The Wall Street Journal - 04.04.2020 - 05.04.2020

B2| Saturday/Sunday, April 4 - 5, 2020 **** THE WALL STREET JOURNAL.

THE SCORE

THE BUSINESS WEEK IN 7 STOCKS

MACY’S INC.

It was a painful week for employees of some of

America’s biggest retailers as tens of thousands of

workers learned their paychecks would soon end.

Macy’s said Monday that it will furlough the

majority of its 125,000-person workforce, and rival Gap Inc.

is furloughing the majority of store workers in the U.S. and

Canada. Both will keep paying benefits. Macy’s sharesfell

2.9% Monday.



M

2.9%

PERFORMANCE OF RETAILSTOCKS THIS PAST WEEK

Source: FactSet

5

–3 5

–3 0

• 25


• 20


• 15


• 10
  
  
  • 5
  
  
  
  

0

%

Macy’s

Gap

LBrands

Mon. Tues. Wed. Thurs. Fri.

I

t’s a question that the head of

every business is grappling

with right now: What happens

if I become too sick to work?

As the coronavirus pan-

demic spreads, management

teams are fortifying their succes-

sion plans and reviewing backup

operating procedures for when top

executives or other critical employ-

ees fall ill.

Some businesses are including

more people on projects to dupli-

cate decision making, or insisting

that technical staffers document

their work in greater detail so oth-

ers can help, if necessary. A few

companies have told top execu-

tives to take it easy, in hopes the

downtime will bolster their im-

mune systems.

Jay Fulcher, the chief executive

of the human-resources technology

company Zenefits, convened 10 of

his top executives for a manage-

ment meeting in late February,

where he asked them a personal

question: What would happen if

you got sick? He wanted to know

departments would continue to

function if the people running them

needed to care for themselves or a

loved one.

“It’s not a comfortable conversa-

tion,” Mr. Fulcher said, but they all

arrived at a backup plan. Should he

need time away, Mr. Fulcher said

the company’s senior vice president

of business operations, Issac

Vaughn, would become acting CEO.

“We’ve got a plan.”

A number of top executives have

already contracted the coronavirus,

including the CEOs of Madison

Square Garden Co., real-estate firm

Vereit Inc. and the British telecom

giant BT Group PLC. At NBCUniver-

sal, CEO Jeff Shell sent an email to

staff late last month to tell them he

had tested positive, but would con-

tinue managing the company. “Al-

though the virus has been tough to

cope with, I have managed to work

remotely in LA and am improving

every day,” he wrote.

Three weeks ago, Cedric Fran-

cois, chief executive of Apellis

Pharmaceuticals Inc., a $2 billion

biotech company, had a low-grade

fever, felt lethargic and had lost

his sense of smell. Dr. Francois, 47,

tested positive for the coronavi-

rus, but felt well enough to con-

tinue running his 250-person com-

pany remotely, holding daily

management calls. About a week

after symptoms appeared, his con-

dition worsened and Dr. Francois

found himself short of breath.

Though he never went to the hos-

pital over the 2½ weeks that his

symptoms persisted, Dr. Francois

says he needed to care for himself,

and Apellis’s chief financial officer

and others stepped up to fill in

some of his duties.

“I had to drop everything,” he

said in an interview, noting he is

now fully recovered. “I haven’t even

gone back to all the emails that I

missed back then, so I’m sure there

are a lot of people upset with me.

But I’m very fortunate to have an

unbelievable executive committee.”

To stay transparent while sick,

Dr. Francois recorded a video mes-

sage to employees and provided

BYCHIPCUTTER

SÉBASTIEN THIBAULT

The Race to Find the Backup CEO

Top executives are deciding who will run the show if they fall ill, and urging subordinates to do the same

in a regulatory filing that it has a

potential replacement picked out to

temporarily assume Mr. Saccaro’s

responsibilities, though it did not

name the person. Baxter also said

an unidentified board member con-

tracted the virus and was recover-

ing in the hospital, and noted Chief

Executive José E. Almeida had

tested negative.

Plenty of CEOs say they are plan-

ning ahead. Beth Cross, chief execu-

tive of boot maker Ariat Interna-

tional, based near San Francisco,

says the roughly dozen employees

on her senior leadership team meet

for a minimum of two hours daily

via video conference, ensuring no

group makes decisions in isolation.

Some leaders have been with the

company for more than 15 years,

and Ms. Cross says the company

has built a culture with a “bias to-

wards listening.” That means execu-

tives can quickly step into each

other’s roles, if needed, to ensure

the company continues functioning.

“People can back each other up and

help,” she says.

The Framingham, Mass., safety

technology company Rave Mobile

Safety says it has been bolstering

its business-continuity plans for

years following events such as su-

perstorm Sandy. CEO Todd Piett

says he has pushed the company

to refashion its structure so many

decisions do not flow through

him. He worries more about the

company’s technical teams, where

employees may have specialized

expertise. He’s encouraging team

members to carefully document

their processes, and to include

colleagues on Zoom calls or in

Slack message threads, so “every-

one understands what’s happen-

ing,” he says.

“I’m pretty confident I could dis-

appear and things would keep on

chugging.”

—Jennifer Maloney, Joe Flint

and Patrick Thomas

contributed to this article.

the tobacco giant on March 19 after

the company’s top executive tested

positive. Mr. Gifford and other

members of the leadership team

went into quarantine because

they’d had contact with their boss,

CEO Howard Willard.

Many companies, particularly

public ones, have robust succes-

sion plans in place, but “it’s not

just an envelope in a drawer any-

more,” says Jane Stevenson, vice

chairwoman of board and CEO ser-

vices at executive-recruitment firm

Korn Ferry. Some companies are

trying to ensure leaders stay

healthy by telling them to take

time for themselves and get

enough sleep to help bolster their

immune systems, she added.

At IAC/InterActive Corp., parent

company of websites such as Vi-

meo and Dotdash, executives

maintain a document noting who

could step into a role within 24

hours, said Chief Executive Joey

Levin. If there is not a clear suc-

cessor, the company notes who

could take over on a temporary

basis, or who may be “one to two

positions away from being ready

to fill in that role,” he said.

While public companies need to

disclose to shareholders if a top ex-

ecutive tests positive for the coro-

navirus, whether a company names

a replacement can depend on how

sick someone becomes, says

Charles Elson, director of the Wein-

berg Center for Corporate Gover-

nance at the University of Dela-

ware. “If they become ill, the

question is: Can they continue to

function in their present roles?”

Mr. Elson says.

After James K. Saccaro, chief fi-

nancial officer of giant health-prod-

ucts company Baxter International

Inc., tested positive for the corona-

virus in late March, the company

said he would continue his duties

from home. If his condition changes

and he needs to take a medical

leave of absence, the company said

frequent updates on his condition

and the state of the company. “Peo-

ple knew what was going on with

the company, with myself,” he said.

The virus has forced many exec-

utives to confront personal chal-

lenges while guiding their organiza-

tions. Glenn D. Fogel, chief

executive of Booking Holdings Inc.,

last week developed a fever and a

headache, while his wife and chil-

dren showed hallmark symptoms

such as shortness of breath and a

loss of smell. They drove to a test-

ing site in a physician’s parking lot

in Scarsdale, N.Y., to get their noses

swabbed. Nearly all tested positive,

including Mr. Fogel.

His case was so mild that he

didn’t ever have a cough, allowing

him to work 18-hour days to man-

age the Norwalk, Conn.-based on-

line travel company that has

roughly 27,000 employees and op-

erates Booking.com, Priceline and

OpenTable. The virus has made

him all the more insistent about

comprehensive succession plan-

ning. He asked his team last week

to identify potential replacements

for staffers several levels down the

corporate ladder.

“You just don’t know who’s go-

ing to become ill,” Mr. Fogel says.

“I want to make sure that we’re not

scrambling if somebody calls HR

and says, ‘Hi, I’m in the hospital.’ ”

Some public companies are add-

ing language to securities filings,

noting corporate risks that could

arise if executives fall ill and dis-

rupt operations. Altria Group Inc.

had to name Billy Gifford, chief fi-

nancial officer, as interim CEO of

‘You just don’t know

who’s going to become

ill....I want to make sure

that we’re not scrambling.’

3M CO.

3 Msaiditcan’tmakeN

masks fast enough to keep

up with requests for the pro-

tective gear. Its chief execu-

tive told The Wall Street

Journal that demand “exceeds

our production capacity,” despite dou-

bling production in recent months. 3 M

also faces new pressure from President

Trump, who on Thursday required 3 Mto

prioritize respirator orders from the Fed-

eral Emergency Management Agency.

3 M said it would work with the U.S. on

those orders but said it had refused a

Trump administration request to stop

exporting some of its U.S.-made masks.

3 M shareslost 3% Friday.



MMM

3%

JOHNSON & JOHNSON

A Covid-19 vaccine from

Johnson & Johnson could be

ready in early 2021. The

drugmaker, one of many com-

panies at work on a cure,

said Monday that human tri-

als would begin by September. J&J

could get approval under an emergency-

use authorization to make the vaccine

widely available early next year, and the

company said the vaccine, if successful,

would be affordable and would be sold

on a not-for-profit basis. It would try to

scale its global manufacturing capabili-

ties to make more than 1 billion doses

of a Covid-19 vaccine by the end of next

year. J&J sharesgained 8% Monday.



JNJ

8%

WALMART INC.

The country’s largest private

employer is taking steps to

limit workers’ exposure to

coronavirus. Walmart said

Tuesday that it will start tak-

ing temperatures of U.S. store

workers at the start of each shift and

offering masks for employees who wish

to wear them. Workers with a tempera-

ture of 100 degrees or higher will be

sent home with pay and will be unable

to return until fever-free for three days.

Walmart has also been closing its U.S.

locations overnight to allow for cleaning,

installing sneeze guards at registers and

promoting social distancing with signs.

Walmart shareslost 1.4% Tuesday.



WMT

1.4%

AMAZON.COM INC.

The country’s escalating pub-

lic-health crisis has tested

America’s e-commerce giant.

As Amazon has struggled to

meet high volumes of orders,

the strain showed in short-

ages, delays and worker unrest, includ-

ing some walkouts, no-shows and

Covid-related sickness. At times Ama-

zon has had to operate warehouses

with half the typical number of work-

ers, The Wall Street Journal reported

Tuesday. The crisis is strengthening

some of its other businesses as em-

ployees work remotely and customers

stream content on Amazon Prime. Am-

azon sharesfell 0.7% Tuesday.



AMZN

0.7%

WHITING PETROLEUM CORP.

U.S. shale driller Whiting Pe-

troleum filed for bankruptcy

protection Wednesday, be-

coming the first sizable

fracking company to succumb

to the crash in oil prices. The

coronavirus pandemic has sapped oil

demand at the same time Saudi Arabia

is pressing a price war against Russia.

Meanwhile, many U.S. oil drillers face

pressure to meet hefty debt obligations.

A number of oil-and-gas companies

have either warned they may not stay

current on their debts or hired restruc-

turing advisers to negotiate with credi-

tors. Whiting sharesplummeted 45%

Wednesday.



WLL

45%

ALPHABET INC.

Alphabet’s Google is your

new social-distancing monitor.

The search giant said it will

help public-health officials

use its vast storage of data

to track people’s movements

amid the coronavirus pandemic. The

initiative, introduced by the company

late Thursday, uses a portion of the

information it has collected on users to

show which locales are abiding by

social-distancing measures. The

“mobility reports” will be posted publicly

and reveal where people are flowing

into shops, pharmacies and parks.

Alphabet sharesfell 2.2% Friday.

—Francesca Fontana



GOOG

2.2%

As the new coronavirus spreads,

people are worried that signing

payment screens at store check-

outs could make them sick. Ac-

cording to the card networks, they

shouldn’t have to sign anyway.

Major card networks including

Visa Inc., Mastercard Inc.,

American ExpressCo. andDis-

cover Financial Services

stopped requiring signatures on

almost all card purchases, no

matter the dollar amount, over

the past couple of years. Many

stores and card companies don’t

even check the signatures.

There are two main reasons

for the disconnect: Some stores

actually do want signatures,

viewing them as a way to im-

prove security. And many stores

just haven’t updated their pay-

ment terminals to remove the

signature prompt.

Mastercard last week sent a

letter to banks that help process

payments, asking them to remind

merchants that the network no

longer requires signatures. “As

the Covid-19 situation continues

to evolve, public health officials

have advised that it’s imperative

that we all do our best to reduce

physical contact with people or

potentially contaminated sur-

faces,” the company wrote.

Card networks like Mastercard

are in charge of the rails that card

payments run on. Banks issue

cards and some of them also help

process payments on behalf of

merchants, which pay fees to card

issuers, networks and acquirers.

The networks and stores used

to be strict about making people

sign for credit-card purchases,

but the signatures became less

important over time.

Some networks stopped re-

quiring them for small purchases.

Over the past couple of years,

they stopped requiring them for

almost all purchases.

The companies say signatures

are no longer needed because

card technology to catch fraud

has improved, in particular the

chip cards that have largely re-

placed magnetic stripe cards over

the past few years.

There are exceptions where

the networks still want signa-

tures. For example, Visa says it

requires a signature if the mer-

chant doesn’t accept chip cards.

The National Retail Federation

said its survey last year found

that about two-thirds of U.S. re-

tailers expected to remove the

signature requirement by the end

of 2020 or already had.

Cecilia Quick isn’t normally a

germaphobe, but recently she re-

fused to sign the checkout termi-

nal at a computer repair store.

“I was like ‘OK, this manicured

hand is not touching that,’ ” said

the 60-year-old retired attorney

in San Jose, Calif.

She told a clerk that she

wouldn’t sign until the screen

was wiped down. He brought

back a bottle of Windex from the

store’s bathroom and wiped the

screen.

BYANNAMARIAANDRIOTIS

Shoppers

Avoid Store

Payment

Screens