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Just days before Tuesday\u2019s PGA Tour hearing<\/a> before the Senate Permanent Subcommittee on Investigations, a prominent tour board member, Randall Stephenson, has resigned. His reason? He said he cannot support the golf organization\u2019s proposed tie-up involving LIV Golf, its Saudi -backed rival, DealBook\u2019s Lauren Hirsch and The Times\u2019s Alan Blinder report.<\/p>\n In a scathing resignation letter obtained by DealBook, Mr. Stephenson, the former AT&T chair, said that he \u2014 like most of the board \u2014 was left out of the loop as the tour negotiated a deal with Saudi Arabia\u2019s sovereign wealth fund that jolted the sports world.<\/p>\n \u201cI have serious concerns<\/strong> with how this framework agreement came to fruition<\/strong> without board oversight,\u201d Mr. Stephenson wrote, adding he cannot \u201cobjectively evaluate or, in good conscience support\u201d it \u201cparticularly in light of the U.S. intelligence report concerning Jamal Khashoggi in 2018.\u201d<\/p>\n Mr. Stephenson had already been planning to retire from the board,<\/strong> two people familiar with his thinking told DealBook. (In fact, he had already lately taken to attending most board meetings via videoconference, save for last month\u2019s meeting in Michigan.<\/a>)<\/p>\n<\/div>\n<\/div>\n The Saudi deal sped up the timeline<\/strong>. Days after the deal\u2019s announcement, he told the board\u2019s chairman, Ed Herlihy, a partner of the law firm Wachtell, Lipton, Rosen & Katz, of his plan to resign. Herlihy requested that Mr. Stephenson hold out while Jay Monahan, the PGA Tour commissioner, was out on medical leave. Mr. Monahan announced his return on Friday<\/a>. Stephenson\u2019s resignation letter was dated Saturday.<\/p>\n He wants the board to consider alternatives. <\/strong>\u201cI hope, as this board moves forward, it will comprehensively rethink its governance model and keep its options open to evaluate alternative sources of capital beyond the current framework agreement,\u201d Mr. Stephenson writes.<\/p>\n There are other interested investors, DealBook has heard. But it is unclear how they could compete with the Saudi wealth fund.<\/a> And a Saudi alliance was the only one that could bring an end to litigation between both sides.<\/a><\/p>\n The optics look bad for the PGA Tour.<\/strong> At Tuesday\u2019s Senate hearing, Jimmy Dunne, a PGA Tour board member who was heavily involved in negotiations, is set to testify alongside the tour\u2019s chief operating officer, Ron Price. Mr. Stephenson\u2019s exit also raises further questions about the deal itself, which still needs approval from the tour\u2019s 10-member board, which includes five players. <\/p>\n Threads surpasses 100 million users, a record for app downloads.<\/strong> Meta\u2019s new social network hit that level in just a few days<\/a>, significantly faster than the two months that ChatGPT needed to hit that milestone, according to The Verge. Meanwhile, traffic to his social network<\/a> appears to have dropped sharply during that same period.<\/p>\n<\/div>\n<\/div>\n Carl Icahn negotiates breathing room with his banks. <\/strong>Under pressure from a short-seller over loans tied to his publicly traded investment vehicle, Icahn Enterprises, the billionaire reached a compromise with some lenders that decoupled some of that borrowing from the company\u2019s share price, The Wall Street Journal reports<\/a>. That could help ease pressure on the firm\u2019s slumping stock.<\/p>\n The moguls are set to arrive at Sun Valley. <\/strong>Allen & Company\u2019s annual conference for tech and media C.E.O.s is set to begin in Idaho on Tuesday, with leaders like Tim Cook of Apple, Mark Zuckerberg of Meta and David Zaslav of Warner Bros. Discovery on the guest list<\/a>. The gathering is famed as a place where big deals \u2014 think Comcast buying NBCUniversal or Jeff Bezos acquiring The Washington Post \u2014 are born.<\/p>\n Elon Musk made good on his threat of retribution against those who forced him to buy Twitter. The social network\u2019s parent company on Friday sued Wachtell, Lipton, Rosen & Katz<\/a>, the Wall Street law firm that represented Twitter\u2019s previous board in efforts to make the billionaire complete his $44 billion takeover bid.<\/p>\n<\/div>\n<\/div>\n Twitter accused Wachtell, long among Wall Street\u2019s most prestigious and profitable<\/a> firms, of \u201cunjust enrichment\u201d by negotiating a hefty success fee just before the deal closed. Some legal experts said the lawsuit faces long odds because Twitter\u2019s board approved Wachtell\u2019s fee \u2014 but it also raises the question of whether the high-powered firm\u2019s advice was worth its price tag.<\/p>\n It\u2019s the first time Twitter has sought to <\/strong>claw back<\/em><\/strong> a vendor\u2019s fee,<\/strong> after months of stiffing advisers and landlords alike on unpaid bills. By any measure, Wachtell\u2019s bill was high: \u201cO My Freaking God,\u201d Martha Lane Fox, a board member at the time, wrote in an email upon seeing the cost.<\/p>\n Twitter executives wired $84 million to Wachtell just 10 minutes before Mr. Musk fired them upon his takeover\u2019s closing, according to the lawsuit. That was fortunate for Wachtell: Other advisers on the deal, including the P.R. firm Joele Frank, Wilkinson Brimmer Katcher and the shareholder relations firm Innisfree M&A, have sued Twitter over fees they haven\u2019t been paid.<\/p>\n Wachtell did provide value for Twitter\u2019s then-shareholders.<\/strong> It helped the board compel Mr. Musk to complete his takeover bid, even as the company\u2019s business deteriorated<\/a> during months of uncertainty on whether the deal would close. Wachtell also helped Twitter avoid a trial, which would have cost even more in billable hours.<\/p>\n But the lawsuit is casting a light on Wachtell\u2019s billing practices.<\/strong> On June 27, 2022, according to the complaint, one Wachtell lawyer billed $1,625 for five hours\u2019 worth of drafting stock price reactions. On July 9, a lawyer charged $3,006.25 for 9.25 hours of small tasks and being on general standby.<\/p>\n<\/div>\n<\/div>\n Wachtell\u2019s billing has been scrutinized before: Carl Icahn unsuccessfully sued the firm<\/a> over its advice defending CVR Energy against a takeover bid of his.<\/p>\n (DealBook wonders: What did Mr. Musk\u2019s legal adviser, Skadden, charge?)<\/p>\n What comes next:<\/strong> The parties are probably headed to arbitration.But the lawsuit raises the prospect of Mr. Musk eventually suing Twitter\u2019s former board for breach of fiduciary duty, having accused the directors of doing so by approving Wachtell\u2019s payment.<\/p>\n Remember that Mr. Musk fired the company\u2019s former management for cause<\/a>, denying them golden parachutes, but never specified why. Perhaps he may argue this was it?<\/p>\n Janet Yellen\u2019s China trip received largely positive headlines, despite a lack of policy breakthroughs and some gripes<\/a> about the secretary of the Treasury\u2019s diplomatic protocol. Yellen said relations were on a \u201csteadier footing\u201d<\/a> and China\u2019s official news agency called the talks constructive.<\/p>\n But that anyone would regard the mere fact that the world\u2019s two biggest economies are talking as a success shows just how low relations have plunged (or is an indicator of how desperate Beijing is to cool tensions amid a worsening domestic slowdown<\/a>).<\/p>\n The focus was on building relationships. <\/strong>Ms. Yellen met with the officials recently put in charge of economic policy, many of whom have little international experience and are little known to western policymakers. She spoke of \u201cdiverse\u201d supply chains \u2014 a purported Chinese goal as well \u2014 and avoided any mention of \u201cdecoupling\u201d or \u201cderisking.\u201d<\/p>\n \u201cChinese decision makers understand that she is more moderate in comparison to many other senior officials in Washington when it comes to China policy,\u201d Li Mingjiang, an expert on China foreign policy at Nanyang Technological University in Singapore, told DealBook. \u201cParticularly, Beijing likes her public reiteration that decoupling would be disastrous for both countries,\u201d<\/p>\n But the pressure points weren\u2019t resolved.<\/strong> No new policies were announced and the tit-for-tat retaliation and criticism continues: China said it would impose restrictions on the export of minerals<\/a> crucial to chipmaking and Ms. Yellen slammed Beijing\u2019s treatment of American companies<\/a>.<\/p>\n<\/div>\n<\/div>\n China has big problems at home. <\/strong>Official data published on Monday show that the country is teetering on the brink of deflation<\/a>, as consumer spending slows and weak global economic growth hits exports. It\u2019s the latest sign that China\u2019s post-Covid recovery hasn\u2019t materialized, prompting renewed calls for new stimulus measures.<\/p>\n What\u2019s next: <\/strong>John Kerry<\/a>, President Biden\u2019s climate envoy, will travel to China this month to resume talks on global warming. <\/p>\n Speaking of Joele Frank, Wilkinson Brimmer Katcher \u2026 the firm, best known for its behind-the-scenes advice on deals and corporate crises, has just made headlines of its own: Several executives \u2014 along with Ed Hammond, a star M.&A. reporter at Bloomberg \u2014 have set up Collected Strategies<\/a>, a new P.R. firm.<\/p>\n DealBook\u2019s phone lit up Sunday night after the news broke because it was the first time in Joele Frank\u2019s two decades that a partner had left to set up a rival firm.<\/p>\n<\/div>\n<\/div>\n Joele Frank is one of the top P.R. firms on Wall Street.<\/strong> Founded in 2000 by Ms. Frank, it has become a go-to for companies looking to make \u2014 or oppose \u2014 deals, defend themselves against activist investors<\/a> or find their way through a crisis. (Its clients over the years have included G.E., Sony, Time Warner and US Airways.)<\/p>\n Ms. Frank also distributed equity broadly among her partners, who have been paid handsomely. That\u2019s a reason Joele Frank hasn\u2019t followed rivals like Sard Verbinnen in selling itself, and why no partner had jumped to create a rival firm \u2014 until now.<\/p>\n The departing partners include<\/strong> Scott Bisang, who advised Twitter on its deal with Elon Musk, and Jim Golden, who advised First Republic and PacWest.<\/p>\n Starting a new firm is hard,<\/strong> given the years needed to build up relationships with corporate leaders and M.&A. bankers and lawyers. Often, as in other industries, executives are also required to take lengthy leaves<\/a> between jobs.<\/p>\n In this case, the Collected founders can\u2019t go after their former clients for some time, since they have nonsolicit agreements.<\/p>\n<\/div>\n<\/div>\n But it\u2019s a boom time for new advisory shops anyway,<\/strong> formed by veterans of longtime firms like Brunswick and Sard Verbinnen (which is now part of FGS Global, after a series of mergers). <\/p>\n Among the P.R. firms that have emerged during the past decade are Gladstone Place Partners, C Street Advisory Group, Gasthalter & Company and Reevemark.<\/p>\n Corporate profits, geopolitics and inflation will loom large this week. Here\u2019s what to watch:<\/p>\n Tuesday: <\/strong>NATO\u2019s annual summit begins with Ukraine\u2019s entry to the alliance in focus.<\/p>\n Wednesday:<\/strong> The Consumer Price Index is set for release. Economists polled by Bloomberg have forecast that overall inflation cooled in June to 3.1 percent on an annualized basis, the smallest increase since March 2021.<\/p>\n Thursday:<\/strong> Earnings season kicks off with PepsiCo and Delta Air Lines reporting results. Investors are worried<\/a> about corporate profitability, given inflation and elevated interest rates.<\/p>\n Friday:<\/strong> It\u2019s Wall Street\u2019s turn, with BlackRock, Citigroup, JPMorgan Chase and Wells Fargo set to report.<\/p>\n<\/div>\n<\/div>\n Deals<\/strong><\/p>\n Glencore, the commodities giant, may consider spinning off the coal division<\/a> that was long one of its most successful businesses. (FT)<\/p>\n<\/li>\n Saudi National Bank reportedly offered to increase its stake in Credit Suisse<\/a> to 40 percent before the Swiss bank collapsed, but was rebuffed by Switzerland\u2019s financial regulator. (Bloomberg)<\/p>\n<\/li>\n<\/ul>\n Policy<\/strong><\/p>\n Best of the rest<\/strong><\/p>\n The comedian Sarah Silverman and two authors are suing OpenAI and Meta<\/a> for copyright infringement, accusing the companies of programming their A.I. networks using their work without compensation. (The Verge)<\/p>\n<\/li>\n \u201cAmerica Is Wrapped in Miles of Toxic Lead Cables<\/a>\u201d (WSJ)<\/p>\n<\/li>\n<\/ul>\n We\u2019d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com<\/a>.<\/p>\n<\/div>\n<\/div>\nHERE\u2019S WHAT\u2019S HAPPENING <\/span><\/h3>\n
Musk puts Wachtell in the spotlight<\/h2>\n
<\/div>\n<\/div>\nGrading Janet Yellen\u2019s trip to China<\/h2>\n
\nA rare set of defections at a top Wall Street P.R. firm <\/h2>\n
The week ahead <<keep this as an H2 for NL<\/h2>\n
THE SPEED READ <\/span><\/h3>\n
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