DealBook: Office Depot and OfficeMax Announce Plans to Merge, After Erroneous Release

9:40 a.m. | Updated

Office Depot and OfficeMax announced their plans to merge on Wednesday, just hours after an erroneous release about the deal briefly surfaced.

Under the terms of the deal, Office Depot said it would issue 2.69 new shares of common stock for each share of OfficeMax. At that level, the transaction would value OfficeMax at $13.50, or roughly $1.19 billion, a premium of more than 25 percent to the company’s closing price last week.

The deal has been anticipated, as the companies face an increasingly difficult competitive environment. Both companies, which are burdened with big real estate footprints, have struggled against lower-priced rivals like Amazon.com and Costco. By uniting, the two companies should be able to cut costs and better negotiate prices.

“In the past decade, with the growth of the internet, our industry has changed dramatically,” Neil Austrian, chairman and chief executive officer of Office Depot, said in a statement. “Combining our two companies will enhance our ability to serve customers around the world, offer new opportunities for our employees, make us a more attractive partner to our vendors, and increase stockholder value.”

While the deal has been years in the making, it was initially announced prematurely. A news release announcing the merger of the two office supply retailers was posted early Wednesday morning on Office Depot’s Web site, but it quickly disappeared.

Several news organizations reported the terms disclosed in the errant news release for Office Depot’s earnings. The details were buried on page four of the release under the header “Other Matters.”

As the details filtered through the market, shares of the companies jumped. In premarket trading, Office Depot’s stock rose more than 7 percent, while OfficeMax shares were up more than 8 percent.

The episode is reminiscent of other times that companies’ earnings releases were published prematurely. Last fall, Google’s third-quarter earnings were published three hours early, which the technology giant blamed on a mistake by R.R. Donnelley & Sons, the company’s printer.

Representatives for Office Depot and OfficeMax were not immediately available for comment on the erroneous release.

Strategically, the deal makes sense, as the companies deal with a changing competitive environment.

Combined, the companies reported about $4.4 billion in revenue for their third quarter of 2012; in comparison, Staples disclosed $6.4 billion in revenue for the same period.

Office Depot has also been under pressure from an activist hedge fund, Starboard Value, which sent a letter to the retailer’s board last fall. In it, Starboard called for more cost cuts and a greater focus on higher-margin businesses like copy and print services. With a 14.8 percent stake, Starboard is the company’s biggest investor.

In announcing the deal, the two companies emphasized their new financial heft.

With the merger, the retailers expect to generate $400 million to $600 million in annual cost savings. The combined entity would also have $1 billion in cash, given them additional firepower to invest in the business.

“We are excited to bring together two companies intent on accelerating innovation for our customers and better differentiating us for success in a dynamic and highly competitive global industry,” Ravi Saligram, chief executive of OfficeMax, said in a statement. “We are confident that there will be exciting new opportunities for employees as part of a truly global business.

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The New Old Age Blog: The Reluctant Caregiver

Now and then, I refer to the people that caregivers tend to as “loved ones.” And whenever I do, a woman in Southern California tells me, I set her teeth on edge.

She visits her mother-in-law, runs errands, helps with the paperwork — all tasks she has shouldered with a grim sense of duty.  She doesn’t have much affection for this increasingly frail 90something or enjoy her company; her efforts bring no emotional reward. Her husband, an only child, feels nearly as detached. His mother wasn’t abusive, a completely different scenario, but they were never very close.

Ms. A., as I’ll call her because her mother-in-law reads The Times on her computer, feels miserable about this. “She says she appreciates us, she’s counting on us. She thanks us,” Ms. A. said of her non-loved one. “It makes me feel worse, because I feel guilty.”

She has performed many services for her mother-in-law, who lives in a retirement community, “but I really didn’t want to. I know how grudging it was.”

Call her the Reluctant Caregiver. She and her husband didn’t invite his parents to follow them to the small city where they settled to take jobs. The elders did anyway, and as long as they stayed healthy and active, both couples maintained their own lives. Now that her mother-in-law is widowed and needy, Ms. A feels trapped.

Ashamed, too. She knows lots of adult children work much harder at caregiving yet see it as a privilege. For her, it is mere drudgery. “I don’t feel there’s anybody I can say that to,” she told me — except a friend in Phoenix and, anonymously, to us.

The friend, therapist Randy Weiss, has served as both a reluctant caregiver to her mother, who died very recently at 86, and a willing caregiver to her childless aunt, living in an assisted living dementia unit at 82. Spending time with each of them made Ms. Weiss conscious of the distinction.

Her visits involved many of the same activities, “but it feels very different,” she said. “I feel the appreciation from my aunt, even if she’s much less able to verbalize it.” A cherished confidante since adolescence, her aunt breaks into smiles when Ms. Weiss arrives and exclaims over every small gift, even a doughnut. She worked in the music industry for decades and, despite her memory loss, happily sings along with the jazz CDs Ms. Weiss brings.

Because she had no such connection with her mother, whom Ms. Weiss described as distant and critical, “it’s harder to do what I have to do,” she said. (We spoke before her mother’s death.) “One is an obligation I fulfill out of duty. One is done with love.”

Unlike her friend Ms. A, “I don’t feel guilty that I don’t feel warmly towards my mother,” Ms. Weiss said. “I’ve made my peace.”

Let’s acknowledge that at times almost every caregiver knows exhaustion, anger and resentment.  But to me, reluctant caregivers probably deserve more credit than most. They are not getting any of the good stuff back, no warmth or laughter, little tenderness, sometimes not even gratitude.

Yet they are doing this tough work anyway, usually because no one else can or will. Maybe an early death or a divorce means that the person who would ordinarily have provided care can’t. Or maybe the reluctant caregiver is simply the one who can’t walk away.

“It’s important to acknowledge that every relationship doesn’t come from ‘The Cosby Show,’” said Barbara Moscowitz when I called to ask her about reluctance. Ms. Moscowitz, a senior geriatric social worker at Massachusetts General Hospital, has heard many such tales from caregivers in her clinical practice and support groups.

“We need to allow people to be reluctant,” she said. “It means they’re dutiful; they’re responsible. Those are admirable qualities.”

Yet, she recognizes, “they feel oppressed by the platitudes. ‘Your mother is so lucky to have you!’” Such praise just makes people like Ms. A. squirm.

Ms. Moscowitz also worries about reluctant caregivers, and urges them to find support groups where they can say the supposedly unsay-able, and to sign up early for community services — hotlines, senior centers, day programs, meals on wheels — that can help lighten the load.

“Caregiving only goes one way – it gets harder, more complex,” she said. “Support groups and community resources are like having a first aid kit. It’s going to feel like even more of a burden, and you need to be armed.”

I wonder, too, if reluctant caregivers have a romanticized view of what the task is like for everyone else. Elder care can be a wonderful experience, satisfying and meaningful, but guilt and resentment are also standard parts of the job description, at least occasionally.

For a reluctant caregiver, “the satisfaction is, you haven’t turned your back,” Ms. Moscowitz said. “You can take pride in that.”

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Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

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The New Old Age Blog: The Reluctant Caregiver

Now and then, I refer to the people that caregivers tend to as “loved ones.” And whenever I do, a woman in Southern California tells me, I set her teeth on edge.

She visits her mother-in-law, runs errands, helps with the paperwork — all tasks she has shouldered with a grim sense of duty.  She doesn’t have much affection for this increasingly frail 90something or enjoy her company; her efforts bring no emotional reward. Her husband, an only child, feels nearly as detached. His mother wasn’t abusive, a completely different scenario, but they were never very close.

Ms. A., as I’ll call her because her mother-in-law reads The Times on her computer, feels miserable about this. “She says she appreciates us, she’s counting on us. She thanks us,” Ms. A. said of her non-loved one. “It makes me feel worse, because I feel guilty.”

She has performed many services for her mother-in-law, who lives in a retirement community, “but I really didn’t want to. I know how grudging it was.”

Call her the Reluctant Caregiver. She and her husband didn’t invite his parents to follow them to the small city where they settled to take jobs. The elders did anyway, and as long as they stayed healthy and active, both couples maintained their own lives. Now that her mother-in-law is widowed and needy, Ms. A feels trapped.

Ashamed, too. She knows lots of adult children work much harder at caregiving yet see it as a privilege. For her, it is mere drudgery. “I don’t feel there’s anybody I can say that to,” she told me — except a friend in Phoenix and, anonymously, to us.

The friend, therapist Randy Weiss, has served as both a reluctant caregiver to her mother, who died very recently at 86, and a willing caregiver to her childless aunt, living in an assisted living dementia unit at 82. Spending time with each of them made Ms. Weiss conscious of the distinction.

Her visits involved many of the same activities, “but it feels very different,” she said. “I feel the appreciation from my aunt, even if she’s much less able to verbalize it.” A cherished confidante since adolescence, her aunt breaks into smiles when Ms. Weiss arrives and exclaims over every small gift, even a doughnut. She worked in the music industry for decades and, despite her memory loss, happily sings along with the jazz CDs Ms. Weiss brings.

Because she had no such connection with her mother, whom Ms. Weiss described as distant and critical, “it’s harder to do what I have to do,” she said. (We spoke before her mother’s death.) “One is an obligation I fulfill out of duty. One is done with love.”

Unlike her friend Ms. A, “I don’t feel guilty that I don’t feel warmly towards my mother,” Ms. Weiss said. “I’ve made my peace.”

Let’s acknowledge that at times almost every caregiver knows exhaustion, anger and resentment.  But to me, reluctant caregivers probably deserve more credit than most. They are not getting any of the good stuff back, no warmth or laughter, little tenderness, sometimes not even gratitude.

Yet they are doing this tough work anyway, usually because no one else can or will. Maybe an early death or a divorce means that the person who would ordinarily have provided care can’t. Or maybe the reluctant caregiver is simply the one who can’t walk away.

“It’s important to acknowledge that every relationship doesn’t come from ‘The Cosby Show,’” said Barbara Moscowitz when I called to ask her about reluctance. Ms. Moscowitz, a senior geriatric social worker at Massachusetts General Hospital, has heard many such tales from caregivers in her clinical practice and support groups.

“We need to allow people to be reluctant,” she said. “It means they’re dutiful; they’re responsible. Those are admirable qualities.”

Yet, she recognizes, “they feel oppressed by the platitudes. ‘Your mother is so lucky to have you!’” Such praise just makes people like Ms. A. squirm.

Ms. Moscowitz also worries about reluctant caregivers, and urges them to find support groups where they can say the supposedly unsay-able, and to sign up early for community services — hotlines, senior centers, day programs, meals on wheels — that can help lighten the load.

“Caregiving only goes one way – it gets harder, more complex,” she said. “Support groups and community resources are like having a first aid kit. It’s going to feel like even more of a burden, and you need to be armed.”

I wonder, too, if reluctant caregivers have a romanticized view of what the task is like for everyone else. Elder care can be a wonderful experience, satisfying and meaningful, but guilt and resentment are also standard parts of the job description, at least occasionally.

For a reluctant caregiver, “the satisfaction is, you haven’t turned your back,” Ms. Moscowitz said. “You can take pride in that.”

---

Paula Span is the author of “When the Time Comes: Families With Aging Parents Share Their Struggles and Solutions.”

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Bits Blog: PopSugar, a Web Site for Women, Gets a Makeover

PopSugar, the blog that is eye candy for celebrity- and fashion-obsessed women, is getting a makeover.

The redesigned site is still photography-heavy, with big pictures and headlines like “Kate Middleton Shows Her Baby Bump” and “Reese Witherspoon’s Leg Workout.” But now, all topics — including fashion, parenting, cooking, gossip and fitness — are combined under PopSugar instead of at separate blogs, and posts offer ways to shop for everything from shoes to nursery decorations.

The message, said Brian Sugar, PopSugar’s co-founder and chief executive, is that it has grown up and matured beyond its previous existence as a blog network.

“We were a blog network, and what we’re trying to be is a real destination that women check on a daily basis,” Mr. Sugar said.

PopSugar is Exhibit A for several of the trends that are currently reshaping digital media.

One example is online video and video advertising. PopSugar originally described itself as a digital Condé Nast — a collection of lifestyle blogs, similar to Condé Nast’s various magazine titles. But it turns out that the magazine business is not the best model to emulate anymore.

That is largely because advertisers are willing to pay more for video ads. Each month, PopSugar produces 250 videos, ranging from live red-carpet interviews to 40-minute online workouts, and people watch them 50 million times.

To make video that was good enough that people would want to watch, PopSugar spent $10 million on video studios, and focuses on live video that viewers cannot find elsewhere online. It had its highest viewership during last year’s Oscars, when 1.2 million people tuned in to its online show.

“In the future, you’ve got to believe when you turn on a TV, whether you’re on a channel or a URL, does it really matter?” Mr. Sugar said. “So as a media company, we need to be prepared for that and invest in it because that’s the future for high-paying advertiser content.”

Like other Web companies, PopSugar was forced to shift from relying solely on advertising to finding another revenue stream: e-commerce. Now it makes half its revenue from e-commerce, including fees retailers pay when a shopper clicks on an item on PopSugar and a $35 monthly subscription box it sells to 12,000 readers.

“It’s a challenge to create a business today solely based on display advertising,” Mr. Sugar said. “A person that reads articles is worth less than a person who watches video who is worth less than a person who clicks to a retailer and then actually buys things from us.” PopSugar is also starting a new daily show, PopSugar Live, that will air every afternoon.

The site wants to become a new kind of search engine. A big search box dominates its shopping site, but unlike Google or Amazon.com, some of the results PopSugar shows are handpicked by editors.

As for other companies, mobile is a challenge for PopSugar. A quarter of its readers don’t visit on desktops, but it has not yet figured out how to make as much money on mobile readers as it does on desktop ones.

“The desktop is just over,” Mr. Sugar said. “But I think we’re all struggling with it. It’s difficult to make as much money on a smaller screen.”

Still, he said the six-year-old company, which changed its name to PopSugar from Sugar Inc. as part of the redesign, is profitable.

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The Lede: North Korean Video Shows Obama in Flames

North Korea has released a new propaganda video that shows President Obama and United States troops in flames and credits Washington with leading the impoverished country to become a proud nuclear power.

Songs, operas and novels that stoke hatred against the United States and belittle South Korea are daily fare for North Koreans living under a leadership that uses propaganda as a critical tool of governing. In the last several years, the country has taken its campaign to the Internet, posting thousands of videos onto YouTube that provide outsiders with rare glimpses into the world of North Korean propaganda.

More recently, the country’s propagandists have been busy trumpeting the successful launch of a satellite in December and a Feb. 12 nuclear test, telling North Koreans that their country was becoming a high-tech nuclear power under its young leader, Kim Jong-un.

“Thanks to the Americans,” the latest work by the propagandists, is a 90-second video that was uploaded on YouTube by the North’s official Uriminzokkiri Web site on Sunday.

“It is not incorrect to say that the United States’ gangster-like policy of hostility prompted us to become a most strong military power,” says the text that scrolls across the screen. “Thus it can be said that it was ‘thanks to’ the Americans that we conducted a nuclear test.”

In the video, flames are superimposed on footage of Mr. Obama in Congress, American troops and screen shots of a South Korean television station reporting the North’s nuclear test. It ends with an animated simulation of a nuclear device exploding in an underground test site.

The scorching of the United States in “nuclear flames” or a “nuclear holocaust” is a recurring theme in North Korean statements. A ubiquitous propaganda poster in North Korean towns calls for a “score-settling war” against the Americans.

While North Korea has faced chronic food shortages and growing trade sanctions, its propaganda strives to inspire nationalistic pride among its people, portraying their country as a small nation prospering despite the constant bullying of the “imperialist” Americans.

Part of another video, posted on YouTube by the country’s Korean Central Television on Feb. 12, showed a boy wearing a red scarf singing a song against the backdrop of rockets flying into space and satellites circling the Earth.

“We will fill the space with satellites,” the boy sang. “We will grow to be conquerors of the space.”

Another video posted early this month showed a North Korean man dreaming about circling Earth on a homemade spacecraft and looking down to see the Korean Peninsula unified and Manhattan being attacked by missiles and going up in smoke.

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Wall St. Shares Inch Ahead

Shares on Wall Street inched higher in early trading on Tuesday, putting the Standard & Poor’s 500-stock index on track to extend its seven-week winning streak.

Shortly after the opening bell, the S.&P. 500 was up 0.3 percent, while the Dow Jones industrial average was up 0.1 percent. The Nasdaq composite rose 0.2 percent.

The strong start to the year has been helped by legislators in Washington, who temporarily averted a series of automatic spending cuts and tax increases, as well as by better-than-expected earnings and economic data. The Federal Reserve’s stimulus policy has also been a major factor.

But further gains for the benchmark S.&P. index have been a struggle as investors look for new catalysts to lift the index, which hovers near five-year highs.

The compromise by lawmakers on across-the-board spending cuts, known as sequestration, only postponed until March 1 a resolution to the Congressional budget fight.

The faster pace in merger-and-acquisition activity, a sign of optimism about the outlook on Wall Street, has resulted in more than $158 billion in deals announced so far in 2013.

“The firm market tone continues," said Andre Bakhos, director of market analytics at Lek Securities in New York, "fueled by a lack of negative surprises as well as an increase in M.&A. activity, adding confidence to market valuations.”

“The market has been able to shrug off minor negatives as it looks ahead to a potential bigger hurdle in the sequestration,” he said. “Until then, the situation looks stable.”

The No. 2 office supply retailer in the United States, Office Depot, surged 24 percent. The company is said to be in merger talks with a smaller rival, OfficeMax. OfficeMax shares jumped 30 percent.

The computer maker Dell reports fourth-quarter results on Tuesday, and it is expected to show earnings per share fall to 39 cents from 51 cents a year earlier. Analysts will have their first chance to question management on a buyout deal struck earlier this month by its chief executive, Michael Dell, private equity firm Silver Lake and Microsoft.

According to the Thomson Reuters data through Friday, of the 388 companies in the S.&P. 500 that have reported results, 69.8 percent have exceeded analysts’ expectations, compared with a 62 percent average since 1994 and 65 percent over the last four quarters.

Fourth-quarter earnings for S.&P. 500 companies are estimated to have risen 5.6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

European shares rose on Tuesday, lifted by gains at food group Danone and fresh signs of a German economic recovery, although broader market sentiment remained cautious ahead of Italian elections this weekend.

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National Briefing | South: Abortion Curbs Clear Senate in Arkansas

The State Senate voted 25 to 7 on Monday to ban most abortions 20 weeks into a pregnancy. The measure goes back to the House to consider an amendment that added exceptions for rape and incest. The legislation is based on the belief that fetuses can feel pain 20 weeks into a pregnancy, and is similar to bans in several other states. Opponents say it would require mothers to deliver babies with fatal conditions. Gov. Mike Beebe has said he has constitutional concerns about the proposal but has not said whether he will veto it.

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National Briefing | South: Abortion Curbs Clear Senate in Arkansas

The State Senate voted 25 to 7 on Monday to ban most abortions 20 weeks into a pregnancy. The measure goes back to the House to consider an amendment that added exceptions for rape and incest. The legislation is based on the belief that fetuses can feel pain 20 weeks into a pregnancy, and is similar to bans in several other states. Opponents say it would require mothers to deliver babies with fatal conditions. Gov. Mike Beebe has said he has constitutional concerns about the proposal but has not said whether he will veto it.

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Bits Blog: Tech Predictions for 2013: It's All About Mobile

If there is one theme that will be the topic of digital business this year, it is mobile.

ComScore, which tracks Web and mobile usage, published a report about what happened in 2012, and what to expect in 2013.

It shows that the effects of a movement toward mobile are everywhere, from shopping to media to search. According to the report, “2013 could spell a very rocky economic transition,” and businesses will have to scramble to stay ahead of consumers’ changing behavior.

Here are a few interesting tidbits from the 48-page report.

The mobile transition is happening astonishingly quickly. Last year, smartphone penetration crossed 50 percent for the first time, led by Android phones. People spend 63 percent of their time online on desktop computers and 37 percent on mobile devices, including smartphones and tablets, according to comScore.

Just as they compete on computers, Facebook and Google are dominant and at each other’s throats on phones.

Google’s map app for the iPhone, which had been the most used mobile app, lost its No. 1 spot to Facebook after Apple kicked Google’s maps off the iPhone in October. Now, Facebook reaches 76 percent of the smartphone market and accounts for 23 percent of total time spent using apps each month. The next five most used apps are Google’s, which account for 10 percent of time on apps.

As mobile continues to take share from desktop, some industries have been particularly affected, and they are seeing significant declines in desktop use of their products as a result. They are newspapers, search engines, maps, weather, comparison shopping, directories and instant messenger services.

The most visited Web sites are not so surprising: Google, Yahoo, Microsoft, Facebook and Amazon. Facebook continues to take up most of our time online.

But there were a few surprises from younger, smaller Web companies. Tumblr was No. 8 on the list of sites, ordered by time spent on them. And several Web sites were breakout hits last year, as measured by growth and visitor numbers: Spotify (music), Dropbox (online storage), Etsy (shopping), BuzzFeed (news), JustFab (shopping), SoundCloud (music) and BusinessInsider (news).

Search, one of the biggest and most reliable Web industries, is at a crossroads, comScore said. Even though the search market continues to be extraordinarily profitable, there is a desire for it to evolve and offer new services to users.

Here is some evidence: Searches on traditional search engines, dominated by Google, declined 3 percent last year, and the number of searches per searcher declined 7 percent. Yet searches on specialty sites, known as vertical search engines, like Amazon.com or Whitepages.com, climbed 8 percent.

Social search, based on what users’ friends like, has put Facebook and Google on a “collision course,” comScore said, particularly in searches for local businesses like restaurants.

In social networking, the visual Web, as comScore calls it, has transformed the landscape. Pinterest, Tumblr and Instagram, all of which emphasize images, each gained more than 10 million visitors last year.

Last year was also pivotal for online video, comScore said, as viewers increasingly seek the ability to watch video when and where they want. Watching TV shows online helped last year break viewing records, especially during the Olympics.

In the United States, 75 million people a day watch online video and stream 40 billion videos a month, and viewing is driven by YouTube.

There has also been a turning point for video ads. They cost more than typical ads, and have always lagged behind viewership. But in 2012, 23 percent of videos were accompanied by an ad, up from 14 percent the year before. More TV ad dollars are coming to online video, comScore concluded.

Though e-commerce spending grew 13 percent last year, it was a disappointing holiday season online, largely because of economic pressures. Purchasing on mobile phones is beginning to make a dent in e-commerce, comScore said, with mobile shopping accounting for 11 percent of e-commerce in the fourth quarter of 2012, up from 3 percent in the period two years earlier.

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IHT Rendezvous: As Europe Moves to Cap Bonuses, Britain Hesitates

LONDON — It is hard to imagine any European politician losing votes these days by promising to curb bankers’ pay, which may explain why members of the European Parliament are enthusiastically pushing for the toughest restrictions on bank bonuses since the 2008 financial crisis.

Representatives of the Parliament and of the 27 European Union governments were meeting on Tuesday to finalize a deal on banking law that would include pegging bankers’ bonuses at no more than their annual salaries.

The Parliament’s demands for a bonus cap reflect public outrage at continued revelations of huge payouts to bankers. But a side effect has been to hold up enactment of global banking regulations designed to strengthen the capacity of banks to withstand a future crisis.

A majority of member states have come around to supporting the bonus cap. Germany, a late convert to the idea, is prepared to compromise on the issue in order to ensure the wider banking changes are adopted by the elected European Parliament.

The debate has left the British government out on a limb, as it fights a possibly doomed rearguard action to protect the interests of the City of London, Europe’s biggest financial center.

The Conservative-led government believes the bonus cap could have the perverse effect of increasing bankers’ fixed pay, while allowing less opportunity to claw back variable bonuses in the event of poor performance.

Boris Johnson, the outspoken Conservative mayor of London, was quoted on Tuesday as saying, “we don’t need Europe butting in on bonuses,” as he attacked the European proposals as a threat to the City’s international competitiveness.

In the light of popular anti-banker sentiment, however, the British government has been relying on quiet diplomacy to argue its case with European partners in order to avoid the perception that it pushing the agenda of “fat cat” bankers.

It has been left largely to the business media to press the case against a bonus cap. Allister Heath, writing at the City A.M. Web site on Tuesday, suggested that a cap would be a “disaster for London.”

In an editorial this week, which said adoption of the bonus cap would be a defeat for common sense, the Financial Times wrote: “The parliamentarians’ pet idea is a result of populism mixed with ignorance of how banking works.”

“A cap on the ratio of variable to fixed pay will do little to lower total compensation (which is what outrages voters sick of bailing out failed banks),” according to the Financial Times. “It will just encourage higher fixed salaries to compensate for the lack of bonuses that tend to be far larger.”

Mr. Heath, in his City A.M. column, suggested that George Osborne, the British finance minister, was “seemingly too frightened by anti-City sentiment” to block the Brussels proposals.

“The cap will lead to further boosts to base pay, increasing fixed costs and risk,” Mr. Heath wrote. “When business volumes drop, the only answer will be to sack people, rather than cutting bonuses.”

“The fact is U.K. regulators have already created a bonus framework that is tough but fair,” according to Nick Goodway, writing in the London Evening Standard. “Europe is trying to bring in one that could have dire consequences for London’s status as one of the world’s top three financial centers.”

Does this all amount to special pleading on behalf of overpaid bankers? Or do the opponents of the bonus cap have a point? Is the European Parliament guilty of populism, or simply displaying good sense with its proposals to outlaw excessive bonuses?

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