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Shareholder Spring; UK Business Secretary Wants More Power for Investors; Berlin's New Airport Delayed; US Stocks Sink in Delayed Reaction to Political Uncertainty in Greece; Euro, Pound Down While Yen Gains Ground; Millennials Learn Big Lesson

Aired May 8, 2012 - 14:00   ET


MAX FOSTER, HOST: Power to the shareholders. Britain's business secretary tells me why a new spring is in the air.

Investors take flight as fears over Greece hit stocks.

And Brandenburg late. Berlin's new airport aborts takeoff.

I'm Max Foster, this is QUEST MEANS BUSINESS

Hello to you. The Shareholder Spring, as it's being called, is stepping up as the CEO of the world's sixth largest insurer steps down. Andrew Moss is leaving Aviva just days after a revolt over executive pay, and he'll walk away with a $2.8 million severance package.

Moss is the third high-profile CEO to go in less than a fortnight. They have all fallen victim to investor anger at the widening gap between bosses' pay packets and corporate performance. Aviva shares have more than halved in value since Moss became chief executive back in 2007.

In London, stocks initially rose more than 5 percent after his resignation. They closed up a fifth of one percent and were one of the best performers on the FTSE 100 today.

Now, Andrew Moss is unlikely to be the last. From banks to bookies, shareholders are taking action over executive pay and what they say is reward for failure.

Barclays Bank felt the wrath of investors over Bob Diamond's $27.5 million pay packet. That was close to the maximum set out by the bank even though the bank's share price, profits, and dividends were all down. Nearly a third of Barclays' shareholders voted against the pay plan.

AstraZeneca CEO Brennan's pay had risen to $14.5 million when he quit, but the drug maker's Q1 profits were down 38 percent. He could be in line for an $8 million golden good-bye.

Bookmakers William Hill chief executive Ralph Topping's $1.9 million retention bonus, the equivalent of 200 percent of his salary, just slipped through by 50.1 percent of votes. The bonus isn't linked to performance.

And on Wednesday, there's expected to be another showdown at Unilever. The Ben and Jerry's maker only had operating profits up one percent last year, but CEO Paul Polman may be in line for a long-term incentive scheme that could see him receive huge payouts.

Now, the UK business secretary Vince Cable wants investors to have more power to clamp down on boardroom excess. I spoke to Mr. Cable earlier, and I began by asking him whether these shareholder revolts are the beginning of a trend or merely coincidence.


VINCE CABLE, UK BUSINESS SECRETARY: I don't think it's a coincidence. I think it's a very healthy assertion of shareholder power, if you like. I think it's encouraged by a variety of things.

I think the fact that people see these things happening in the United States as well as in the UK and, indeed, in Switzerland, the fact that in the UK my own government is getting behind shareholders. We're going to legislate to give them binding votes, for example.

The fact that we've been through an economic crisis, which has meant that dividends have been squeezed in order to fund very high executive pay. So, these whole issues about reward for failure, what is excessive and what is reasonable levels of pay are coming to the fore.

So, it is not a coincidence. I think it's very easy to understand why shareholders are now exerting themselves in this much more forceful way.

FOSTER: And you've alluded to it a bit there, but it's been described as a Shareholder Spring, and a suggestion that you personally are partly responsible for this, or largely responsible for it, in the UK because shareholders didn't feel they had any power before. But now they do feel that politicians are behind them. Is that a sense you got from the shareholder groups that you've been working with?

CABLE: Yes, it is. I'm not claiming total credit for it. We don't know what's the cause and what's the effect here.

But certainly for the last six months, my government's been signaling very, very clearly that we do want shareholders to act where pay's out of line with performance, that we're willing to get behind them both in terms of more transparency of information, because executive pay packets are often very complex and opaque, and also giving them strength and powers through binding votes.

And I think that's probably reinforces what was in any event going to be greater activism on the shareholders' side.

What I want to ensure is that this isn't just a temporary spasm of interest, that it does represent a long-term change in the way that companies are governed and a healthier way where the owners, the investors are involved.

FOSTER: And as I understand it, you're creating legislation which would mean that if enough shareholders voted against a remuneration package, then that would be binding?

CABLE: That's correct. I think we need to look at the -- there are different -- there are complexities, here, to do with exit payments, for example. But the basic principle is that where we're talking about forward-looking remuneration policy, shareholders should, indeed, have a binding vote.

There is the question about any anger about what's happened in the past. That will remain voluntary. But nonetheless, it will send a powerful signal if a sufficient number express their unhappiness.

FOSTER: And where does the -- where does the line get drawn on an over-involved government and legislation, here? Because at the moment, it's actually set up in quite a democratic way, isn't it? Shareholders express their views and they are held to account to some extent. At what point do you actually get involved in what is free enterprise?

CABLE: Well, we want to preserve the principle of free enterprise. This is what this is all about. We're -- the government is very firmly resisting the idea that government sets private sector executive pay. We don't. It's not our responsibility. If we want a fairer society, we've got to deal with that through taxation.

No. Companies have got to set their own pay levels, but we -- this has got to be done in a proper private enterprise way, and that does mean that the owners of capital, the shareholders, exercise responsibility. I think what's happened in the past is that they -- we've had absentee owners, passive owners, and we want to channel the current mood of activism and make it operate positively.


FOSTER: Vince Cable speaking there.

Now, Berlin's new airport is not ready for takeoff. We'll tell you why this sparkling new hub might not be ready for months, now.


FOSTER: Now, an important passenger announcement for you. Berlin's brand-new airport is delayed again less than one month before it was due to open. It's a major embarrassment for Berlin. Even if everything goes to plan, it'll still be another three months before it's ready.

The problem is that the fire safety system at Berlin Brandenburg -- there's a problem there. Everything has been in stalled, but it can't be checked in time. The Brandenburg state premier says he's extremely angry at the delay. The airport CEO and the city's mayor also expressed their disappointment.

Joining me now from Berlin is the head of the Berlin Brandenburg press office, Ralf Kunkel. Thank you for joining us. If you could, just explain why we've got this additional delay. What is the problem with the current system?

RALF KUNKEL, HEAD OF PRESS, BERLIN BRANDENBURG AIRPORT: Well, we have a major problem with the fire protection installations. They are already almost finished, but we haven't got enough time to check them. It's a very complex system.

And -- in the last few days, we learned that it won't be possible to do all the checks until 3rd of June, the original date of the opening of the airport, and so we had to take this decision.

FOSTER: So, delayed until when?

KUNKEL: Delayed until the end of the summer holidays. We expect the opening now in August or in September. We still have to check all the details, all the information, have to talk to all the experts to the steering people and all these guys, to the companies, and at the beginning of next week, I think we will be able to announce a new opening date.

FOSTER: It was just last Friday, wasn't it, you had journalists touring the airport, and you were still confident of the opening going on time? What's -- where's the communication problem here? It's such a short space of time to find such a big problem.

KUNKEL: Well, I fear it's not only a communication problem. On Friday, we were still very confident to open the airport on 3rd of June. It was quite clear already at that moment that it will be a desperate race against time.

Imagine, we have more than 7,000 people working on this airport. It's the biggest construction site in all of Europe, it's a very complex project. But in several crisis meetings over the whole weekend and on Monday, it became clear that it won't be able. And so, we had to take this very hard decision on Monday evening, it's not just 24 hours ago. So, it's really breaking news.

FOSTER: But what about the two other airports that are going to have to pick up from the mess-up at your airport? And also, all of the airlines that are going to have to pick up from your mess-up?

KUNKEL: I'm quite happy that we can say that, as far as we know now and today, not even one flight within the next month has to be canceled due to the postponing of the opening of the new airport.

So that means that all of the flights to Schonefeld and Tegel will go on as planned, and after 3rd of June, for the next weeks to come until the final opening of the airport, we will have enough space there for the new flights that Air Berlin and Lufthansa have already announced.

FOSTER: Ralf Kunkel, thank you very much, indeed. We will watch that story very closely. Thank you for joining us.

Let's go to New York, now, where stocks are falling sharply. Alison is there for us, and you can explain for us. Alison, what's going on?

ALISON KOSIK, CNN CORRESPONDENT: What's interesting is after the elections of -- for Greece and France that happened over our weekend, over the weekend, you'd think that Wall Street would have reacted to them on Monday, but that clearly wasn't the case.

We're kind of seeing that delayed reaction happening today as far as the outcome of those elections, and you can see it right on the screen, the Dow is down 159 points. Clearly, investors are on edge, Max, that they watch the political turmoil in Greece. As I said, that huge sell-off was expected on Monday. That didn't happen. We saw stable markets anyway.

The market, of course, hates uncertainty, and there are a lot of questions about the future of austerity in Europe. The situation in Greece is stirring fears that the country may pull out of the eurozone.

Not to mention there are questions about whether the new leadership, once it is put into place, whether or not that new leadership will kick out the debt deal that took so long to put in place. So, with all of that happening, you're seeing stocks tumble today. The S&P 500, by the way, is at a two-month low. Max?

FOSTER: In terms of US news you're expecting to come in this week, what's the big story?

KOSIK: There really isn't much on the US economic calendar, and that's specifically why you are seeing the markets react the way they're reacting, because the focus is squarely right on Europe and what the effects an the outcome politically that will have on the finances here on Wall Street. So, I think you're going to see focus really this week on Europe, Max, so -- until some bigger data comes out.

Also, you've got the lingering effects of that jobs report that was a big disappointment last week, showing only 115,000 jobs were created in April. Once again, that was a big disappointment, so not much here stateside for investors to rally about, either. Max?

FOSTER: Alison, thank you very much, indeed, for joining us. Onto the currency markets and the Currency Conundrum for you right now. Which country devalued its currency by a third yesterday, Malawi, Venezuela, or China? We'll reveal the answer later in the show.

And let's take a quick look at some other currencies. The troubled euro is falling for a seventh day in the wake of those Greek and French elections. The British pound also slightly down, it's trading above $1.61. And the Japanese yen is gaining ground against the greenback, some good news for them.


FOSTER: Now, The Millennials for you. This week, our young entrepreneurs are about to learn some big lessons. Milli is a typical slasher: blogger-slash-fashion designer-slash-shop owner. She's about to add a new slash as she launches a new venture in Johannesburg.

Now, in London, 27-year-old David has been given a big responsibility. The futures of dozens of interns are in his hands. Here are The Millennials.


UNIDENTIFIED CORRESPONDENT (voice-over): Previously, on The Millennials: David Lloyd grills potential candidates as he looks for a new addition to his team.

DAVID LLOYD, MANAGING DIRECTORY, INTERN LATIN AMERICA: And I'm also well aware that if you don't trust, then you can't hire anyone, then your thing doesn't grow.

UNIDENTIFIED CORRESPONDENT: And in Johannesburg, Milli Bongela recognized the risks that come with doing it all.

MILISUTHANDO BONGELA, FASHION BLOGGER: I can't say that there won't be another burnout in another year. It's just the risk I have to take.

UNIDENTIFIED CORRESPONDENT: Today, Milli is taking yet another risk. She's hosting a barbecue party with homemade drinks and burgers.

BONGELA: I hate it. I'm not happy, you guys.

UNIDENTIFIED CORRESPONDENT: But there's a twist. The party is taking place at her shop garden so guests can eat and shop.

BONGELA: It's just -- it's not what it's supposed to be.

UNIDENTIFIED CORRESPONDENT: It's a new business venture she's calling Punch and Judy.

BONGELA: And I have met none of the people, and I decided to start Punch and Judy because we wanted to really refurbish our house, but we didn't want to use money from our own salaries. So, we had been making this cocktail for two years. And so, we just decided, hey, let's continue just for fun. And of course, it's a viable business idea.

UNIDENTIFIED CORRESPONDENT: Unfortunately, the sauce to go with the burgers is not quite as viable.

BONGELA: This is really a disaster, and I'm not happy with the fact that it's not coming together. It's not -- I would never try this, and I don't want to just sell it on our first -- you know?

UNIDENTIFIED CORRESPONDENT: But Milli is going to serve it regardless.

BONGELA: OK, it might not be a disaster. It's coming. I think the more cheese we add, it's going to get better.

UNIDENTIFIED CORRESPONDENT: With the sauces all ready to go and the burgers on the grill, Milli takes the time to entice her guests to buy an item or two from her shop. This latest tactic is yet another clever move in the Milli portfolio.

BONGELA: How do you -- I mean, I love all of them. I just think she'd like these ones more.

UNIDENTIFIED CORRESPONDENT: But with so much on her plate, it's no surprise she's worried about her performance at work.

BONGELA: It's one of my biggest fears, the fact that I might do some -- do other things that I'm doing in a mediocre way. Because I'm sure if I did one thing, I would do it really, really well. I don't necessarily think I would ever want to just do one thing only and be really, really good at it. I can see the appeal of that, but it's just not me.

UNIDENTIFIED CORRESPONDENT: Milli is a Millennial who clearly sticks to her guns.

BONGELA: This is you, though. That's Kate, but this is you.

UNIDENTIFIED CORRESPONDENT: And on this occasion, it's all about getting a good return.

BONGELA: I don't do a million things because of the money. I do a million things because it's fun and it's -- it's a way to extend myself as a human being. But of course, I'm not going to mind that there's money at the end of the rainbow. There's gold coins, of course.

UNIDENTIFIED CORRESPONDENT: Meanwhile, in London, David is also looking to strike gold. He's hoping the iconic Troubadour restaurant will take on some of his international students.

UNIDENTIFIED MALE: Hello, David. Susie from the Troubadour.

LLOYD: Hi, David Lloyd, good to meet you.

It looks kind of quite quintessentially quirky and English, and that's exactly the sort of atmosphere and welcome we want to give to our international students.

UNIDENTIFIED CORRESPONDENT: In June this year, David's company, Intern Latin America, is offering 50 international students the opportunity to intern in London for the first time.

UNIDENTIFIED FEMALE: So, where do your interns come from?

LLOYD: Well, the majority of our students, I would say, come from the USA and Europe, but increasingly, we're seeing interest from Asia, most specifically India and China, and also Latin America.

UNIDENTIFIED CORRESPONDENT: Despite being only 27, David feels at ease selling his ideas to an experienced team from the Troubadour.

UNIDENTIFIED FEMALE: And do they need -- have special visas to come?

LLOYD: Obviously, European students have no visa issues whatsoever. For other students, there are some visa requirements which depend mainly on their level of education.

UNIDENTIFIED CORRESPONDENT: And throughout, he's professional and modest about his achievements.

LLOYD: To be honest, words like, I don't know, "entrepreneur," "managing director," they feel kind of -- words that I'd much feel far more comfortable using with a lot more success, to be honest.

UNIDENTIFIED CORRESPONDENT: For this Millennial entrepreneur, it's all about keeping your feet on the ground, remembering where you started, and how far you have to go.

LLOYD: Well, I'm not complacent, because while we've had some very good moments in the last year and things are going, touch wood, very well, there's a great deal of potential here still to realize. Being complacent now would be kind of moronic because there's so much to achieve.

UNIDENTIFIED CORRESPONDENT: Next week on The Millennials, Joe's father tells us how his son has gone from being an ambitious little boy to an award-winning Millennial as we look back at the earlier years.


FOSTER: Well, if you're a Millennial, you're most welcome to watch this show, of course, but do tell us which issue concerns you the most and tell us why you're a Millennial that stands out. E-mail us at or follow us on hash tag #cnnmills.

Now, let's have a look at the Dow because it's been pretty grim today and the problem is there isn't much US news around, so they're looking at all of the very negative European news, a lot of concern about a turn back against austerity, particularly in France and in Greece, but also some developments in Germany and Britain, as well, with local elections.

This is what the Dow is currently doing, down just over 1 percent, 160 points down, 12,848. We'll check in on that before the close for you.

And "Austerity is over," as we've been reporting. The words of the man who's hoping to form a government in Greece, a particularly difficult task right now. The latest from Athens for you next.


FOSTER: Welcome back to you, I'm Max Foster, these are the main news headlines this hour.

Greece's top leftist leader is now trying to form a government after Sunday's election created political chaos. The country's center-right party has given up its attempt. The leftist leader says he wants to scrap the austerity program Greece accepted in exchange for European bailouts.

US investigators say this man is a master al Qaeda bomb maker and they say it is likely he designed the sophisticated explosive device al Qaeda hoped to use in its latest attempt to blow up an airplane. But they say a tip from the Saudis enabled them to stop the plot.

The UN and Arab League's envoy for Syria has told the UN Security Council that an unacceptable level of violence is still happening within the country. Kofi Annan says he's very worried the country could distend into a full civil war.

Former Ukrainian prime minister Yulia Tymoshenko will be ending her 19-day hunger strike. Her spokeswoman says that the jailed politician has agreed too be treated by a doctor. Tymoshenko is serving seven years in prison for abusing her power. She started her hunger strike after accusing her jailers of beating her.

The future and outgoing presidents of France will have laid a wreath at the Tomb of the Unknown Soldier in Paris. Francois Hollande and Nicolas Sarkozy are commemorating the end of World War II or VE day, as it's known in Europe. Their appearance comes just two days after Hollande won the presidential election.

Now, the man in pole position to lead Greece's next government has told Angela Merkel that austerity is over. The head of the left-wing Syriza Party has three days to form a coalition, and its leader, Alexis Tsipras, has no intention of continuing Europe's austerity measures. Matthew Chance has this report for us from Athens.


MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it's utter chaos here. After the first attempt to form a coalition ended in failure, it's now the turn of Greece's far-left parties, opposed to the country's austerity plan, to try and forge a majority.

The leader of the coalition of the radical left, which was swept into second place in Greece's divisive elections is now engaged in intensive meetings with other parties to try and build a majority.

If it succeeds, Greece will be led by a party that is fundamentally opposed to the austerity measures imposed on the country in exchange for billions of dollars in loans from Europe and the International Monetary Fund.

Here's the thing, though. Many political analysts just don't believe the numbers add up even for the far-left parties, and that Greece, after all this agonizing horse trading over the next couple of days, will have to stage fresh elections anyway.

Matthew Chance, CNN, Athens.


FOSTER: Now, the EU president has called an extraordinary summits of all EU heads of state on May the 23rd, where they'll discuss -- or they're expected to discuss plans for growth in Europe's economy.

The G word is the centerpiece of the new French president's economic plan, but one of France's leading lawyers says Francois Hollande is in for a hard landing if he expects to implement it all. Our Richard asked Nicolas Baverez if the president-elect would soon face some harsh realities.


NICOLAS BAVEREZ, PARTNER, GIBSON, DUNN & CRUTCHER: In fact, production, competitiveness, employment, and the fact to cut public spending were outside the campaign and outside of the field of the program of Mr. Hollande.

So, he will have to try to fill this gap between his program and the reality of the French economy, which is very weak now with very low growth, huge unemployment, and a huge public deficit and debt.

And so, the other gap to be filled up is with Europe and especially Germany. So, very rapidly, we will have -- he will have to make very important choice, a kind of soft landing, so to try to moderate his program and to find compromises with the financial markets and Germany or a hard landing applying, really, the totality of his program and very probably to face financial shock on the French debt.

RICHARD QUEST, CNN INTERNATIONAL: The business community in France, the wealthy in France, do they fear what is now about to come down the road towards them?

BAVEREZ: Yes, of course. The business community is worrying because first you have this risk of a financial shock on the French debt and you have two very important potential problems regarding the business.

As you know, Mr. Hollande wants to implement a 50 -- 75 percent tax on the high revenues over 1 million euros. He wants to increase the taxes on the big companies, and a more general point of view, he will increase public spending and increase the taxes, especially on the business.

So, if this was to be implemented, there are very important risks on the businesses in France.

QUEST: Can Hollande not only make those changes he's promised, carry the French people with him, and not throw the European Union into complete disarray?

BAVEREZ: Of course, it's possible, but it will be a very important political challenge, but because it's very different from what the left voters are expecting.

That's why the beginning of his mandate and the first hundred days will be critical, because the situation of France and Europe, the political and economic situation in France and Europe now is really critical as we see, too, with the Greek elections.


FOSTER: Well, those developments in France (inaudible) continued instability in Greece weighed heavily on the markets across Europe today. France's CAC 40 lost 2.8 percent today. Greek markets also suffered more losses, leaving stocks at a 20-year low. The Swiss markets shed 1 percent. The London FTSE lost 1.8 percent.

Norwegian oil giant Statoil has beaten expectations in the first quarter. Production is up 11 percent and adjusted earnings are its highest on record for a single quarter. CEO Helge Lund says the company isn't planning to slow down. He's just signed a deal, in fact, with the Russia's Rosneft to explore parts of the Arctic. And I asked him how Statoil keeps growing stronger when other oil giants aren't.


HELGE LUND, CEO, STATOIL: Well, we have consistently, over the last few years, strengthened the resource space (ph). We have improved on our operations in Norway and also we have had the -- a pretty good exploration performance over the last few years.

FOSTER: It is always a high-risk game, isn't, it, exploration? You're going really high-risk, though, aren't you, with your deal with Rosneft, going into the Arctic? How are you balancing that risk against the potential reward?

LUND: We, a few years back, we have turned around our exploration strategy. We have gradually increased our investments into exploration. And we would like to access areas in an early phase, (inaudible) risks, but also at the higher upside if the play works. And the agreement that we have made with Rosneft for Arctic areas in Russia is really long-term.

Now the first few years we have to plan the area and do seismic, understand it. And then we probably drill the first, really in 2016. And then of course the size of our investment may be dependent on the discoveries that we are making after that.

FOSTER: Is there a feeling that the potential reward of the Arctic is so big that you can't afford to stay out of it?

LUND: Well, the way I think about it is that Statoil has through its 40 years' history, really operated in harsh environment in Norway. We have most of our operations in offshore and over the last few years, we have taken pretty big positions in the Arctic in the belief that longer term, there will be significant resources to be developed there.

So we have taken positions in the last (inaudible), East Coast Canada and Greenland, in Norway, and of course also in Russia. I would like to underline also that it's very, very hard to have credible Arctic strategy unless you are present in Russia, which we estimate will hold roughly two- thirds of the total resource estimate for Arctic areas in the world.

FOSTER: There are two elements of risk there, though, aren't there? There might not be the resources that you think are there, but there's also the political risk.

And I know that President Putin has already changed the rules, most recently changed the rules about exploration there. You see it as a long- term investment, but your shareholders will be worried that perhaps the Russian government won't let you continue as you have done or are expecting to. Other companies have been stung in that region.

LUND: I think it's fair to observe that there are political risks more or less in any country where we operate in the OACD (ph) area, but also, of course, outside the OACD (ph) area. To a large extent, I think oil and gas companies now have developed into risk management institutions. We have to manage (inaudible) risks, technical risks, project risks, market risks and, as you said, of course, also political risks.

We are not new to Russia. We have been there for many, many years. And we hope that this agreement where there is also reciprocity between Rosneft and Statoil, i.e., they will invest into our project that (inaudible) Continental Shelf. We hope that can create also an incentive for both parties to deliver on the long term.


FOSTER: You're watching QUEST MEANS BUSINESS. After the break, (inaudible) Facebook, the world's largest social media company prepares for what could be the biggest IPO in history.



FOSTER: Now the answer to the "Currency Conundrum", (Inaudible) valued it currency by a third yesterday and the answer is Malawi. (Inaudible) ties with the IMF. One U.S. dollar will now buy you a mere 250 kwacha.

Now at the start of the show, we told you about the shareholder spring, and that's -- is causing havoc across U.K. boardrooms. Well, it's not just here in the U.K. that shareholder power is being felt. In fact, in the U.S., a group of Yahoo investors are demanding internal records after CEO Scott Thompson apologized for his resume padding scandal.

Now in a memo to shareholders, Thompson expressed his regret at how the issue had affected companies typical responsibility. He said he respected the thorough review that the board planned to undertake. Adam Seessel, wants Yahoo's chief executive to stay put. He's the director of research at Martin Capital Management, which owns Yahoo shares. He joins me live via Skype from Illinois.

Thank you so much for joining us. I mean, you're backing the boss, aren't you? But -- and that's because the alternative is losing him at a very difficult time.

ADAM SEESSEL, DIRECTOR OF RESEARCH, MARTIN CAPITAL MANAGEMENT: Yes, that's correct, Max. I mean, no one likes a liar and padding your resume smacks of desperation.

But it was done a long time ago and Yahoo is in a real fight for its life with two very important issues on the table, the future of their 40 percent ownership of Alibaba Group, which is a huge valuable asset in China and turning around their core business. So I'm not so sure that getting rid of a new battlefield commander when the bullets are flying is the right idea at this time.

FOSTER: What's the concern amongst shareholders here that you've spoken to? Is it that he has the potential to lie, and though this lie isn't going to change the future of Yahoo?

SEESSEL: Yes, you're right. It's not going to change the future of Yahoo, and look, we own shares. We've owned shares here about a year for a year and it's a good -- we're value investors out here in the Midwest. And we buy stuff when it's so cheap that even if things go poorly, you're going to do OK. And that's the case.

We've made 10 or 15 percent on our money, even though pretty much everything has gone wrong, including this latest scandal. But it's a very small scandal, and up to this point, we've really been supportive of Dan Loeb, the activist hedge fund investor, who's been banging on Yahoo to create shareholder value.

But I'm not sure that this creates any shareholder value, trying to fire your new leader, even if he did tell a fib. And so I think Loeb needs to ask himself, you know, what does he really want here? I'm not sure it's very constructive.

FOSTER: Do you, as a shareholder, feel empowered these days? Because it does seem as though shareholders do hold more weight at the moment, and boards are taking more notice of them and their thoughts.

SEESSEL: Well, it's good that boards pay attention, you know, boards represent the shareholders and CEOs ought to be accountable to boards, very similar to our Western democracy. I don't feel particularly empowered. We're not activist investors, we're value investors. So we buy things when they're so beaten up that only, you know, even if bad news comes, we're going to do well.

And so far we've done well here, even though there's been a whole bit of bad news. Meanwhile, there's a lot of upside on Alibaba in China, and there's a lot of upside on the core business. So to me this is a whole big distraction, the guy lied a little bit on his resume, in peace time I would say it warrants a dismissal. But this is wartime for Yahoo. And, you know, we need to get the business.

FOSTER: Yahoo was a pioneer, of course, in the business, and it fell behind kind of this sprawling, unfocused business. How do you think, after all of this, it's going to come out? What do you think Yahoo will be?

SEESSEL: Well, it's so hard to know, Max. I mean, that's the $64,000 question, as we like to say in the States, but the math for Yahoo's stock is so compelling, you know, Alibaba Group, at latest count, is worth maybe $40 billion. So if we as a Yahoo shareholder own 40 percent of it, that's a $16 billion value. Well, Yahoo's entire market cap is $20 billion right now.

And so they also have a huge 35 percent stake in Yahoo Japan, which is a separately traded and very valuable company. They have a couple billion dollars of cash in the bank, and they have this core business which is no question it's a red-headed stepchild, but it has latent potential to be turned around. It's the third most popular website in America, if not the world.

So just on the math, there's enormous value to be created here. We're not sure how we get from here to there. Up to this point, Dan Loeb's been very constructive. But I'm not sure pointing out a peccadillo on someone's resume is the best thing to do.

FOSTER: I think he's learned his lesson, rather, hasn't he? Adam Seessel, thank you very much. Enjoyed it. Thank you indeed for joining us.

No more Yahoo deals with that fallout from the scandal. Facebook is on course to be the biggest IPO, the tech IPO, at least, in history. It's going to go public a week and a half from now, in fact. Before that, (inaudible) Mark Zuckerberg (inaudible) meeting investors across the U.S. Look at this rock star moment. The first round of meetings was in New York on Monday.

Today they're pitching two potential backers in Boston. But what's it like to be on the inside of company's first share sale? Well, Ali Velshi talked to a tech CEO who's been through the whole process and explains how it all works.


ALI VELSHI, CNN HOST: The IPO, initial public offering, it's the first time that a privately held company offers its shares to the public. Now there are a few reasons why they do this. One, they pay off early stage investors. Two, it's prestigious. But, three, they raise much needed money to expand the business.

Tom Adams was the CEO of Rosetta Stone, a language learning software company which went public on April 16th, 2009.

TOM ADAMS, CHAIRMAN, ROSETTA STONE: The actual IPO day is a fantastic moment for the company because effectively you had to do a lot of work to be ready to go public. It's a source of enormous pride for everybody.

VELSHI: But before a company can do its IPO, it has to set a price range for the stock and then go on a road show.

ADAMS: You basically get to feel like a rock star for about two weeks. The bankers will put you on a private plane and fly you around and it (inaudible) such urgency to get to as many meetings as you possibly can.

So you sort of go in to tell your story and I think you have to just tell it like it is and very much explain the good and the bad of the company, because these are long-term relationships that your company's going to sort of have with an investor base. And so you want to hit the right balance.

VELSHI: The ideal process is too complicated for a company to undertake itself, so they hire investment bankers to underwrite it.

ADAMS: So you have essentially all the different banks that you've considered come to present to you and you evaluate their assessment of the company and how they would present it and sell it.

VELSHI: The big question? How high do you set the price?

ADAMS: You're trying to get the range at a level where people will have the conversation. That's vital. So --

VELSHI: So low enough to produce demand?


VELSHI: But high enough that you make money off of it.

ADAMS: Right, so high enough that your incumbent investors, the people who've been with you for a long time, will be very happy about the outcome. And so you've got to balance the two and, you know, that's something you just have to get done.

VELSHI: Companies can make a lot of money going public, instant millionaires. You pay off your early stage investors, you've got money to expand. But there is a tradeoff. When you're a private company, nobody minds your business. When you're public, it's everybody's business -- Ali Velshi, CNN, New York.


FOSTER: Now you know. And we're also going to bring you the latest weather. But Jenny's actually going to be talking about insects, insect hair, our new insect hair correspondent joins us from the show.

JENNY HARRISON, CNN METEOROLOGIST: No, look, honestly, you don't -- caterpillars, that's what Max and I are talking about. The caterpillars (inaudible) their development, but apparently they've got poisonous hairs, and it's causing a few problems. This is actually in the U.K., but that wasn't really what I was going to talk about.

Instead, I was going to talk about this continual round of rain and strong winds that's been really hitting much of the northwest of Europe for really the last couple of weeks now, but in particular, of course, we have on Monday a tornado that was (inaudible) one county.

It was first of all spotted in Wiltshire (ph), then apparently headed on into Oxfordshire and then up into Buckinghamshire, but not surprisingly, really, when you see all the showers that the thunderstorms had also came through on Monday and of course have been coming through over the last several weeks, on average about 30 tornadoes are reported in the U.K., and of course, generally they don't cause this sort of damage certainly we hear about and see about in the United States.

We also have the tornadoes occurring across much of mainland Europe as well as France, Poland, Turkey, all these countries have seen tornadoes in the last several months. And a lot of the rain again has been impacting much of France, and that's because the low always further to the north. We've got this cold front sinking down.

And this is really impacting much of western Europe and as I say, what this system clears, well, then guess what? There's another one just waiting in the wings as well, because of course there's been system after system.

Also a few thunderstorms further towards the east, and so got a bit of heat in place there. But again, another down side to all this rain, in April particularly, because we've seen such huge amounts of rain, it really enabled a lot of the grass to really get going.

It was cooler as well, and then now as we're heading into May, and the weather's expected to warm up slightly over the next few months. Then as expected, in particular the grass pollen counts (ph) are going to be very high indeed, and 95 percent of people who suffer from allergies are actually allergic to that grass pollen. And so again, it'll be July and August (inaudible) be at its worst.

And these are the regions that in the U.K. that have very high pollen counts. And it's not just countryside areas. London, for example, Birmingham, these big cities, they also have very high pollen because of the pollution. (Inaudible) what causes it.

You can see meanwhile the temperatures still warming up from the southwest, but of course, as I say, in comes the next round of rain and thunderstorms, all of which, Max, I'm sure, you're not that happy to hear about.

FOSTER: No, it's fantastic news. Thank you very much. At least the caterpillars aren't here quite yet.

HARRISON: Not yet.

FOSTER: Jenny, thank you very much indeed.

Next, specs for vision or for fashion, what costs you $200 on the High Street or on Main Street could be a lot less online. This is a bargain hunting story for you. We'll tell you why, next.



FOSTER: Now the world's largest premium eyewear maker Luxottica has recorded its best-ever quarter, sales up nearly 15 percent. The price of some of their frames they have a license for include Prada and Chanel. It's enough to leave many of us wanting another eye test.

Have a look at this rather clever graphic we put together for you tonight. The average price for frames is between just $200 and $700 each, so it's lot less. And the industry itself is worth something like $50 billion. That's for the whole industry. But it doesn't have to be that way.

Now onto online retailers like Warby Parker and, are trying to convince consumers that stylish prescription frames can be purchased online for a fraction of the cost. CNN's Maggie Lake talked to both companies to find out how they can do it so much cheaper.


MAGGIE LAKE, CNN CORRESPONDENT (voice-over): Glasses have come a long way. Once the butt of jokes --

"LEWIS SKOLNICK": It's going to be a great year.

LAKE (voice-over): They're now a fashion statement, but the improved image has come with a price.

LAKE: A pair of frames from an optical shop or a doctor's office can set you back, on average, $200, but many people pay much more.

How much is the most you've ever paid for glasses?

UNIDENTIFIED FEMALE: Eight hundred dollars.

UNIDENTIFIED FEMALE: Three hundred dollars.

LAKE: What happens if you break them?


LAKE (voice-over): It shouldn't be that way, says Neil Blumenthal, one of the founders of eyeglass startup Warby Parker.

NEIL BLUMENTHAL, CO-FOUNDER, WARBY PARKER: People have been hiding behind like these fashion brands to justify these high prices. But the secret is, is that those fashion brands haven't been involved in that pair of glasses.

So you look at a pair of Ralph Lauren eyeglasses, per se, and no Ralph Lauren designers have designed those frames. It's all a licensing company that's paying Ralph Lauren 10 percent of every pair sold.

LAKE (voice-over): At Warby Parker, they cut out the middleman and brought the design and distribution in-house. The result? Fashion forward prescription glasses and sunglasses for just $95.

Blumenthal said monthly sales growth is in the double digits, thanks to their intense focus on customer service, as I found out myself.

LAKE: The tortoise ones, I think.

UNIDENTIFIED FEMALE: Do you need a different skin type?


LAKE: Not so much on this one.

I like this one.

LAKE (voice-over): Customer service is also how online vision retailer is hoping to win over customers. They offer the first pair free and free returns for up to a year.

ROGER HARDY, CEO, COASTAL.COM: We control the whole process, start to finish. So if someone isn't happy with our glasses, we take them back at our cost.

LAKE (voice-over): There are at least a half a dozen online sites where you can buy glasses at big discounts. As with other merchandise, quality varies, so you want to choose a company that has a generous return policy. To find out if there were any other downside risks to the discounted brands, I spoke to a couple of my family optometrists.

They say it's safe for people with single vision issues to buy online as long as they get regular eye exams, have a current prescription and know the distance between their pupils. People with more complicated visions problems might be eligible, but they should check with their doctor. Coastal CEO Roger Hardy and marketing head Aaron Magnus say technology is transforming the industry.

HARDY: We hear all the time, how could I ever do that? How could I try them on? What we find is people go to the website, they upload a photo of their face. They can quickly try on 200-300 pairs of glasses while sitting at home.

And they've got a great -- you know, they've got a great sense of how they look. And then they can check out with them absolutely risk-free. So it's -- the value proposition's really, I think, catching on.

LAKE: The dark horse look.

LAKE (voice-over): Maggie Lake, CNN, New York.


FOSTER: Of course, you look great. The whole market beyond up there, it looks like. Let's have a look at the markets more generally, the financial markets after the break for you and update.



FOSTER: (Inaudible) look at the markets then for you. Political uncertainty in Europe spreading throughout the financial markets today, pushing U.S. stocks sharply lower. There's not much in the U.S. positive to sort of counterbalance that. But they had to pull back a bit in the last hour, down 1 percent currently.

Wall Street tumbled to its lowest level in two months in trading earlier, though, pulling back a bit, as you can see. European shares sinking to four-month lows, weighed down by doubts about Greece's commitment to its bailout pledges, mainly. France's CAC 40 (inaudible) 8 percent Greek markets also suffered more losses leaving stocks at a 20-year low.

But throughout the week, certainly watching the fallout from the Greek and French elections. Increasingly the Greek elections dominated things in fact. That is QUEST MEANS BUSINESS. Thank you very much for joining us. For headlines in just a moment, but now I'm Max Foster in London.


FOSTER: Demand a poll position (ph) to meet Greece's next government has told Angela Merkel that austerity is over. The head of the left-wing Syriza party has three days to form a coalition and he has no intention of continuing Europe's austerity measures.

The U.S. investigators say this man is a master Al Qaeda bombmaker and they say it is likely he designed the sophisticated explosive device Al Qaeda hoped to use in its latest attempt to blow up an airplane. But they say a tip from the Saudis enabled them to stop the plot.

The U.N. and Arab League envoy to Syria has told the U.N. Security Council that an unacceptable level of violence is still happening within the country. Kofi Annan says he very worried the country could descend into a full civil war.

And former Ukrainian prime minister Yulia Tymoshenko will be ending her 19-day hunger strike. A spokeswoman says that the jailed politician has agreed to be treated by a doctor. Tymoshenko is serving seven years in prison for abusing her power. She started her hunger strike after accusing her jailers of beating her.

That's a look at some of the stories we're watching for you on CNN. We'll keep you updated, of course, in the coming hours. "AMANPOUR," though, is next.