Governance in Brief
March 14, 2019 | Editor: Martin Wennerström
As Warren pushes for big tech breakup, Facebook scores own goal
Facebook has inadvertently stoked the flames of Senator Elizabeth Warren’s campaign to regulate the social media company – by deleting a post calling for such regulation. Warren had revealed on March 8 a far-reaching plan to break up tech giants like Facebook, Google, and Amazon. In presenting the plan, Warren argues that these companies have abused their dominant market positions. According to the Senator, a common abusive strategy is the acquisition of competitors, thereby shutting out market pressure. Warren goes on to highlight the tech giants’ participation in their own proprietary marketplaces, creating an arguable conflict of interest. In both cases, Warren references an apparent reluctance on the part of regulators to constrain the companies. Facebook ascribes its deletion of Warren’s post to a misuse of Facebook’s own logo. The social media platform prohibits such usage as a countermeasure against deceptive advertising and social engineering. Nevertheless, Warren has seized the opportunity to paint the deletion as an example of Facebook’s undue influence over political discourse. Warren recently announced her candidacy for the 2020 US presidential election. She has a track record of several ambitious legislative initiatives, and so the practicability of this latest proposal remains to be seen.
Vale CEO and other executives temporarily step down
Brazilian mining company Vale SA announced on March 2 that its CEO Fabio Schvartsman and three other executives were temporarily removed from office following the January 25 dam collapse, which killed more than 180 people and left a remaining 120 missing. The executives requested to be removed after prosecutors and the federal police recommended their ouster. Schvartsman, who has held the CEO role since 2017, is replaced by Eduardo Bartolomeo, nominated as interim CEO by the board, a senior executive with more than 10 years of service with the company. It has also been reported that the Brazilian government, which wields power through a golden share, is considering additional management changes. Vale’s share price remains 12% below the price reported just prior to the deadly disaster.
Activist seeks Barclays board seat
British investment bank Barclays Plc has announced that three of its 15 directors will not stand for re-election at the company’s May 2 AGM. The changes come after activist investor Edward Bramson, holding approximately 5% of capital, submitted his candidacy for shareholder approval. The company had previously denied Bramson a board seat as recently as September 2018. Simultaneously, sitting directors Reuben Jeffery and Dambisa Moyo will depart after having reached the nine-year term limit for independent board service, while Mike Turner will depart as a result of a reduction of the board’s size. As previously announced, Barclays’ Chairman John McFarlane will retire after this year’s AGM, being replaced by newly appointed director Nigel Higgins.
Wells Fargo to receive USD 240 million from insurers
US banking giant Wells Fargo & Co. has disclosed that insurers of current CEO Tim Sloan, former CEO John Stumpf and 18 other executives and directors will pay around USD 240 million to the company, following the settlement of a shareholder derivative lawsuit over fake accounts. The agreement, which is pending court approval, settles shareholders’ allegations that directors and officers of the company breached their fiduciary duty by failing to prevent and handle issues related to the establishment of fake accounts without clients’ approval. In September 2016, Wells Fargo reached a USD 190 million settlement with the US government over similar allegations. The company also announced that its legal expenses may be USD 2.7 billion higher than it had anticipated at FYE 2018.