European Union Offers Berlin Compromise on Bank Proposal

Speaking in London, Michel Barnier, the European Union’s commissioner overseeing financial services, said there was “room for maneuver in the negotiation,” and tried to head off criticism from Germany that the European Commission, the executive arm of the 28-nation bloc, was using the proposal to make a power grab.

“I don’t have any ideology in the issue,” Mr. Barnier said. “It’s not that the Commission wants to have a big role in the resolution process — if someone would find and suggest to us a better solution we would be happy to look at it.”

The resolution fund is one pillar of the proposed banking union that policy makers see as an important part of the response to the financial crisis that has gripped the euro zone.

One question, Mr. Barnier said, was, “Should we be treating banks that are purely regional and have no cross-border activities in exactly the same way as big international banks?”

“That’s something that we can maybe look at further in the course of negotiations,” he added. Germany, whose approval will be needed for the resolution mechanism, has more than 400 local savings banks, which are economically and politically important.

Under Mr. Barnier’s plans, outlined Wednesday, the European Central Bank would signal when a lender in the euro zone, or in a country participating in the banking union, was in severe financial difficulties. With representatives of national authorities, the E.C.B. and the Commission, a board would undertake preparatory work before the Commission would then decide whether and when to place a bank into resolution.

That idea provoked immediate opposition from Berlin, and more evidence of discord in Germany surfaced Friday in a letter to Mr. Barnier from Finance Minister Wolfgang Schäuble. “The proposal published by the Commission regrettably envisages too high a degree of centralization with regard to the boundaries” of the existing E.U. law, the letter said, according to Reuters.

“The proposal does not match the current legal, political and economic realities and would create major risks,” Mr. Schäuble wrote, adding that the transfer of powers to the Commission was not backed by E.U. treaties.

Mr. Barnier disputed that, arguing that his proposal was the best solution available without changing E.U. treaties. He said that if the treaties were amended, the European Stability Mechanism, the euro zone’s permanent bailout fund, might take over the power to decide when to wind down banks.

One E.U. official, speaking on condition of anonymity owing to the sensitivity of the issue, said that agreement with national governments on the resolution fund was possible by the end of the year — but conceded that changes would likely be made. Most officials expect the role of the Commission to be pared back, but for legal reasons there are few alternative bodies that could make the decision to wind down a bank, they say.

In his speech in London on Friday, Mr. Barnier also warned against any effort by Britain to win special exemptions from E.U. single market rules for its financial services sector, the City of London.

“By definition,” he said, “there can’t be two single markets: one for financial services and one for the rest of the economy. One for the City, and one for the rest of the E.U.

“Repatriating full policy responsibility for financial services would mean leaving the single market as a whole and de facto the E.U.,” Mr. Barnier said, adding: “I believe the U.K. would lose out on many of its own interests if it chose that path.”

Prime Minister David Cameron has promised to renegotiate British ties with the European Union and some lawmakers from his Conservative party have called for new powers that would prevent Britain being outvoted on any new legislation on financial services.

But Mr. Barnier rejected that idea.

“It would not work,” he said. “If you give a veto to one country you have to give it to others and then we no longer have an internal market,” he said. “Our interest is in having a coherent single market with intelligent rules that apply everywhere.”

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DealBook: Sony Pondering Spinoff Proposal From a Big Investor

Kimimasa Mayama/European Pressphoto AgencyKazuo Hirai, chief of Sony, at a corporate strategy presentation in Tokyo on Wednesday.

TOKYO — Sony said on Wednesday that its board was considering a proposal from the hedge fund Third Point to spin off part of its entertainment business, but it emphasized that the discussions were preliminary and that it had not set a time to respond.

Sony, under pressure from Third Point, one of its top investors, to unlock more value from its lucrative entertainment divisions, also said it was on track to return its electronics business to profitability this year.

“We will engage in thorough discussions at the board level to decide on Sony’s response,” Kazuo Hirai, the chief executive, said in response to questions at a corporate strategy presentation. “It is an important matter that relates to Sony’s core businesses and management, so the board must hold ample discussions.”

Mr. Hirai said board members were already discussing the proposal, though some of them will be replaced after Sony’s annual investor meeting in June. He declined to say when Sony might respond or to give his views on the proposal, saying the matter was for the board to judge.

“We are still in early stages,” Mr. Hirai said. “But we intend to engage positively with our investors.”

Phil McCarten/ReutersDaniel S. Loeb of Third Point.

It is unclear whether Sony will seriously consider the proposal from Third Point’s manager, Daniel S. Loeb, who is pressing the company to spin off part of its entertainment arm, which includes one of the biggest film studios in Hollywood and one of the largest music labels in the world.

Corporations in Japan, including Sony, have a history of ignoring letters from shareholders calling for overhauls, a former top investor in Sony said.

Mr. Loeb’s hedge fund has acquired roughly a 6.5 percent stake in Sony, making it one of the biggest shareholders. In a letter that was made public, he has proposed that Sony use the money raised from a spinoff to reinvest in its ailing electronics business.

Mr. Hirai, who became chief executive in April 2012, emphasized that even without such a move, Sony was on track to bring its electronics business back into profitability this fiscal year, which runs through next March.

He said Sony still expected sales of 6 trillion yen ($58.3 billion) from electronics and an overall 5 percent operating profit margin, adding that the company hoped its televisions would turn a profit for the first time in a decade.

“The No. 1 mission assigned to me is to bring change to Sony and to revive our electronics business,” Mr. Hirai said. “We are on the offensive.”

DealBook: Hedge Fund Rejects Proposal by Hess to End Proxy Fight

Ángel Franco/The New York TimesHess, an oil and gas company, holds its annual meeting on Thursday.

8:22 p.m. | Updated
The Hess Corporation on Monday offered a concession to an activist investor after the investor’s board nominees waived their rights to a contentious compensation plan.

Hess, an oil and gas company, said it was prepared to support two of the five nominees put forward by the activist hedge fund Elliott Management. But the company’s proposal, which was intended to end a proxy fight waged by Elliott, was promptly rejected by the hedge fund.

Elliott, which has said Hess suffers from a lack of discipline and poor oversight, said on Monday that Hess’s latest proposal was a “P.R. stunt.”

“If Hess were serious, they would have engaged in substantive conversation with Elliott rather than blast out desperate press releases,” Elliott said in a statement on Monday evening.

The exchange was the latest development in the continuing fight between Elliott and Hess, which said on Friday that it would separate the positions of chairman and chief executive. The company hopes all five of its board nominees are elected at the annual meeting on Thursday.

Elliott’s nominees, who have the support of the influential proxy advisory firms Institutional Shareholder Services and Glass Lewis, announced on Monday that they would give up a compensation plan from Elliott that could have paid them millions of dollars.

The arrangement, which would have tied director compensation to Hess’s stock price, was causing an “ongoing distraction,” the nominees said in a letter to Hess shareholders on Monday.

“While each of us believes that these arrangements are appropriate and consistent with the performance of our duties as independent directors, each of us has made the decision to waive our right to receive these payments from Elliott,” the letter said.

Under the compensation plan, Elliott would have paid any nominees who won a seat and served for a year an aggregate $30,000 for each percentage point Hess’s stock price outperformed that of a peer group of stocks over three years beginning in January 2013.

Hess responded favorably to that letter from Elliott’s nominees, saying in a statement that it showed that the nominees had acknowledged that the proposed compensation plan was “wrong.”

“As we have said all along, Elliott’s directors compromised their independence and judgment by agreeing to accept Elliott’s compensation scheme,” John H. Mullin III, the lead independent director of Hess, said in a statement.

Hess then went further, saying it was “ready to be responsive” to the possibility of adding directors nominated by Elliott. The company said it was prepared to add two of Elliott’s nominees “whom we would choose in consultation with shareholders.”

“We would effect this change promptly after annual meeting if all five of Hess’ new, independent nominees are elected,” the company said.

That did not sit well with Elliott, which said in a statement: “Hess should accept all five shareholder nominees and replace as many of their incumbent directors with management’s nominees as is reasonable.

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