Business News

Jeffrey S. Litwin, M.D., F.A.C.C.


Calling teen vaping 'epidemic,' officials weigh flavor ban The U. In Southern Europe , wolf extermination was not as complete as in Northern Europe, because of greater cultural tolerance of the species. Do CEOs and Directors say to one another, in substance, "I won't tell on you to Shareholders , if you don't tell on me"? Wolves may catch infectious canine hepatitis from dogs, though there are no records of wolves dying from it. Call it the fear factor:

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The author of both opinions, year-old Vice Chancellor Leo E. Strine faulted the company's board for letting Chief Executive Robert E. Rossiter negotiate the deal with Mr. Icahn on his own. The Delaware court's increased scrutiny of possible conflicts comes amid rising complaints, and more lawsuits, criticizing buyout deals for allegedly enriching corporate executives at the expense of the shareholders. In the current buyout craze, many buyout firms retain the management by offering rich pay packages and a stake in the newly private entity.

These deals are being challenged in the courts by shareholders who allege that they are getting a meager payout for the company. They say boards are accepting deals based on factors other than the best-available price. In addition, shareholders are accusing boards of running into the friendly arms of private-equity buyers to escape activist hedge funds, who are trying to oust them through proxy battles.

In the case of Topps, the New York producer of trading cards, collectibles and candy, shareholders have accused the board of breaching its duties to get the highest price for the company Strine warned in his Topps opinion. Not only do CEOs get theirs, but , when they do wrong, Shareholders foot the bill. Once again, shareholders are shouldering the costs of unethical behavior they had nothing to do with.

Hill and Richard W. Painter, professors at the University of Minnesota Law School. In 'Better Bankers, Better Banks,' they argue for making financial executives personally liable for a portion of any fines and fraud-based judgments a bank enters into, including legal settlements.

Hill said in an interview. If that's the case, bad CEOs are able to hang on to their jobs long after they should be driven out. In a new study titled Pay for Failure: Few of the plans, for example, required that the company's performance be measured against its industry peers.

It's a matter of mutual back-scratching, as another recent study confirmed. The authors are John K. They found that companies paying CEOs excessive amounts also pay directors excessive amounts.

Companies that pay too much also tend to perform worse than their peers. Kozlowski was exceptionally extravagant with company money, Mr. Campriello showed jurors an expense report Mr. John Fort submitted for his attendance at a single three-day board meeting. Campriello asked 'This is the way we traveled,' Mr. Permitting extravagant expenses is the morale equivalent of bribery. Raines received salary, bonus and other compensation last year However, Fannie Mae is not a person.

The Broadcom Corporation … shareholders are being asked to vote on a company proposal to increase by 12 million the number of shares authorized for grants under its stock incentive plan.

In addition, a 'yes' vote will expand the types of stock awards that the company can offer executives and employees, as well as grant the compensation committee the right to reprice underwater options at any time.

This objectionable repricing practice removes the risk for executives and employees that outside shareholders incur when their stock falls. Had the proposed plan been in place last year, it would have cost shareholders an amount equal to about 75 percent of the company's revenue, the firm said.

Berman had until 29 February been affiliated with a law firm that served as outside counsel to the Company and had since 1 March been engaged by the Company to render legal, regulatory and other professional services.

Berman was a director of Tyco until December 5, From March 1, through July 31, , Mr. Berman was engaged to render legal and other services. During this period, Tyco compensated Mr. Berman with health benefits, secretarial assistance, a cell phone and electronic security services for his homes.

Weingarten said the two clashed over several issues, including the amount of Tyco business sent to Kramer Levin for which Berman received referral fees. Dennis Kozlowski , Tyco's former chief executive, and were not approved by the board or disclosed in filings with the United States Securities and Exchange Commission. He also has drawn fire from critics for having business ties to Disney in the past while sitting on the board.

Those payments ended two years ago amid an outcry from corporate governance experts. Independence of new chairman, who had sided with Eisner, is called into question. Mitchell, 70, … who has little business experience, said … yesterday that he had no desire to play the corporate strategist, as many chairmen do.

Instead, he sees his main job as negotiating among factions of unhappy investors, other board members and Michael D. Eisner, the chief executive who lost the chairman's title in the wake of a resounding no-confidence vote at the company's shareholder meeting on Wednesday.

Mitchell's appointment is not sitting well with many of the investors … nor with corporate governance experts. They complained that not only does Mr. Mitchell have negligible corporate experience, but they say he is too closely allied to Mr. Eisner and his appointment does little to address investor discontent with Mr.

Eisner's management of the company. Mitchell takes umbrage at the notion he is beholden to Mr. He said he had only had three social dinners with Mr.

Eisner actually approached Mr. Mitchell in to gauge his interest in joining Disney as president. Mitchell said because the decision was made only on Wednesday, the duties of the job had not been completely defined. But he said the setup and his lack of business experience should not impede his ability to oversee Mr. The most beholden Directors may live in states of denial. And that has prompted some governance experts and investment fund officials to question his sincerity toward reform and sensitivity to appearances.

Their concern is that directors may have competing loyalties between the shareholders they are supposed to serve and the executives who put them on the payroll.

Sidhu has … become a national force in community banking by repeatedly triumphing over rebellious directors and shareholders. Sidhu has excluded directors from important deal deliberations or waits until the last minute to brief them. Some investors say his public statements about acquisition plans are misleading. Sidhu has a board of supportive directors who have scant banking experience, are compensated unusually well and, in some cases, enjoy access to Sovereign loans and business opportunities.

While that's more than directors at similar banks get, Sovereign justifies the pay by noting that its directors meet 14 times a year, five more times than its peer average. Sovereign has had business dealings with and made increasing loans to its directors in recent years.

Sovereign added that the Troilo leases all have been at market rates. Troilo didn't return calls. Troilo so he could buy a Lawrenceville, N. To help secure the loan, Mr. Troilo used another Sovereign-mortgaged property, in Pennsylvania , that he also rented to the bank.

The Monday filing said Mr. Troilo's bid was better because it included 'no financing, inspection or due diligence' conditions. Was Sovereign concerned that its building could not withstand "inspection or due diligence"? Upon what objective criteria was that decision made and by whom?

But, after all, it is just another instance of Shareholder assets being considered as chump change! The bank offers no relevant disclosure about the loans, including terms, interest rates or performance.

Relational Investors discovered the full extent of them only by cross-referencing Sovereign's Securities and Exchange Commission filings with records at the Office of Thrift Supervision. Sovereign says the SEC filings excluded credit extensions that haven't been drawn down. Since , however, Sovereign's filings have included no specific figures, just vague reassurances. Wall Street is skeptical that a three-year turnaround plan will work, and Fitch has cut its bond rating to triple C, which is low even for junk bonds.

So far this year it is down another 27 percent. But there is little pain at the top. But there is no mention of internal equity -- of the justice of paying a lot to bosses when workers and investors are suffering.

Perhaps board members think they deserve an increase because their past stock grants keep losing value. They face tricky choices in deciding how much to challenge year-old Mr. Mozilo, who co-founded the company 38 years ago. Countrywide's nonemployee directors collect fees, shares that they must hold for at least a year, and perks that include health insurance and spousal travel, according to the latest proxy statement. The pay range is above median total compensation for directors of the largest U.

Countrywide said directors review their compensation annually with the help of an independent pay consultant Countrywide rewards board members so well that 'at some point, you cross the line between paying for services provided and a very lucrative thing where board members aren't going to challenge management,' says Mark Reilly, a partner at 3C, Compensation Consulting Consortium.

Corporate Library has long argued that Countrywide's board has done a poor job of designing Mr. Mozilo's pay package, guaranteeing him too much compensation regardless of performance. The consultants urged directors to slim his hefty contract, partly by revamping his annual bonus formula Directors kept the formula and decided to replace the consultancy Snyder , 75, is Countrywide's lead director. Institutional shareholders who have tried to engage the Countrywide board on issues like Mr. Mozilo's pay say that Mr.

Snyder, who has been a board member since , prevents such dialogues from occurring. One complaint was that he does not share letters from stockholders with other members of the board. Charles Prince , for instance, who stepped down under fire as Citigroup Inc. The rules are in place to allow boards to retain an appropriate mix of retired and active executives and push out members who no longer have the time for outside directorships because of more demanding new jobs.

Still, many governance watchers and veteran directors say boards rarely accept a resignation after a member loses a CEO spot—no matter the reason.

Another former chief who kept a directorship is Richard Syron , ousted as head of Freddie Mac in when the U. He recently received a warning that he may face civil action from the Securities and Exchange Commission as part of its investigation into whether Freddie Mac properly disclosed its exposure to subprime loans. Syron held a board seat, rejected his offer to resign. Syron didn't have to defend his actions to fellow board members.

To be sure, boards occasionally drop a member after leaving a CEO post under fire. Advanced Micro Devices Inc. AMD declined to comment. I just could not resist the temptation.

The devil made me do it. The other dude done it. It was my poor upbringing. Then, there is reciprocal back scratching. It would be so embarrassing at the country club to encounter a removed former fellow Director. Additional conflicts of interest are caused by the existence of a Director clique. No one wants a wild card. It's not surprising that their objective is to get along. Statistical analyses can go just so far in detecting links between Directors. For directors, it is simply bad form to nitpick over a couple of million dollars with another member of the club, particularly one who helps set director fees or serves on the compensation committee of other corporations.

Even legendary investor Warren E. Buffett was not immune to the collegiality. He recently wrote to the Shareholders of Berkshire Hathaway Inc.

A certain social atmosphere presides in boardrooms where it becomes impolitic to challenge the chief executive, he wrote.

Buffett is reputed to be the best of the best! Thus, Shareholders have no reason to expect better representation from any other Director. Buffet, the best of the best, found it necessary to ask a subordinate multiple times about a sizable transaction and walked away without getting the "details.

Was he suspicious when he had to ask a second time? What about the third time? Did the subordinate still retain his job? Is there a letter of reprimand in the file? What does the subordinate say he communicated to Buffet? Why was the questioning of Buffet not done under oath? Well, since he was questioned by regulators, if the truth not be told, there is always the obstruction of justice route.

Hopefully, Buffet does better where he serves in the capacity of a corporate Director. After his talk with Mr. Ferguson wrote an e-mail to Joseph Brandon, then General Re executive vice president, describing the conversation with Mr. Buffet, saying that he asked Mr. Buffet whether the deal was proper. Ferguson reported that Mr. Buffet said the deal was proper, but not by a large margin. Buffet told regulators that didn't happen.

Buffet told regulators that he asked Mr. Brandon several times whether General Re's accounting on the deal was okay, but didn't learn details. Did Ferguson want to know? If not, why not? Was a copy of the email transmitted to Buffet when it was written? Did Buffet read it and not respond?

When did Buffet first question Brandon? What triggered the question? If Brandon was not answering Buffet, perhaps Buffet could have asked his external auditors? On the other hand, if one is suspicious, why alert the external auditors to look carefully at what might be a minefield? Perhaps the issue of a Director's fiduciary duty to Shareholders was lost in an ethical haze?

He stated, in part, "I've sat on enough boards and audit committees to understand the kind of culture of seduction that characterizes many boards. It's a game that many CEOs played and played well by seducing their boards with perks and private attention and contributions to favorite philanthropies, and meetings that were short on substance and long on fluff. The boards became willing accomplices. And it's part of the American personality to go along and become more fraternal rather than more vigilant.

Levitt did all that board sitting before From to , as Chairman of the SEC, what did he do or attempt to do to cure the specific problem? Also, it appears that Mr.

Levitt is claiming that it would be un-American to require Directors to be vigilant on behalf of Shareholders. Directors who served at failed companies may rate a red badge of courage and additional opportunities to employ their varied talents.

In some cases, however, companies have stopped passing on this information in proxy materials distributed to shareholders…. But what about the directors of companies like Enron, WorldCom, Adelphia Communications, Global Crossing, Waste Management, Tyco International and others who oversaw the implosion of hundreds of billions in market capitalization?

In many cases, they got better jobs. But many companies don't make it easy for shareholders to find out where their directors have been. Sprint Nextel 's biography for William E. Conway , for instance, mentions nothing about his stint at Enron. Thornton of Goldman Sachs Group Ford's, someone with whom he shares several friends and even more interests.

Thornton was appointed to the Ford board at the recommendation of the company's chief executive and chairman The lawsuit … said the chief executive and chairman, William Clay Ford Jr. The suit said Mr. Ford's acceptance of the shares was a 'usurpation of an opportunity that belonged to the company' After shareholders complained in late , the company formed a committee that concluded that Mr. Ford had not acted improperly.

Ford's purchase in May of , shares of Goldman Sachs, the largest allocation to an individual, drew attention after a lawyer for Ford shareholders wrote to the company's board, demanding an investigation.

The shareholders demanded that Mr. Ford return any profits and pay damages to the company for the lost investment opportunity. Ford bought the shares, Goldman's co-chief operating officer, John Thornton, sat on Ford's board. Ford had no significant say in the awarding of investment banking business. They also said … that Mr. Ford had a long personal banking relationship with the firm. Ford probably claimed a tax deduction for his charitable donation. And, how does one determine that "no wrongdoing had occurred"?

Ford did not violate the non-existent policy. Therefore, "no wrongdoing had occurred. In some cases, 10 percent or more of all donations went to these organizations. Companies, directors and non-profits routinely stress the importance of philanthropy and say the donations don't affect board members' independence.

Critics, however, say big donations can create a clubby atmosphere that may make directors less likely to aggressively challenge management. Although foundations detail their donations in annual tax filings with the Internal Revenue Service, companies are not required to disclose most non-profit affiliations of their directors, making it problematic for investors to know the full extent of such connections. Farmer , the 87 year old chairman of the company Farmers, who are members of the board, along with other directors The coming-together will be at a town in Georgia where the main attraction is a 'gentleman's club' exclusive enough to garner members by invitation only.

Augusta National Golf Club, which openly and proudly discriminates against women, will produce its Masters Golf Tournament with considerable help from the masters of corporate America.

It also makes a mockery of board independence, now required to protect stockholders and the public from cronyism in financial dealings. The cronyism that perpetuates gender bias against employees is every bit as harmful, and ought to be stopped just as forcefully. At nearly all other companies, a simple majority will do. Purcell will color their judgment in any way. Indeed, Morgan Stanley bankers, not to mention the dissident executives, have accused the board of coddling him. It is packed with former chief executives, many from the Chicago area, where Mr.

Some have golfed together; others have worked for one another. First, there is the Kraft connection. Miles, the chairman of the nominating committee and … recruited two former executives who worked for him at Kraft in the mid's: Then there is the McKinsey connection.

Four directors were partners at McKinsey, the management consulting firm, as was Mr. And finally, there is the fact that a number of directors, notably Mr. Miles, serve together on boards at other companies. Miles, for example, serves on six boards, including that of the AMR Corporation, where he serves alongside Mr. Brennan also serves on six boards, and Charles F.

Brennan during his battle with shareholders. Miles and Kraft on its merger with Philip Morris, and he is now advising the independent directors at Morgan Stanley on a range of matters, including their strategy for dealing with their antagonists. One point made by the retired executives is that until recently, no director - including Mr.

Purcell - had ever operated a line of business for a securities firm. That set Morgan Stanley apart from nearly every other Wall Street firm. Partners have fiduciary duties to one another.

So much for the concept that BODs have undivided loyalty to represent the interests of Shareholders! Who is watching the supposed watchdogs of Management? Do conflicts of interest disappear if they are disclosed to Shareholders who have no effective means to remedy the situation? Purcell, their first call for help when to the superlawyer Martin Lipton.

Lipton quickly donned a number of other legal hats - advising the board, Mr. Purcell and the company itself on tactics, legalities and, most controversially, severance pay to departing executives.

Purcell stepped down, a compensation specialist at Wachtell, Adam D. Chinn, in tandem with the board's compensation committee, draft the controversial severance packages that awarded Mr. Chinn's reputation for cobbling together generous severance awards for departing chief executives is such that the contracts are known as Chinn-ups. As a result of these payouts, the board has been sued by shareholders and received irate letters from institutional investors who have decried the packages as a violation of the very governance practices Mr.

Lipton was hired to improve. Purcell's leadership, many Morgan Stanley executives were never quite clear about Mr. Several said they frequently asked each other: Was he advising the board? The answer, people close to the board said, is that Mr.

Lipton was, first and foremost, an adviser to the board. When it became clear that Mr. Purcell would depart, he hired his own lawyer to negotiate.

While the very best governance practices would argue for the hiring of separate counsel on the compensation packages, time and confidentiality considerations led the board to stick with Wachtell.

Lipton for being an apologist for corporate management, that assertion misses the point - that Mr. Lipton's fiduciary responsibility is to best represent and advocate in support of his client's interests. If Lipton represented only the BOD and, thus, the Shareholders, his fiduciary duty was to get the executive to leave for the lowest amount. It is fair to assume that he, at the least, did not discourage the BOD from appointing Chinn while knowing that he Chinn does Chinn-ups.

Lipton and Chinn are members of the same law firm. Lipton probably benefits from each fee Chinn earns for the firm. The BOD tries to justify its act of hiring Chinn by claiming "time and confidentiality" considerations.

Does Lipton's rolodex contain the name of at least one competent non-Wachtell attorney who has a reputation for being parsimonious when dealing with executive payoffs? Couldn't Lipton have asked Chinn for a referral? Did the BOD not know that attorneys, even non-Wachtell attorneys, have a duty to maintain confidentiality?

Purcell decided he should step down…. The tale serves as a caution for boards in an era when their role in corporate governance is drawing more scrutiny. The damage from delay when directors fail to spread their antennae widely is especially great at a Wall Street securities firm like Morgan Stanley, where the most valuable assets can walk out the door and never return.

At a mid-March board meeting, Laura D'Andrea Tyson , a former Clinton administration economic official who is dean of the London Business School , said directors should take the criticism of Mr. Purcell's record more seriously. Tyson, calling her comment inappropriate … The board took steps to interview more employees. Knight, the director who had clashed with Ms. Purcell and didn't see any reason to discuss the matter since the board had already decided on it….

The attempt to cut off debate bothered some other directors, people familiar with the meeting say. Knight and Zumwinkel left, the discussion turned more freewheeling. Knight's conduct is reminiscent of that of a school yard bully who made it to the big time.

Institutional Shareholders do much "discussing an effort to out the directions," but, when push came to shove, they faded. Knight and Zumwinkel, who should be their first targets, need not lose any sleep.

Bostock , had a family connection to a hedge fund that does business with the firm. They generally worry that the indirect connections can impair the directors' abilities to serve as independent advocates for shareholder interests.

Is this what is meant by "the ties that bind"? If this is what Morgan Stanley does when it is under a corporate governance microscope, imagine what might occur when the spot light turns elsewhere business as usual. Yet during that time, the company's stock has slid 12 percent while shares of its archrival, Lowe's , have climbed percent.

Why would a company award a chief executive that much money at a time when the company's shareholders are arguably faring far less well? Two of those members have ties to Mr. Nardelli's former employer, General Electric.

Nardelli's lawyer in negotiating his own salary. And three either sat on other boards with Home Depot's influential lead director, Kenneth G. Langone , or were former executives at companies with significant business relationships with Mr. In addition, five of the six members of the compensation committee are active or former chief executives, including one whose compensation dwarfs Mr.

Governance experts say people who are or have been in the top job have a harder time saying no to the salary demands of fellow chief executives. Moreover, chief executives indirectly benefit from one another's pay increases because compensation packages are often based on surveys detailing what their peers are earning. To its critics, the panel exemplifies the close personal and professional ties among board members and executives at many companies — ties that can make it harder for a board to restrain executive pay.

They say this can occur even though all of a board's compensation committee members technically meet the legal definition of independent, as is the case at Home Depot. Langone's circle of friends and associates… [T]he Home Depot board decided … Mr.

Nardelli, who had no retail experience, should become CEO. Nardelli might not hit one of the few performance goals the board had set to cause payment of a long-term incentive plan, the board lowered the goalposts….

More than a dozen U. Several factors are spurring such appointments, recruiters and management consultants say. Boards are quicker to fire poorly performing CEOs, often before potential internal successors are ready for the job.

Many of these companies have deep-seated problems, making it harder to recruit outsiders. And increasingly, there's a deep pool of outside executives in the boardroom. They contend that a chief chosen from the board signals cronyism and weak succession planning. A director's comfort with a colleague obscures 'a clear view of the individual's suitability to be a successful CEO,' says Richard Breeden, an activist investor and former chairman of the Securities and Exchange Commission.

Franks , the former chief of the Public Broadcasting System and the publisher of a Spanish newspaper would seem to have nothing in common — except for one thing. They all sit on the board of Bank of America. But as they and 13 of their colleagues meet Wednesday to discuss how to steer the bank through its troubled merger with Merrill Lynch, they are likely to be united by something else: Their shareholder scrutiny has also turned an unusual spotlight on the oversight role played by the board members, many of whom were picked by Mr.

Lewis from several companies that the bank, based in Charlotte , N. Bank of America's board is an eclectic group, and it will grow larger this week when it adds three members from the board of Merrill. The bank's two most powerful directors, O. Spangler , are close to Mr. Lewis's predecessor, Hugh L.

Lewis, only two people on the board — the former chief of FleetBoston and a former senior executive of MBNA — have roots in banking. While Wall Street is rife with tales of bank and brokerage directors who deferred to executives seeking faster growth through ever-riskier business, Bank of America's shareholder advocates have grown increasingly concerned about the board's ability to understand financial risks and rein in managers.

While critics charge that Bank of America's board has been little more than a rubber stamp in the empire-building campaign of Mr. Lewis, others describe it as independent and willing to push back against the chief executive. Its members are expected to vote Wednesday on the addition of three directors from Merrill Lynch Their approval would raise the number of board members to 20, and would tighten the web that already binds many of the board's current representatives.

Yet some board members are connected in other ways that reveal strong cross-pollinations with other company boards. Nothing could get the attention of Directors more than the prospect of being held personally accountable for their lack of diligence in performing their duties to Shareholders. Board members also acknowledge they are struggling to rein in bloated executive compensation, but are counting on investors to lead the cause to knock it down.

Those conclusions aren't a decade old, but are part of a recent survey from the consulting firm PricewaterhouseCoopers and the Corporate Board Member magazine , which culled responses of more than 1, directors at U. Directors still don't have as much control over corporate dealings that many believe is needed to curb supersized compensation. While more boards are independent of management, there are still plenty of cases of directors using flawed judgment or kowtowing to demanding executives who are pushing their own agendas.

Part of the problem, it seems, is that boards are still controlled by CEOs, with 50 percent of directors surveyed saying that board leadership flows from the company's top executive who is also board chairman. Those individuals, therefore, set the agenda as well as the flow of information at board meetings and among members. In the area of compensation, two-thirds of responding directors believe that U. Separately, a third believe that stockholders are the group most likely to get pay pared down.

But it is hard to reduce pay when the directors themselves don't know how much they've even agreed to pay executives. Less than half of those surveyed said their boards use tally sheets to add up total compensation, and about one in five directors said that they didn't know what the CEO would collect if he or she is terminated, retires or should there be a change in control. Among the bigger shockers in these filings are the tallies showing how much money executives will cart away if they are terminated or agree to a merger.

Buried in these figures is one of the most contentious items in all of payland: Michael Kesner , principal at Deloitte Consulting in Chicago said, 'Boards are now just getting a sense of how big that number is.

If directors are surprised by gross-ups, you can imagine how stockholders will react. And given how ubiquitous gross-ups are -- surveys say 75 percent of chief executives have such arrangements with their companies -- the shocks could be far and wide. Training the spotlight on gross-ups may help stamp them out.

As long as they were kept under wraps, directors didn't have to justify them to angry shareholders. Six days later, its chief executive, E. Underlying the situation at Merrill is the nagging question of what a Wall Street board is expected to know about complex financial markets where asset values can shift drastically and where many directors are not in the business of managing trillion-dollar balance sheets — or perhaps have little experience in doing so.

Directors should know what independent risk controls are in place, who is overseeing that function After every market crisis Case law, lawyers say, has affirmed that directors have to be informed and make sure that obvious red flags are not ignored. There were certainly some red flags waving in front of directors. One issue should have been the revolving door of talent in the upper echelons of the firm And, like everyone else, directors knew about the bank's very public shift into riskier business areas, which until this summer were delivering handsome profits.

Merrill had become the top issuer of collateralized debt obligations in the marketplace, and its profitability soared; fixed-income revenue in the second quarter was up percent. According to some analysts, the billion-dollar size of those profits — and the soaring return on equity — should have caused directors to ask whether the risks being taken to generate higher profits warranted better controls.

Analysts say that directors should have asked about the exposures and, more important, what might happen to those exposures under various financial scenarios, including a collapse of the mortgage market. Compared to its closest wild cousins the coyote and golden jackal , the gray wolf is larger and heavier, with a broader snout, shorter ears, a shorter torso and longer tail.

The gray wolf usually carries its head at the same level as the back, raising it only when alert. Generally, wolves have a high heart weight of 0. Tibetan gray wolves, which occupy territories up to 3, above sea level , have evolved hearts that withstand the low oxygen levels. The gray wolf's head is large and heavy, with a wide forehead, strong jaws and a long, blunt muzzle. This force is sufficient to break open most bones. A similar trend was found with the carnassial tooth bite force, but with the extinct dire wolf and gray wolf both measuring , then followed by the African hunting dog , the dhole , and the dingo The gray wolf has very dense and fluffy winter fur, with short underfur and long, coarse guard hairs.

Especially long hairs are on the shoulders, and almost form a crest on the upper part of the neck. The hairs on the cheeks are elongated and form tufts.

The ears are covered in short hairs, which strongly project from the fur. Short, elastic and closely adjacent hairs are present on the limbs from the elbows down to the calcaneal tendons. Wolf fur provides better insulation than dog fur, and does not collect ice when warm breath is condensed against it. Older wolves generally have more white hairs in the tip of the tail, along the nose and on the forehead.

The winter fur is retained longest in lactating females, though with some hair loss around their nipples. Coat color ranges from almost pure white through various shades of blond, cream, and ochre to grays, browns, and blacks, [68] with variation in fur color tending to increase in higher latitudes. The gray wolf is a social animal, whose basic social unit consists of a mated pair, accompanied by the pair's adult offspring.

In the rare cases where other wolves are adopted, the adoptee is almost invariably an immature animal 1—3 years of age unlikely to compete for breeding rights with the mated pair. In some cases, a lone wolf is adopted into a pack to replace a deceased breeder. Wolves are highly territorial animals, and generally establish territories far larger than they require to survive in order to assure a steady supply of prey.

Territory size depends largely on the amount of prey available and the age of the pack's pups, tending to increase in size in areas with low prey populations [77] or when the pups reach the age of 6 months, thus having the same nutritional needs as adults.

Wolves defend their territories from other packs through a combination of scent marking , direct attacks and howling see Communication. Scent marking is used for territorial advertisement, and involves urination, defecation and ground scratching.

Such markers can last for 2—3 weeks, [78] and are typically placed near rocks, boulders, trees, or the skeletons of large animals. The gray wolf is generally monogamous , [86] with mated pairs usually remaining together for life.

Upon the death of one mated wolf, pairs are quickly re-established. Since males often predominate in any given wolf population, unpaired females are a rarity.

Such gray wolves are termed " Casanova wolves" and, unlike males from established packs, they do not form pair bonds with the females they mate with. Some gray wolf packs may have multiple breeding females this way, as is the case in Yellowstone National Park. This might take place if the original parents die or are for some reason separated from them. The age of first breeding in gray wolves depends largely on environmental factors: This is further demonstrated by the fact that captive wolves have been known to breed as soon as they reach 9—10 months, while the youngest recorded breeding wolves in the wild were 2 years old.

Females are capable of producing pups every year, with one litter annually being the average. Unlike the coyote, the gray wolf never reaches reproductive senescence. The gestation period lasts 62—75 days, with pups usually being born in the summer period. Wolves bear relatively large pups in small litters compared to other canid species. The milk canines erupt after one month.

Pups first leave the den after 3 weeks. Mother wolves do not leave the den for the first few weeks, relying on the fathers to provide food for them and their young. Pups begin to eat solid food at the age of 3—4 weeks. Pups have a fast growth rate during their first four months of life: Actual fights to establish hierarchy usually occur at 5—8 weeks of age. This is in contrast to young foxes and coyotes, which may begin fighting even before the onset of play behavior. Although social animals, single wolves or mated pairs typically have higher success rates in hunting than do large packs, with single wolves having occasionally been observed to kill large prey such as moose , bison and muskoxen unaided.

Because of this, it rarely manages to capture hidden hares or birds, though it can easily follow fresh tracks. The actual killing method varies according to prey species. With large prey, mature wolves usually avoid attacking frontally, instead focusing on the rear and sides of the animal.

Large prey, such as moose, is killed by biting large chunks of flesh from the soft perineum area, causing massive blood loss. With small, mouse -like prey, wolves leap in a high arc and immobilize it with their forepaws. Such instances are common in domestic animals, but rare in the wild. In the wild, surplus killing primarily occurs during late winter or spring, when snow is unusually deep thus impeding the movements of prey [] or during the denning period, when wolves require a ready supply of meat when denbound.

Once prey is brought down, wolves begin to feed excitedly, ripping and tugging at the carcass in all directions, and bolting down large chunks of it. When food is scarce, this is done at the expense of other family members, especially non-pups.

Once the breeding pair has finished eating, the rest of the family tears off pieces of the carcass and transport them to secluded areas where they can eat in peace.

Wolves typically commence feeding by consuming the larger internal organs of their prey, such as the heart , liver , lungs and stomach lining. The kidneys and spleen are eaten once they are exposed, followed by the muscles.

The gray wolf's expressive behavior is more complex than that of the coyote and golden jackal, as necessitated by its group living and hunting habits. While less gregarious canids generally possess simple repertoires of visual signals, wolves have more varied signals that subtly inter grade in intensity.

Passive submission usually occurs as a reaction to the approach of a dominant animal , and consists of the submissive wolf lying partly on its back and allowing the dominant wolf to sniff its anogenital area.

Active submission occurs often as a form of greeting, and involves the submissive wolf approaching another in a low posture, and licking the other wolf's face. The mouthing of each other's muzzles is a friendly gesture, while clamping on the muzzle with bared teeth is a dominance display. Similar to humans, gray wolves have facial color patterns in which the gaze direction can be easily identified, although this is often not the case in other canid species.

In , a study compared the facial color pattern across 25 canid species. The results suggested that the facial color pattern of canid species is related to their gaze communication, and that especially gray wolves use the gaze signal in conspecific communication. Gray wolves howl to assemble the pack usually before and after hunts , to pass on an alarm particularly at a den site , to locate each other during a storm or unfamiliar territory and to communicate across great distances.

Pups almost never howl, while yearling wolves produce howls ending in a series of dog-like yelps. The pitch usually remains constant or varies smoothly, and may change direction as many as four or five times. When pursuing prey, they emit a higher pitched howl, vibrating on two notes.

When closing in on their prey, they emit a combination of a short bark and a howl. The two are however mutually intelligible , as North American wolves have been recorded to respond to European-style howls made by biologists. Other vocalisations of wolves are usually divided into three categories: Wolves do not bark as loudly or continuously as dogs do, but bark a few times and retreat from perceived danger.

Pups commonly growl when playing. One variation of the howl is accompanied by a high pitched whine, which precedes a lunging attack. Olfaction is probably the wolf's most acute sense, and plays a fundamental role in communication. The wolf has a large number of apocrine sweat glands on the face, lips, back, and between the toes.

The odor produced by these glands varies according to the individual wolf's microflora and diet, giving each a distinct "odor fingerprint". A combination of apocrine and eccrine sweat glands on the feet allows the wolf to deposit its scent whilst scratching the ground, which usually occurs after urine marking and defecation during the breeding season.

The follicles present on the guard hairs from the wolf's back have clusters of apocrine and sebaceous glands at their bases. As the skin on the back is usually folded, this provides a microclimate for bacterial propagation around the glands. During piloerection, the guard hairs on the back are raised and the skin folds spread, thus releasing scent. The pre-caudal scent glands may play a role in expressing aggression, as combative wolves raise the base of their tails whilst drooping the tip, thus positioning the scent glands at the highest point.

The components of anal sac secretions vary according to season and gender, thus indicating that the secretions provide information related to gender and reproductive state. The secretions of the preputial glands may advertise hormonal condition or social position, as dominant wolves have been observed to stand over subordinates, apparently presenting the genital area for investigation, [] which may include genital licking.

During the breeding season, female wolves secrete substances from the vagina , which communicate the females' reproductive state, and can be detected by males from long distances. Urine marking is the best-studied means of olfactory communication in wolves. Its exact function is debated, though most researchers agree that its primary purpose is to establish boundaries.

Wolves urine mark more frequently and vigorously in unfamiliar areas, or areas of intrusion, where the scent of other wolves or canids is present. So-called raised leg urination RLU is more common in male wolves than in females, and may serve the purpose of maximizing the possibility of detection by conspecifics, as well as reflect the height of the marking wolf.

Only dominant wolves typically use RLU, with subordinate males continuing to use the juvenile standing posture throughout adulthood. The gray wolf is a habitat generalist, and can occur in deserts , grasslands , forests and arctic tundras.

Habitat use by gray wolves is strongly correlated with the abundance of prey, snow conditions, absence or low livestock densities, road densities, human presence and topography. The warmth of the footpads is regulated independently of the rest of the body, and is maintained at just above tissue-freezing point where the pads come in contact with ice and snow. During the autumn-spring period, when wolves are more active, they willingly lie out in the open, whatever their location.

Actual dens are usually constructed for pups during the summer period. When building dens, females make use of natural shelters such as fissures in rocks, cliffs overhanging riverbanks and holes thickly covered by vegetation. Sometimes, the den is the appropriated burrow of smaller animals such as foxes, badgers or marmots.

An appropriated den is often widened and partly remade. On rare occasions, female wolves dig burrows themselves, which are usually small and short with 1—3 openings. The odour of urine and rotting food emanating from the denning area often attracts scavenging birds such as magpies and ravens. As there are few convenient places for burrows, wolf dens are usually occupied by animals of the same family.

Though they mostly avoid areas within human sight, wolves have been known to nest near domiciles , paved roads and railways. Although wolves primarily feed on medium to large sized ungulates , they are not fussy eaters.

Smaller sized animals that may supplement the diet of wolves include marmots , hares , badgers , foxes , weasels , ground squirrels , mice , hamsters , voles and other rodents , as well as insectivores. They frequently eat waterfowl and their eggs.

When such foods are insufficient, they prey on lizards , snakes , frogs , rarely toads and large insects as available. In times of scarcity, wolves readily eat carrion , visiting cattle burial grounds and slaughter houses. In Eurasia, many gray wolf populations are forced to subsist largely on livestock and garbage in areas with dense human activity, though wild ungulates such as moose , red deer , roe deer and wild boar are still the most important food sources in Russia and the more mountainous regions of Eastern Europe.

Other prey species include reindeer , argali , mouflon , wisent , saiga , ibex , chamois , wild goats , fallow deer and musk deer. Animals preferred as prey by North American wolves include moose, white-tailed deer , elk , mule deer , bighorn sheep , Dall's sheep , American bison , muskox and caribou.

Wolves supplement their diet with fruit and vegetable matter. They willingly eat the berries of mountain ash , lily of the valley , bilberries , blueberries and cowberry. Other fruits include nightshade , apples and pears. They readily visit melon fields during the summer months. Gray wolves typically dominate other canid species in areas where they both occur.

In North America, incidents of gray wolves killing coyotes are common, particularly in winter, when coyotes feed on wolf kills. Wolves may attack coyote den sites, digging out and killing their pups, though rarely eating them. There are no records of coyotes killing wolves, though coyotes may chase wolves if they outnumber them. Brown bears typically dominate wolf packs in disputes over carcasses, while wolf packs mostly prevail against bears when defending their den sites.

Both species kill each other's young. Wolves eat the brown bears they kill, while brown bears seem to only eat young wolves. The majority of black bear encounters with wolves occur in the species' northern range, with no interactions being recorded in Mexico. Wolves have been recorded on numerous occasions to actively seek out black bears in their dens and kill them without eating them. Unlike brown bears, black bears frequently lose against wolves in disputes over kills.

Wolves may encounter striped hyenas in Israel, Central Asia and India, usually in disputes over carcasses. Striped hyenas feed extensively on wolf-killed carcasses in areas where the two species interact. One-to-one, hyenas dominate wolves, and may prey on them, [] but wolf packs can drive off single or outnumbered hyenas. Large wolf populations limit the numbers of small to medium-sized felines.

Wolves encounter cougars along portions of the Rocky Mountains and adjacent mountain ranges. Wolves and cougars typically avoid encountering each other by hunting on different elevations.

In winter, however, when snow accumulation forces their prey into valleys, interactions between the two species become more likely. Wolves in packs usually dominate cougars and can steal kills. They have been reported killing mothers and their kittens. Wolves may kill lynxes by running them down, or killing them before they can escape into trees.

Leftovers of wolf kills are sometimes scavenged by wolverines. Wolverines usually wait until the wolves are done feeding, but have been known to drive away wolves from kills. However, there have been confirmed reports of wolf packs killing wolverines. Other than humans, tigers appear to be the only serious predators of wolves. Wolves appear capable of escaping competitive exclusion from tigers only when human persecution decreases tiger numbers.

Proven cases of tigers killing wolves are rare and attacks appear to be competitive rather than predatory in nature, with at least four proven records of tigers killing wolves without consuming them.

However, deliberate human persecution has reduced the species' range to about one third, because of livestock predation and fear of attacks on humans. Wolf population declines have been arrested since the s, and have fostered recolonization and reintroduction in parts of its former range, due to legal protection, changes in land-use and rural human population shifts to cities. Competition with humans for livestock and game species, concerns over the danger posed by wolves to people, and habitat fragmentation pose a continued threat to the species.

Despite these threats, because of the gray wolf's relatively widespread range and stable population, it is classified as least concern by the IUCN. Although wolf-dog hybridization in Europe has raised concern among conservation groups fearing for the gray wolf's purity, genetic tests show that introgression of dog genes into European gray wolf populations does not pose a significant threat.

Also, as wolf and dog mating seasons do not fully coincide, the likelihood of wild wolves and dogs mating and producing surviving offspring is small. The extermination of Northern Europe 's wolves first became an organized effort during the Middle Ages , and continued until the late 19th century. In England , wolf persecution was enforced by legislation , and the last wolf was killed in the early sixteenth century during the reign of Henry VII. Wolves lasted longer in Scotland , where they sheltered in vast tracts of forest, which were subsequently burned down.

Wolves managed to survive in the forests of Braemar and Sutherland until The extirpation of wolves in Ireland followed a similar course, with the last wolf believed to have been killed in The Sami extirpated wolves in northern Sweden in organized drives. By , few wolves remained in Sweden, because of the use of snowmobiles in hunting them, with the last specimen being killed in The gray wolf was exterminated in Denmark in and Norway's last wolf was killed in The species was decimated in 20th century Finland, despite regular dispersals from Russia.

The gray wolf was only present in the eastern and northern parts of Finland by , though its numbers increased after World War II. In Central Europe , wolves were dramatically reduced in number during the early nineteenth century, because of organized hunts and reductions in ungulate populations. In Bavaria , the last wolf was killed in , and had disappeared from the Rhine regions by Today, wolves have returned to the area. The louveterie was abolished after the French Revolution in , but was re-established in In , up to 1, wolves were killed, with many more by poison.

In Eastern Europe , wolves were never fully exterminated, because of the area's contiguity with Asia and its large forested areas. However, Eastern European wolf populations were reduced to very low numbers by the late nineteenth century.

Wolves were extirpated in Slovakia during the first decade of the twentieth century and, by the mid-twentieth century, could only be found in a few forested areas in eastern Poland.

Wolves in the eastern Balkans benefitted from the region's contiguity with the former Soviet Union and large areas of plains, mountains and farmlands. Wolves in Hungary occurred in only half the country around the start of the 20th century, and were largely restricted to the Carpathian Basin. Wolf populations in Romania remained largely substantial, with an average of 2, wolves being killed annually out of a population of 4, from — An all-time low was reached in , when the population was reduced to 1, animals.

The extermination of wolves in Bulgaria was relatively recent, as a previous population of about 1, animals in was reduced to about — in In Greece, the species disappeared from the southern Peloponnese in Despite periods of intense hunting during the eighteenth century, wolves never disappeared in the western Balkans, from Albania to the former Yugoslavia. In Southern Europe , wolf extermination was not as complete as in Northern Europe, because of greater cultural tolerance of the species.

Wolf populations only began declining in the Iberian Peninsula in the early 19th-century, and was reduced by a half of its original size by Wolf bounties were regularly paid in Italy as late as The recovery of European wolf populations began after the s, when traditional pastoral and rural economies declined and thus removed the need to heavily persecute wolves.

By the s, small and isolated wolf populations expanded in the wake of decreased human density in rural areas and the recovery of wild prey populations. The gray wolf has been fully protected in Italy since , and now holds a population of over 1,, By the wolves in the Western Alps imposed a significant burden on traditional sheep and goat husbandry with a loss of over 5, animals in In Spain , the species occurs in Galicia , Leon , and Asturias.

Although hundreds of Iberian wolves are illegally killed annually, the population has expanded south across the river Duero and east to the Asturias and Pyrenees Mountains. In , wolves began recolonising central Sweden after a twelve-year absence, and have since expanded into southern Norway.

As of , the total number of Swedish and Norwegian wolves is estimated to be at least one hundred, including eleven breeding pairs. The gray wolf is fully protected in Sweden and partially controlled in Norway.

The Scandinavian wolf populations owe their continued existence to neighbouring Finland's contiguity with the Republic of Karelia , which houses a large population of wolves. Furthermore, the decline in the moose populations has reduced the wolf's food supply. Tesla stock plunges amid concerns about Elon Musk's behavior.

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