate launched a mock taken by the hoaxes—and while that seems to an activist community that looks a lot more
be long before another pops up to take its
“Arctic Ready” website that mirrors its genuine be the activists’ goal, it is also underscores the like Occupy Wall Street than the one the Ralph
place. Moreover, the courtroom win would still
Shell counterpart in almost every way, except strategy’s fatal flaw. Activists largely rely on Nadars of the world used to define (I, for one,
translate into a Court of Public Opinion loss for
for the sarcastic “Let’s Hit the Beach” tagline; third parties to give their movements teeth. got my professional start in the Nader net-
having provided adversaries undue levels of
a conspicuous and unsubstantiated claim that They need traditional journalists, regulators, work). This means activists are likely to grow
credibility and creating the perception that the
300,000 people die every year from “climate- shareholders, plaintiffs’ attorneys, and con- all the more creative, shocking, and intransient
company does indeed have something to hide.
change-related causes;” and the image of an sumers to take notice before their targets are to keep attracting key audiences of influentials
adorable arctic fox accompanied by a caption forced to confront tangible consequences. The that fatigues a little more with every prank.
2. Strengthen media ties.
that reads “No. You can’t run your SUV on problem with these underhanded tactics is that But it also means companies that find themselves
‘cute.’” Then, the groups staged a mock press they seek to dupe—and often embarrass—the in these activists’ crosshairs can take advantage The more that activists rely on hoaxes, rumor,
very allies activists need to rally. Tricks of this of their adversaries’ strategic missteps by follow- and conjecture, the more social and traditional
ing three rules for a new age in activism. media reporters need sources they can trust—
and who better to fill that role than the target
1. Resist the urge to fight. company itself. In the wake of a high-profile
hoax, targets should reach out to influential
Like a little sibling that antagonizes an older
journalists and high authority bloggers to let
brother or sister, activists’ stunts seek to achieve
them know the company stands ready to pro-
the dual objectives of attention and provoca-
vide real-time answers to any questions and
tion. They are looking to pick a fight that results
assist in preventing misconceptions from being
in more coverage and more social media activ-
communicated as fact. Even better, they should
ity. As such, the worst thing a target company
“know ‘em before they need ‘em.” Journalists
can do is take the bait. As the people behind @
and bloggers have been conditioned to be as
ShellIsPrepared amply demonstrated, attempts
receptive as ever—and especially so if the hoax
to silence a stunt often have the opposite ef-
caused a few reporters to print retractions to
fect as they enhance the story’s viral allure. At
erroneous stories.
the same time, anything the company says in
response only provides fodder that turns a one-
Tom K!/shutterstock.com
day story into a two or three-day day saga.

9. The Marissa I guess it’s what you’d call striking a nerve. When new
Yahoo! CEO Marissa Mayer announced that her maternity
Mayer Saga:
leave would be a few weeks long and she’d “work
throughout it,” the vociferousness of the ongoing response
was itself as significant as the issues under debate. Her
What Yahoo! Seems To Have disclosure wasn’t even originally headlined in the media.
Learned From Playboy’s In fact, it was well buried in the initial coverage.
Christie Hefner
Richard S. Levick, Esq.
Originally Published on Forbes.com
Not just vociferous, it was also a sustained re- In turn, Mayer is accused of disserving women
action, in part because there are many parts to who lack those resources or simply prefer longer
the story. Along with maternity leave, the dia- work-free leave. “Her statement sets a bad prec-
logue has included much broader talk about edent for other new moms and the corporations
women in the workplace. Yet the most lasting they work for that will now expect that to be nor-
impact of this media saga will likely be rather mal maternity-leave behavior,” said one woman.
narrow: namely, the repercussions for Yahoo!
“I’m really glad I don’t work for you,” blogged
itself in light of how the company has handled
another.
the situation from the get-go.
However unfounded such anger and anxiety
This tale of strategic communications cannot,
may be, Mayer’s critics are raising points that
however, be told outside the context of those
need to be respectfully addressed. After all,
other broader issues. One focal point was as
aren’t there often two laws, one for the rich
much about class as gender: that Mayer can
and one for the not-so-rich? Don’t we have an
do what she says she’s going to do because she
obligation to articulate the socio-economic
has the wherewithal, i.e., the money, to do it.
impact of what Mayer has revealed?
The lives of the rich and famous – Sarah Palin
returning to work three days after giving birth, In fact, a number of female executives have
Heidi Klum back on the runway a month later, done just that. What is very interesting is that
etc. – infused media coverage, underscoring they vigorously defend and applaud Mayer
that postpartum resources are available to the while, at the same time, they’ve taken up the
elites but not to the average working Jane. cudgel on behalf of the very women who feel
undermined by Mayer’s privileged decision.
It’s a commendable balancing act.
“IMG_1405”, © 2005 Leon Brocard, used under a Creative Commons Attribution-ShareAlike license: http://creativecommons.org/licenses/by-sa/3.0/

10. Weekly
“
“Attention devoted to this aspect of Mayer’s At the same time, Mayer’s choice underscores
life distracts us from solving the real problems a few inescapable realities. “The CEO’s job is
In 1960, just over 25% of American women worked;
faced by parents who work tirelessly without 24/7. It’s not for everyone, nor should everyone
power, privilege, or means. It muddies the real- strive to achieve it,” says Hefner. “Those who that number is more than 70% today...”
ities we need to face in order to ensure prog- don’t, including people in some very responsi-
ress for mothers and fathers,” wrote former ble corporate positions, can continue to exer-
company that has suffered a prolonged leader- be parents. Yahoo!’s new-found resoluteness is
Massachusetts governor Jane Swift, the first cise more flexible work schedule options.”
ship void; that looked irresolute in its handling the tide that proverbially lifts all boats.
U.S. governor to give birth in office.
As Hefner sees it, the issues here are more of the scandal over former CEO Scott Thomp-
The only question remaining for Yahoo! is
“Think about this data point: In 1960, just over generational than gender-related. Her (our) son’s fake resume; and has seemed indeci-
whether or not Mayer should now say or do
25% of American women worked; that number parents assumed that the father’s role was tra- sive in publicly communicating its vision of a
something to clarify the issues under discus-
is more than 70% today. And yet U.S. work-fam- ditionally limited in terms of parenting time. sustainable strategic direction.
sion. Neither she nor the company apparently
ily policies have not been dramatically updated The Baby Boomers began the transformation
Like Playboy and thousands of other compa- think she should, and they’re right. “There
to reflect this stunning demographic leap,” Swift as more women came into the workplace but
nies through the years, Yahoo! must radically will be ample time later on to talk these issues
added. Most companies persist in complying it was the next generation that compelled a
change the narrative. through with her own people at Yahoo! once the
only with minimum legal requirements for rethinking of work roles at every level. Today,
current storm has subsided,” agrees Hefner.
either parent: 12 weeks of unpaid family leave Hefner can cite data showing a huge percent- The buzz over Mayer is therefore heaven-sent.
at companies with 50 or more employees. age of men dissatisfied with the amount of The board, unanimous in its decision to hire If Mayer dives into this discussion, she simply
time they get to spend with their children even her, can now present an unflinching posture increases the chances of a damaging mistake
“In Chicago, for example, one half of full-time
as our assumptions about work effectiveness – as well it should considering Mayer’s ap- or misperception. Worse, it would protract
female workers earn less than $35,000 per year
– that, for example, we need to spend most of parent qualifications for the job. Indeed, any the debate and keep the story focused on her,
and the work/family balance challenge for
our time in the office – are long-since obsolete. equivocation would be unthinkable, disas- when, in truth, the story must instead be all
single mothers is great,” says Christie Hefner,
trous. Conversely, as Hefner puts it, “they’re about the company she now runs. That is go-
former chairman and chief executive officer of At Playboy Enterprises, Hefner provided flex
now proving their leadership and showing real ing to be one of the major business stories of
Playboy Enterprises, now executive chairman time for all employees and benefits for part-
risk management skills.” In exchange for the the coming years in any event, as this injured
of Canyon Ranch Enterprises. “We must create time employees. Such liberality was a matter of
marketplace confidence Yahoo! sorely needs, giant struggles to assure its survival and regain
a system where people can be productive both self-interest as well as principle. “I was trying
the objections to Mayer’s prerogatives are a dominance. For all its symbolic and substance
as workers and as parents. That kind of change to recruit from the media and entertainment
fair price to pay. importance, the debate over Mayer’s pregnan-
is often driven at the top, so Mayer’s disclosure industry,” she says. “Many of the people I hired
cy leave is but a preamble to a stunning busi-
helps put the issue out there.” were younger, they needed these kinds of ar- There’s an even stronger sub-text. Yahoo! has
ness failure or a historic business triumph. L
rangements, and they weren’t typically getting $19 billion in market capitalization. Tens of
According to Hefner – the longest-serving (20 Richard Levick, Esq., President and CEO of LEVICK, repre-
them elsewhere.” thousands of jobs depend on what the com-
years) female CEO of any public company – sents countries and companies in the highest-stakes global
pany does. Marissa Mayer succeeded at Google
criticism of Mayer for disserving women who Not just offering competitive practical ben- communications matters — from the Wall Street crisis
– as employee number 20 who rose through
and the Gulf oil spill to Guantanamo Bay and the Catholic
need or want maternity leave is “unfair and efits, Hefner was also sending a message to the
the ranks – and she’s the best bet to succeed Church.
misleading. She is not telling anyone else what marketplace about Playboy itself, and the kind
at Yahoo! That means improved performance,
to do, and she is certainly not trying to estab- of new leadership it had. Which brings us back
aggressive growth, and more benefits for
lish some kind of standard for the workplace.” to the story behind the Mayer story: Yahoo!, a
everyone, including employees who happen to

11. THE URGENCY
OF NOW.