Nation roundup for May 6


Court favors prayer at local council meetings

WASHINGTON (AP) — A narrowly divided Supreme Court upheld decidedly Christian prayers at the start of local council meetings on Monday, declaring them in line with long national traditions though the country has grown more religiously diverse.

The content of the prayers is not significant as long as they do not denigrate non-Christians or try to win converts, the court said in a 5-4 decision backed by its conservative majority.

Though the decision split the court along ideological lines, the Obama administration backed the winning side, the town of Greece, N.Y., outside of Rochester.

The outcome relied heavily on a 1983 decision in which the court upheld an opening prayer in the Nebraska Legislature and said prayer is part of the nation’s fabric, not a violation of the First Amendment’s guarantee of freedom of religion.

Writing for the court on Monday, Justice Anthony Kennedy said that forcing clergy to scrub the prayers of references to Jesus Christ and other sectarian religious figures would turn officials into censors. Instead, Kennedy said, the prayers should be seen as ceremonial and in keeping with the nation’s traditions.

“The inclusion of a brief, ceremonial prayer as part of a larger exercise in civic recognition suggests that its purpose and effect are to acknowledge religious leaders and the institutions they represent, rather than to exclude or coerce nonbelievers,” Kennedy said.

Target’s CEO is out in wake of identity theft

NEW YORK (AP) — Target’s CEO has become the first boss of a major corporation to lose his job over a breach of customer data, showing how responsibility for computer security now reaches right to the top.

Gregg Steinhafel, who was also president and chairman, stepped down nearly five months after Target disclosed a huge pre-Christmas breach in which hackers stole millions of customers’ credit- and debit-card records. The theft badly damaged the store chain’s reputation and profits.

Steinhafel, a 35-year veteran of the company and chief executive since 2008, also resigned from the board of directors, Target announced Monday.

“He was the public face of the breach. The company struggled to recover from it,” said Cynthia Larose, chair of the privacy and security practice at the law firm Mintz Levin. “It’s a new era for boards to take a proactive role in understanding what the risks are.”

The departure of Steinhafel, 59, suggests the company wants a clean slate as it wrestles with the fallout. But the resignation leaves a leadership hole at a time when the 1,800-store chain is facing many other challenges.

The company, known for its trendy but affordable housewares and fashions, is struggling to maintain its cachet while competing with Walmart and Amazon.com. Target is also grappling with a disappointing expansion into Canada, its first foray outside the U.S.

Experts say the breach, which highlighted the flaws in Target’s security system, seemed to be the final straw.

The Target board said in a statement that after extensive discussions with Steinhafel, they both “have decided it is the right time for new leadership at Target.” The board also said that he “held himself personally accountable.”

“The last several months have tested Target in unprecedented ways,” Steinhafel wrote in a letter to the board that was made available to The Associated Press. “From the beginning, I have been committed to ensuring Target emerges from the data breach a better company, more focused than ever on delivering for our guests.”

The company’s stock fell more than 3 percent, or $2.14, to close at $59.87.

Chief Financial Officer John Mulligan was named interim president and CEO.

Under Steinhafel’s leadership, Target won praise for its expansion into fresh groceries and its 5 percent discount for customers who use its branded debit and credit cards. In 2009, he defended the company against a proxy fight waged by hedge fund manager William Ackman, who was pushing his own candidates for the board.

But Target, based in Minneapolis, has been criticized for reacting too slowly to the shift toward shopping on mobile devices. Target just started to let shoppers order items online and pick them up at the store, years later than some competitors.

Analysts also say Target botched its Canadian expansion by moving too aggressively. The company opened about 120 stores in the latest year and lost nearly $1 billion in the Canadian business.

On Dec. 19, Target disclosed a breach of 40 million credit and debit card accounts over a nearly three-week period before Christmas. Then on Jan. 10, the company said hackers also stole personal information — including names, phone numbers, and email and mailing addresses — from as many as 70 million customers.

“Ultimately, too much rained down on Gregg Steinhafel,” said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors. “There was no way he could escape the black vortex of news.”

Target reported in February that its fourth-quarter profit fell 46 percent on a revenue decline of 5.3 percent as the breach scared off customers.

Target’s sales have been recovering, but it expects to feel the effects for some time. The breach has spawned dozens of legal actions that could prove costly.

Share are down 5.8 percent since the breach was disclosed.

Its response since the theft has included free credit monitoring for affected customers and an overhaul of security systems. Two months ago, the company’s chief information officer lost her job.

And last week, Target announced plans to become the first major U.S. retailer to have store credit and debit cards with chip-and-PIN security technology.

When the final tally is in, Target’s breach may eclipse the biggest known data theft at a retailer, one disclosed in 2007 at the parent company of TJ Maxx that affected 90 million records.

That breach didn’t directly lead to the CEO’s ouster; TJX Co.’s management was already in transition at the time.

Coke, Pepsi dropping ‘BVO’ from all drinks

CANDICE CHOI, AP Food Industry Writer

NEW YORK (AP) — Coca-Cola and PepsiCo said Monday they’re working to remove a controversial ingredient from all their drinks, including Mountain Dew, Fanta and Powerade.

The ingredient, called brominated vegetable oil, had been the target of petitions on Change.org by a Mississippi teenager who wanted it out of PepsiCo’s Gatorade and Coca-Cola’s Powerade. In her petitions, Sarah Kavanagh noted that the ingredient has been patented as a flame retardant and isn’t approved for use in Japan and the European Union.

Coca-Cola and PepsiCo have stood by the safety of the ingredient, which is used to distribute flavors more evenly in fruit-flavored drinks. But their decisions reflect the pressure companies are facing as people pay closer attention to ingredient labels and try to stick to diets they feel are natural. Several major food makers have recently changed their recipes to remove chemicals or dyes that people find objectionable.

While food companies stress that the ingredients meet regulatory requirements, their decisions reflect how marketing a product as “natural” has become priority and a competitive advantage.

PepsiCo had said last year that it would remove brominated vegetable oil from Gatorade. On Monday, the company said it has since been working to remove it from the rest of its products. PepsiCo also uses BVO in its Mountain Dew and Amp energy drinks.

The company, based in Purchase, New York, didn’t provide a timeline for when it expects the removal to be complete.

Earlier on Monday, Coca-Cola had also said that it’s removing the ingredient from all its drinks to be consistent in the ingredients it uses around the world. In addition to Powerade, Coca-Cola uses BVO in some flavors of Fanta, Fresca and several citrus-flavored fountain drinks. The company said BVO should be phased out in the U.S. by the end of the year.

Coca-Cola said it would instead use sucrose acetate isobutyrate, which it noted has been used in drinks for more than 14 years, and glycerol ester of rosin, which it said is commonly found in chewing gum and drinks.

A Coca-Cola spokesman, Josh Gold, noted that BVO isn’t used in many other countries, but said it would be phased out in Canada and Latin America as well.

The Center for Science in the Public Interest, a health advocacy group, notes that the Food and Drug Administration permitted the use of BVO on an interim basis in 1970 pending additional study. Decades later, the group notes that BVO is still on the interim list.

Kavanagh, the Mississippi 17-year-old, had been planning on launching another petition on Change.org asking PepsiCo to remove BVO from all its drinks. She wasn’t immediately available for comment late Monday. Earlier in the day, however, she said, “It’s really good to know that companies, especially big companies, are listening to consumers.”

 

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