Logan Cyrus / AFP via Getty Images; Phillip Faraone/Getty Images)
Keith Davidson, a lawyer for Stormy Daniels, is testifying in Donald Trump's hush-money trials.
He crafted statements for Daniels denying an affair with Trump.
Davidson said the statements are "technically" true because the relationship wasn't "romantic."
Sexual? Sure. Romantic? That's something else.
Keith Davidson — the lawyer who brokered a hush-money agreement for Stormy Daniels over the affair she says she had with Donald Trump — continued his testimony in the former president's Manhattan criminal trial on Thursday.
Under questioning from prosecutor Joshua Steinglass, Davidson discussed a pair of statements Daniels made in January 2018. Around that time, The Wall Street Journal was publishing a series of stories about the affair between the porn star and Trump, and the contract she signed that was designed to keep her quiet ahead of the 2016 presidential election.
On the recommendation of Trump's personal lawyer, Michael Cohen, Davidson wrote a "strong denial" on Daniels' behalf, which would deny the existence of a hush-money agreement as well as the affair itself.
Daniels affixed her signature to the letter, published on January 10, 2018 — but Davison testified he wrote it himself.
"TO WHOM IT MAY CONCERN: I recently became aware that certain news outlets are alleging that I had a sexual and/or romantic affair with Donald Trump many, many, many years ago," the statement began. "I am stating with complete clarity that this is absolutely false."
Davidson testified on Thursday that "an extremely strict reading of this statement would technically be true" based on how he would parse "affair," "romantic," and "and/or."
"I don't think that anyone had ever alleged that any interaction between she and Mr. Trump was romantic," Davidson said, to laughter in the court's overflow room.
Such letters, Davidson explained, served as a "tactic" for lawyers wrangling with the press to try to throw them off a story.
Asked by Steinglass whether "there was a sexual encounter" between Daniels and Trump, Davidson said he believed there was.
"That was my understanding," he said.
Davidson also said the statement's denial of rumors that Daniels "received hush money" from Trump was also true, because he "would never use that word."
"There wasn't hush money. It was a consideration in a civil settlement agreement," Davidson said.
The Manhattan District Attorney's Office has charged Trump with violating criminal business record-keeping laws 34 times by disguising reimbursements to Cohen, who paid the hush money to Daniels on Trump's behalf.
Former US President Donald Trump attends his trial for allegedly covering up hush money payments linked to extramarital affairs, at Manhattan Criminal Court in New York City.
MARK PETERSON/POOL/AFP via Getty Images
Trump has pleaded not guilty to the charges and laid the blame at Cohen's feet, saying he arranged the payments.
Davidson testified Thursday about the chaotic atmosphere surrounding the hush-money arrangement. Cohen repeatedly pushed back payment deadlines ahead of the 2016 election. he said. And on election night, as the results pointed to Trump winning the presidency, Davidson was surprised.
"What have we done?" Davidson texted National Enquirer editor Dylan Howard on election night.
The arrangement between Trump and Daniels remained dormant until early 2018, when the Journal prepared to publish its stories revealing the scandal to the public. Cohen worked at all hours trying to keep the narrative under control, sending text messages "with little regard for my schedule," Davidson testified.
When the 2018 State of the Union address rolled around, on January 30, Daniels saw an opportunity to reinvigorate her career as an adult film actress and director, he said.
She was set to appear on ABC's "Jimmy Kimmel Live!"
Cohen insisted that Daniels publish another statement, with yet another denial of the affair.
Davidson crafted the statement with Daniels in the Marilyn Monroe Suite in the Hollywood Roosevelt Hotel, which Kimmel's production team booked for her team. It referred to an "alleged sexual relationship" with Trump.
"I am not denying this affair because I was paid 'hush money' as has been reported in overseas owned tabloids," the statement read. "I am denying this affair because it never happened."
Davidson explained Thursday he thought the statement was "technically true" because of how he personally defined "relationship."
"I don't think anyone had ever alleged that there was a relationship with Stormy Daniels and Donald Trump," he said. "I believe a relationship is an ongoing interaction."
Daniels recanted both statements later in 2018, saying she agreed to them only because of the non-disclosure agreement and believed she had no choice but to make them.
She has also previously said her interactions with Trump were neither "romantic" nor an "affair."
"It was not romantic," she testified in a different trial. "I don't consider getting cornered coming out of a bathroom to be an affair."
Protesters reinforce the barricades set up against one of the doors of Royce Hall as police started clearing a pro-Palestinian encampment on the campus of the University of California, Los Angeles.
ETIENNE LAURENT/AFP via Getty Images
Biden said that protests against the war in Israel haven't led him to reconsider policies.
He made the comment at the end of a surprise press conference on Thursday regarding campus unrest.
Local police have shut down protests and encampments on select campuses in recent weeks.
President Joe Biden said Thursday morning that the widespread college protests against the war in Gaza haven't led him to reconsider his policies in the region.
Biden held an unscheduled press conference at the White House to address the growing number of protests and university encampments across the nation in opposition to Israel's military operations in the Gaza Strip.
Biden spoke for just under four minutes, explaining the protesters' rights to free speech and assembly while emphasizing what he said were the limitations of those rights.
"Vandalism, trespassing, breaking windows, shutting down campuses, forcing the cancellation of classes and graduations. None of this is a peaceful protest," he said.
"Dissent is essential to democracy, but dissent must never lead to disorder or to denying the rights of others," Biden added.
Just before Biden walked away from the podium, a reporter asked if any of the protests had forced him to reconsider his policies relating to the conflict. "No," Biden quickly replied.
He also said he didn't think the National Guard should be called in.
Members of the House of Representatives addressed the rising campus unrest on Wednesday with the Antisemitism Awareness Act, which passed in a bipartisan landslide vote.
The wholesale club has an interesting arrangement with participating dealers that effectively eliminates all the negotiating and haggling from of the picture, leaving the buyer with one low price.
Sometimes the savings go even deeper, with significant discounts on particular makes and models. This summer, Costco is swinging big with $1,000 or more off EVs from four brands.
From now until July 31, Costco members can take $1,000 off the price of a Cadillac Lyriq, Chevy Equinox EV, Chevy Blazer EV, Volvo C40 Recharge, or Volvo XC40 Recharge. Meanwhile, Polestar 2 fans can pick up $2,000 savings on the brand's latest offering.
Vehicles must be in stock at a participating dealer and delivery must take place before July 31.
There is another catch too: the deal is only available to those who were existing members as of April 30.
Of course, Costco still offers smaller deals on a range of other new vehicles for current and new members alike.
The Manta Ray off the coast of California this year.
Courtesy of the Defense Advanced Research Projects Agency
The US military is developing a huge underwater drone called the "Manta Ray."
The unmanned system passed its first major test at sea earlier this year.
Drones like the Manta Ray can function like a torpedo, mine, or small submarine.
A US military submarine that looks like a giant metal manta ray and is currently under development passed its first major test at sea.
The unmanned prototype aptly named "Manta Ray" completed "full-scale, in-water testing" off the coast of Southern California in February and March, the Pentagon's research arm, the Defense Advanced Research Projects Agency (DARPA) said in a statement on Wednesday.
The Manta Ray, built by defense contractor Northrop Grumman, is an uncrewed underwater vehicle, a type of drone that can essentially function like a torpedo or small submarine but can also double as a mine.
According to DARPA, the five-year-old Manta Ray program looks to build a "new class of long-duration, long-range, payload-capable UUVs" that can operate in various maritime environments around the world. It didn't really elaborate further on the function.
Testing earlier this year evaluated the Manta Ray's different modes of propulsion and steering — its buoyancy, propellers, and control surfaces — while submerged at sea.
The Manta Ray being towed in preparation for testing.
Courtesy of Northrop Grumman
"Our successful, full-scale Manta Ray testing validates the vehicle's readiness to advance toward real-world operations after being rapidly assembled in the field from modular subsections," Kyle Woerner, the DARPA program manager for the Manta Ray, said in the statement.
"The combination of cross-country modular transportation, in-field assembly, and subsequent deployment demonstrates a first-of-kind capability for an extra-large UUV," he added.
One photograph of the Manta Ray shows it sitting adjacent to a support boat, and another shows it with people standing on top of it. These underscore just how large this drone actually is. Despite it's large size, the underwater system can be easily shipped and assembled, DARPA said, which allows for the vehicle to be quickly deployed anywhere without crowding up the piers at US naval facilities.
DARPA program manager Dr. Kyle Woerner (right) talks with a member of the Northrop Grumman team while standing atop the Manta Ray vehicle.
Courtesy of Defense Advanced Research Projects Agency
Also, "shipping the vehicle directly to its intended area of operation conserves energy that the vehicle would otherwise expend during transit," Woerner said.
"Once deployed, the vehicle uses efficient, buoyancy-driven gliding to move through the water," he continued. "The craft is designed with several payload bays of multiple sizes and types to enable a wide variety of naval mission sets."
DARPA noted that it is working with the US Navy on next steps for testing the Manta Ray.
The Navy already operates various types of UUVs — alongside unmanned surface vehicles (USVs) and unmanned aerial vehicles (UAVs) — for reconnaissance and intelligence-gathering missions.
US Navy Sailors launch an unmanned underwater vehicle (UUV) from an 11-meter rigid hull inflatable boat.
US Navy photo by Mass Communication Specialist 2nd Class John Paul Kotara II
In the Middle East, for example, a first-of-its-kind Navy initiative known as Task Force 59 is working to merge unmanned systems and artificial intelligence with maritime operations in the region. This program is intended to give the US more surveillance and deterrence options and is becoming an increasingly important job as wars become more dependent on autonomous platforms.
The US, however, is not the only one to operate maritime drones; it has seen friends and foes alike use USVs and UUVs to conduct operations amid conflicts in the Red Sea and Black Sea.
In recent months, Iran-backed Houthi rebels have attempted to use USVs and UUVs to hit ships off the coast of Yemen. These threats, however, are either destroyed by US and coalition forces in the water, or in preemptive strikes on land before the weapons can even be launched.
Ukraine, meanwhile, has relied heavily on USVs to target Russian warships in the Black Sea. Kyiv has been quite successful with this asymmetric style of warfare, which Moscow has been unable to consistently defend against.
America's falling population isn't necessarily bad for the economy, Fisher Investments said.
The US birth rate just fell to its lowest level in over 40 years, according to provisional CDC data.
But consequences could be offset by technological advancements and time, the investment firm said.
Americans aren't having nearly as many kids as they used to, but that won't be the blow to the US economy that many have feared, according to Fisher Investments.
In a recent note, the investment advisory firm pointed to falling birthrates around the world, with the US rate falling to a multidecade-low last year. The nation saw the fewest number of babies born since 1979, according to provisional data from the Centers for Disease Control.
That continues a long-running decline in the US birth rate, with the number falling ever since the 1960s, according to World Bank data.
But fewer babies being born isn't necessarily a bad thing for the economy, the firm said. The birth rate has fallen before without crimping growth, such as during the '80s and '90s, when the economy boomed despite falling fertility the prior decade.
A falling birthrate is also more typical among wealthier nations. That's because the nation has a lower infant mortality rate and people are generally living longer, allowing them to have fewer babies and potentially postpone having kids.
"Yes, falling birth rates could have negative long-run ramifications if a true reduction in human capital and other factors don't offset this. But that isn't a given since a lot can change in the near and distant future," the firm added.
Economists have said technological advances, like AI, could blunt the impact of a smaller workforce. AI could disrupt as many as 300 million jobs around the world, Goldman Sachs estimated. That could mean the economy will be just fine, even with a smaller number of people entering the workforce.
Even if falling birthrates do weigh on the economy, it won't affect the market right away. The burden of a falling population takes years to reveal its full effect, meaning the market and the economy aren't in any near-term peril, Fisher added.
"Concerns about fewer babies are rooted in the notion population growth is tied to economic growth (i.e., any slowdown or decline in the former will hurt the latter,) the firm said. "To us, this says more about where sentiment is today: when well-known false fears grab eyeballs, skepticism remains pretty prevalent, suggesting the wall of worry bull markets climb remains high."
Ken Fisher, the firm's founder and co-chief investment officer, has been bullish on stocks for months, brushing off the market's fears over a potential recession and higher-for-longer interest rates. Stocks are likely still in a bull market, he said, as bear markets typically begin with a gradual decline in equities, not a sudden drop, which stocks saw over the past month.
Peloton has struggled with issues like product recalls, high-level exec departures, and falling demand.
John Smith/VIEWpress
Peloton was a Wall Street darling during the pandemic, with a market cap of around $50 billion.
Now, its CEO is out after two years, it announced more layoffs, and its stock hit a record low.
Here is the history of Peloton's impressive rise and fall in recent years.
At the height of the pandemic, Peloton was on top of the world.
Its stock pushed $171 per share and its market cap hovered around $50 billion.
On Thursday, the company announced its CEO was out and its stock was trading below $3 — a record low.
The company has struggled since the pandemic boom and falling demand for its products. In 2022, the company laid off more than 5,000 staff members, saw four top executives depart, and reportedly considered a potential sale to the likes of Amazon, Apple, or Nike. The company has also seen mass layoffs and recalled millions of bikes.
It's a stunning reversal for a company once at the top of the connected-fitness food chain, and it's the result of a culmination of factors, including the fading popularity of at-home fitness and a mishandled logistics operation.
Now, to re-energize its business, the company is focused on pushing beyond the at-home fitness market. It is incentivizing businesses to offer Peloton as a workplace benefit and adding Peloton equipment to local gyms, apartments, and hotels, Bloomberg reported.
Here's how Peloton got its start and became a fitness world darling, and just as quickly saw its decline.
Peloton was founded in 2012 by a group of ex-IAC employees
Several of Peloton's five cofounders previously worked at IAC.
Peloton
John Foley, Hisao Kushi, Tom Cortese, and Graham Stanton — four of Peloton's five cofounders — met working at media and internet company IAC. The fifth cofounder, Yony Feng, met the group through his roommate who worked at IAC.
Foley has said that the vision for the company was his, but that his four cofounders "took it, ran with it, and built it while I was gone" raising money, he told Fortune in 2021.
Prior to founding Peloton, Foley was president at Barnes & Noble, overseeing its e-commerce business.
The early version of its bike was 'janky,' and it struggled to find investors
Jen Van Santvoord rides her Peloton exercise bike at her home on April 7, 2020.
Ezra Shaw/Getty Images
Foley is a self-professed "boutique fitness addict," as well as an avid cyclist. But the early versions of the Peloton bike didn't look like something you'd find in a high-end fitness studio, the company's first instructor, Jenn Sherman, told Fortune.
"They had this little tiny corner of the office that was sectioned off by black velvet curtains. There was a camera on a tripod sticking through a circle people literally cut out of the curtain. There was a janky, broken bike in there — the instructor bike was like this rusted piece of crap. It was ridiculous," she said.
Still, Sherman signed on. Meanwhile, Foley was on the road for the first three years, pitching what he told Business Insider in 2018 was as many as 400 investors.
"I got 400 'nos,'" he said at the time. "The worst part is that we're not talking about 400 individual pitches. A lot of people would want me to come back four or five times and have me meet more partners and pitch again. I would say that I've been turned down maybe five or six thousand times."
Instructor Hannah Corbin teaching a live class at Peloton's Manhattan studio.
Peloton
Peloton began shipping bikes in 2014, with Foley and the other cofounders showing off how they worked at pop-up stores inside shopping centers.
But it didn't take long for the company to develop a cult following, thanks in large part to its roster of high-wattage instructors. When the company opened its own studio in New York City, owners of the company's $2,000 bike would make a pilgrimage to Manhattan in order to take a live class with their favorite instructor.
Eventually, big-name investors came calling. "I would say that it took about five years for the really smart money to start getting involved," Foley told BI in 2018. "When Mary Meeker is calling you to say, 'Hey, I want to invest' — that's pretty cool."
That year, Peloton raised $550 million in venture capital funding at a valuation of $4.1 billion, according to Pitchbook.
Peloton expanded its offerings as spinning faded in popularity
Peloton unveiled the Tread at the 2018 Consumer Electronics Show.
Avery Hartmans/Business Insider
Peloton introduced its second product, a $4,000 treadmill called the Peloton Tread, in 2018, and added new types of classes, like high-intensity interval training and yoga, to keep users engaged or get new customers to sign onto a digital subscription, no equipment required.
In August of that year, Peloton filed for an initial public offering, revealing it had over 500,000 paying subscribers, but also spiraling losses from major investments in marketing and licensing music for its classes.
Peloton went public on September 26, 2019 in what was at the time the third-worst trading debut for a major IPO since the financial crisis.
Peloton's stock plummeted following its 2019 holiday ad
A still from the "Peloton wife" ad.
Peloton
Ahead of the holidays in 2019, Peloton made what was seen as a major public misstep with its infamous "Peloton wife" ad.
But Peloton stood by the commercial, issuing a statement saying it was "disappointed" by how people had "misinterpreted" the ad.
The pandemic became a major boon for Peloton's business
Cari Gundee rides her Peloton exercise bike at her home on April 06, 2020 in San Anselmo, California.
Ezra Shaw/Getty Images
Then, in early 2020, the pandemic hit. Suddenly stuck inside, people turned to at-home fitness and found connection in Peloton's streamed workout classes. The company's share price took off.
By May 2020, Peloton reported a 66% increase in sales and a 94% increase in subscribers. In September of that year, Peloton said that it had had its first profitable quarter, with sales spiking 172% since the same quarter the year prior and revenue rising to $607 million.
But the unexpected uptick in demand showed the cracks in Peloton's logistics operation. Delivery times for new equipment became longer and longer, and Peloton's typically diehard fans began expressing their frustration online.
Then, some customers began experiencing issues with their bikes where pedals snapped off mid-ride. The company took weeks or months to make repairs, further frustrating users. After 120 reports of bikes breaking and 16 reports of customers getting injured, the company issued a recall affecting 30,000 bikes.
In an effort to make the treadmill safer, Peloton also made a change that resulted in it becoming unusable unless users paid $39 per month. Following customer outrage, the company said it would work on a fix.
As the pandemic began to recede, so did Peloton's popularity
Former CEO John Foley says the company underestimated the impact on its business of gyms and fitness studios reopening.
John Smith/VIEWpress
As the nation continued to move toward reopening — and returning to the gym and fitness studios — Peloton's business took a punch. The company's stock dropped 34% following its fiscal first-quarter earnings in November, which included a dismal outlook for the months ahead.
"It is clear that we underestimated the reopening impact on our company and the overall industry," Foley said in a call with shareholders.
Peloton was also being chased by rivals like Echelon and iFit Health, which offer similar, cheaper products. Peloton filed a lawsuit against them in November 2021, accusing them of patent infringement.
Peloton began laying off employees, replaced Foley, and eyed a potential acquisition
An instructor during a Peloton class.
Scott Heins/Getty Images
In February 2022, The Wall Street Journal reported that Amazon was eyeing Peloton as a potential acquisition — soon after, the Financial Times reported that Nike was considering the same. Wall Street analysts posited that Apple would be another natural fit as the new owner of Peloton.
Days later, Foley announced that he would step down as Peloton's CEO and that the company was slashing 2,800 jobs, about 20% of its workforce. The company said that the fired employees would receive a free year's subscription to the platform, along with a "meaningful cash severance allotment" and other benefits. Its roster of instructors would not be impacted by the layoffs.
During a conference call following the company's second-quarter earnings, Foley said he took responsibility for what happened at Peloton.
"We've made missteps along the way. To meet market demand, we scaled our operations too rapidly. And we overinvested in certain areas of our business," he said.
"We own this. I own this. And we're holding ourselves accountable," he added.
Experts told BI that the company fell prey to the "bullwhip effect," spending big on logistics while expecting that demand would remain high — when demand cooled, Peloton was left with costly supply chain operations that now require a major overhaul.
Barry McCarthy, the former chief financial officer of Spotify and Netflix, replaced Foley as CEO. In a leaked memo to employees, McCarthy called the layoffs "a bitter pill" but said that the company needed to accept "the world as it is, not as we want it to be if we're going to be successful."
"Now that the reset button has been pushed, the challenge ahead of us is this…… do we squander the opportunity in front of us or do we engineer the great comeback story of the post-Covid era?" he wrote. "I'm here for the comeback story."
Foley severed his remaining ties to the company
Peloton co-founder John Foley.
Mark Lennihan/AP
July 2022 brought news of 570 additional job cuts, and that August, the company announced yet another round of layoffs, slashing roughly 800 customer-service and distribution team members — and raising prices on some equipment.
In September of that year, Foley stepped down as executive chairman. Cofounder and Chief Legal Officer Hisao Kushi and Chief Commercial Officer Kevin Cornils also left the company.
In a statement, Foley said: "Now it is time for me to start a new professional chapter. I have passion for building companies and creating great teams, and I am excited to do that again in a new space. I am leaving the company in good hands." Lead independent director Karen Boone took over as chair.
Then came the departure of another top executive: The New York Times' DealBook newsletter reported that Chief Marketing Officer Dara Treseder would exit the company that October. Treseder was instrumental in helping Peloton double its membership, which numbered more than 6.9 million at the time, a company spokesperson told DealBook.
Peloton made another round of cuts in October 2022, but McCarthy said he's 'optimistic about our future'
Barry McCarthy.
Drew Angerer/Getty Images
McCarthy told The Wall Street Journal in October 2022 that the company would cut an additional 500 employees, many of whom work on the marketing team, in an effort to cut costs.
The report revealed that Peloton had eliminated more jobs than was previously known. About 600 additional employees had left the company since June through factors like retail store closings and attrition. That brought Peloton's total cuts for the year to over 5,200.
The Journal also reported that McCarthy said the company had only six months to turn things around, which McCarthy later denied in a memo to employees published by Bloomberg. McCarthy said his comments were taken out of context and that he's never felt more optimistic about the company's future.
"There is no ticking clock on our performance and even if there was, the business is performing well and making steady progress toward our year-end goal of break-even cash flow," he said.
Peloton's 2023 wasn't a great cause for optimism so far, though.
That May, Peloton reported a wider-than-expected loss of 79 cents per share for the most recent quarter, and it projected its first-ever decline in subscribers.
And in a shareholder letter, McCarthy said the upcoming quarter "will be among our most challenging from a growth perspective."
And things got worse as the company had to issue a massive recall
Peloton Bike
Peloton
The New York-based company announced in May 2023 that, in cooperation with the US Consumer Product Safety Commission, it was doing a voluntary recall of the Peloton original Bike sold from January 2018 to May 2023 in the US for about $1,400. Per the company, "the seat post can break unexpectedly during use, creating a potential fall and injury risk." Peloton said that as of April 30, 2023, it had identified 35 reports of seat posts breaking, out of more than 2.1 million units sold.
According to the US Consumer Product and Safety Commission, there were more than a dozen reports of injuries – including a fractured wrist, lacerations, and bruises – caused by seat posts suddenly breaking.
The recall does not impact Peloton Bike+ members nor Peloton original Bike owners in the UK, Germany, and Australia, according to the company.
Peloton now wants to be a workplace benefit for employees
Peloton is trying to become a workplace benefit.
Courtesy of Comparably
Peloton is working to expand its reach beyond the at-home fitness market. The company is focused on building partnerships with businesses, including hotels, apartments, gyms, as well as education and healthcare facilities, to offer its services and equipment, Bloomberg reported.
Employees at participating businesses will receive discounts on Peloton equipment and free use of the Peloton app, which typically costs customers $24 per month and doesn't need to be used with Peloton equipment.
Peloton's next hurdle is another CEO departure and more layoffs
Barry McCarthy is stepping down as CEO of Peloton.
The layoffs are part of restructuring efforts to reduce yearly expenses by more than $200 million by the end of the 2025 fiscal year, the company said. As part of these efforts, the company will also be reducing its retail showroom footprint and rethinking its international approach.
Karen Boone, the chair of Peloton's board, and Chris Bruzzo, one of its directors, will serve as interim co-CEOs. The board has already begun looking for its next CEO, the company says.
Peloton's stock was trading below $3 — a record low — following the news.
As organizations embark on a journey toward growth, their equity requirements change.
To drive a culture of ownership, companies must build an effective strategy around equity management.
Here are a few considerations organizational leaders can keep in mind as their company evolves.
As a private company grows from early-stage startup to IPO and beyond, the equity requirements of the business and its shareholders evolve. To address these changing needs, companies must consider how to design an effective equity management strategy that tracks ownership across the capitalization table, supports the creation of competitive stock plan strategies, clearly communicates equity value to employees, and helps foster company growth — all while remaining compliant with securities laws and tax regulations.
Below are four foundational steps organizations can take as they build an effective modern equity management strategy — one that supports a robust culture of ownership and helps organizational leaders prepare for the next growth stage.
1. Optimize capitalization table management
One of the core elements of an effective equity management strategy is a transparent and defensible capitalization table. Cap tables are documents that track ownership structures within a company. They contain essential information about who owns specific shares, vesting schedules, and other important details. They can also serve as critical financial tools that forecast equity dilution (the decrease in existing shareholders' ownership percentages) or the impact of future investment rounds.
"Companies should look at the long-term impact of their equity programs," said Teri McFadden, principal of talent at Norwest Venture Partners. "Tracking equity and forecasting future needs across new hire, promotion, and retention equity grants becomes critical to business planning and overall equity dilution."
A successful cap table management strategy also depends on strong data integrity. For example, an inaccurate data point can lead to incorrect equity forecasting, costly errors during financial audits, or delays ahead of a future equity transaction. These issues may compound as a company grows and moves closer to an IPO.
To enhance your cap table data strategy, consider migrating to a more sophisticated software solution once you've reached the growth stage (Series B+). With a scalable approach to equity cap table management, companies can continue to adapt to address more complex transaction needs as they arise.
2. Get the 409A valuation right
A 409A valuation is an independent appraisal process used to establish the strike price for newly granted stock options. This valuation factors into a number of considerations, including repricing and tax implications.
Finding an experienced partner can help companies comply with securities laws and remain transaction-ready ahead of a liquidity event, fundraising, or IPO.
For startups that have deferred their private-to-public plans, consider that 409A valuations and related activities within three years of an IPO are subject to public disclosure. So, while current market conditions are rife with volatility, it's important to think ahead and proactively plan for those events.
3. Prepare for one-off or recurring liquidity events
According to recent research from Morgan Stanley at Work, 59% of private company decision-makers reported increased internal pressure to conduct a liquidity event — an acquisition, merger, or other circumstance that allows shareholders to cash out some or all of their shares. As a result, more companies offer organized liquidity events that reward shareholders with partial or full liquidity for their vested shares.
These organized events have become a common method for companies to grant liquidity to shareholders. However, such transactions require adequate preparation, shareholder communication, and education.
For companies looking to build an ownership culture and compete for talent in today's market, liquidity has become an important strategic element. Whether a private company plans to offer liquidity on a one-off or recurring basis, creating a proactive liquidity strategy can ensure there is enough time to prepare for the transaction and educate employees on what it could mean for them.
"When planning a liquidity program, management should work closely with their board of directors to think through who should be eligible to participate and how much any particular shareholder can sell," said Mike Jung, partner and cofounder at Founders Circle Capital. "Alignment between stakeholders is key to any successful program."
4. Harness the power of employee education
Even the most competitive equity packages are rendered ineffective if employees don't understand them. As ongoing market volatility contributes to higher levels of employee financial stress, companies can support staff by having transparent conversations about the implications of equity ownership — and how it can help people achieve their financial goals.
Offering resources and support for employee financial wellness can be a powerful way for a private company to improve the overall effectiveness of its equity plan, while investing in the financial wellbeing of employees. Giving employees the tools to navigate major life milestones and address financial needs that arise can help improve employee engagement.
Whether your company is a startup or late-stage private company, an equity plan can be a critical driver of growth and a key tool for attracting and retaining talent. Creating an effective equity plan starts with building a solid foundation. And with a partner to help design or evolve your equity plan management strategy, your organization will be well-prepared for its next stage of growth.
This post was created by Insider Studios with Morgan Stanley at Work.
Morgan Stanley Smith Barney LLC ("Morgan Stanley") and its Financial Advisors and Private Wealth Advisors do not provide any tax/legal advice. Consult your own tax/legal advisor before making any tax or legal-related investment decisions.
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Morgan Stanley at Work services are provided by Morgan Stanley Smith Barney LLC, member SIPC, and its affiliates, all wholly owned subsidiaries of Morgan Stanley.
Google paid Apple $20 billion in 2022 to secure itself as the default browser on Apple devices.
Nathan Howard/Getty
Alphabet paid Apple $20 billion in 2022 to remain Safari's default search engine, court documents show.
That's a $2 billion increase compared to the reported amount Google paid Apple in 2021.
The deal is key evidence in a US antitrust lawsuit alleging Google has an illegal search monopoly.
The price to be the default search engine on iPhones, iPads, and Macs has apparently gone up.
Newly disclosed court documents from the US Department of Justice's antitrust case against Google indicate the tech giant paid over $20 billion in 2022 to secure itself as the default search engine on Apple's Safari browser.
Public disclosure of the documents is a big deal, because both parties have kept quiet about the exact dollar amount of the arrangement, and the numbers have also been excluded from SEC filings.
At the trial last fall, Apple execs remained cryptic about the payment and said Google spent "billions" on a deal with Apple. A witness later accidentally revealed Google pays 36% of the revenue it earns from search ads through Safari.
The $20 billion deal with Apple is a key piece of evidence in the US' landmark antitrust lawsuit against Google. Since 2005, the agreement has required Apple to pre-set Google as Safari's sole default search engine on its devices, according to the court documents.
It's a highly valuable deal for Apple. In 2021, Bernstein analysts estimated that Google's payments to Apple made up over 14-16% of the iPhone maker's operating income.
While Google has been paying Apple to be the default search engine on Apple devices since 2002, the value of the deal has increased significantly. In 2014, Google was paying $1 billion, according to court documents filed in a separate case involving Oracle.
The court documents say that in search, Google and Apple seek to "work as if [they] are one company."
An email from Google's president of global partnerships and corporate development Donald Harrison said in 2018 that Tim Cook's "overall message to Google was 'I imagine us as being able to be deep deep partners,'" and "deeply connected" at the point where Apple's services end and Google's begin, according to the court documents.
As Apple's biggest smartphone competitor, the deal also reveals a complex relationship between the two tech giants. Court documents revealed that Google CEO Sundar Pichai at one point said the company "continued to have moments of tension" with Apple, as they compete over Android and iPhone and other rival products.
Spokespeople for Google and Apple didn't immediately respond to Business Insider's requests for comment ahead of publication.
Closing arguments are taking place this week in the antitrust case against Google, with the US Department of Justice arguing Google is illegally dominating the search engine market. Google has denied the allegations.
Apple is also fighting its own antitrust lawsuit that accuses the iPhone maker of illegally maintaining a smartphone monopoly by making its competitors' offerings worse, allegations that Apple has denied.
On Thursday morning, prosecutors at Trump's Manhattan hush-money trial argued that he violated his gag order last week, during four on-camera statements in which he attacked witnesses and the jury.
Things got weird when defense attorney Todd Blanche complained that Trump must remain silent about witnesses and jurors while his opponents get to say whatever they like.
That's when President Joe Biden and "Von ShitzInPants" made their bizarre cameo appearances on the official trial record.
Biden "mocked President Trump," Blanche complained to the judge, quoting into the record a joke the president had made at the White House Correspondents' dinner on Saturday.
"I've had a great stretch since the State of the Union. But Donald has had a few tough days lately. You might call it stormy weather," Biden had quipped apparently in reference to Stormy Daniels, the porn star at the center of Trump's hush-money trial.
Blanche lamented to the judge, state Supreme Court Justice Juan Merchan, "President Trump can't respond to that" by criticizing Daniels.
Likewise, Trump's ex-personal attorney-turned-nemesis, Michael Cohen, can take whatever potshot he chooses, Blanche griped.
Trump must remain silent, Blanche complained, even when Cohen mocks him as Donald "Von ShitzInPantz," a favorite insult of Cohen's podcast and commentary on the social media site X.
Blanche read that colorfully worded, offending tweet into the record as Trump himself sat listening at the defense table.
"Hey Von ShitzInPantz," Blanche recited as the court stenographer duly followed along.
"Your attacks of me stink of desperation," he continued quoting the Tweet. "We are all hoping that you take the stand in your defense."
Hey Von ShitzInPantz…your attacks of me stink of desperation. We are all hoping that you take the stand in your defense. pic.twitter.com/FVsWbRnNkB
Merchan has already found Trump in contempt of court for gag violations. Last Thursday, he fined the GOP frontrunner $9,000 for nine online attacks on witnesses and jurors.
The judge did not immediately rule on the four additional Trump statements now before him.
Prosecutors are asking that Trump be fined another $4,000, the maximum allowed, for four on-camera statements Trump made last week.
Contempt of court is punishable under New York law by as much as 30 days in jail per violation. The DA's office has not asked for jail.
However, prosecutors and the judge have warned that jail may be appropriate if there are future violations.
Varghese highlighted five economic indicators that show continued underlying strength in the US economy, giving him little reason for concern as the labor market continues to power higher.
"The workhorse of the US economy remains the consumer, and there's really not much sign of a slowdown as far as household spending is concerned," Varghese said in a note last week. "In fact, services spending, which makes up 45% of the economy rose at an annualized pace of 4%."
That 4% growth rate is more than double the 1.8% growth trend seen from 2010 through 2019, according to Varghese, and it represents the fastest pace of growth since the third-quarter of 2021.
"The current strength of consumption is directly related to the strength of American household finances," Varghese said.
These are the five indicators that give Varghese confidence that the US consumer, and therefore the US economy, remains on solid footing.
1. Income growth is outpacing inflation
Despite elevated inflation, wage growth continues to outpace inflation growth, and that's ultimately a boon for consumers.
Disposable incomes grew at an annualized pace of 4.8% in the first-quarter, and employee compensation soared 7.8%. Meanwhile, PCE inflation rose 4.4%.
"That's the simplest explanation for why consumption continues to run strong," Varghese said.
Carson Group
2. Average hourly earnings are also outpacing inflation
It's not only high-income earners that are seeing their wages outpace inflation. The average every-day worker is also seeing their income grow faster than the pace of inflation.
"Inflation-adjusted hourly wages are growing even when you look at the average worker, and separate non-managers from managers," Varghese explained.
That's important because non-managers tend to spend a greater portion of their incomes from wages, so it's important that they see their wage growth outpace inflation.
Carson Group
3. Consumer balance sheets are strong
A continued rise in the stock market and housing prices means Americans are more wealthy today than they have ever been.
US consumers held a collective $176.7 trillion in assets as of December 31, and their liabilities have not risen as quickly as their assets have.
That means consumers have ample room to spend money and save less, which makes it no surprise that the savings rate of US consumers has steadily declined over the past few years to 4.2% today from 7.4% in 2019.
"This is not surprising considering net worth is higher. Why save more if you're worth more?" Varghese said.
Carson Group
4. Consumer's have capacity to borrow more
Across all levels of the income spectrum, consumers owe less in debt relative to their income than they have in decades.
The household debt service ratio, which measures debt payments as a percentage of disposable income, stood at 9.8% in the fourth-quarter of 2024. That's significantly below the 13.3% peak hit in 2007 and the historical average of 11.2%, and it suggests that consumers have ample flexibility to borrow more money and consumer if they have to.
"Across all income groups, liabilities as a percent of assets are well below what we've seen historically. In short, households are significantly less levered than in the past," Varghese said.
Carson Group
5. The jobs market is still resilient
"The labor market is the entire ballgame as far as the consumer is concerned. If the labor market deteriorates, incomes fall, consumption falls, and the economy is in trouble," Varghese said.
And so far, there are no signs of that happening. "We have the opposite now," Varghese highlighted.
The unemployment rate has stayed below 4% for 26 consecutive months, representing the longest streak since the late 1960s.
Meanwhile, there is still more than one job opening for every unemployed worker, and weekly jobless claims continue to hover near historically low levels.
"Ultimately, here's what's important to keep in mind: consumption makes up 70% of the US economy, and right now consumption is running strong thanks to strong labor markets, which are pushing incomes higher to above the pace of inflation, and higher net worth, which means households can spend more," Varghese concluded.