Jack Dorsey is logging out as Twitter’s C.E.O.Credit…Energy and Commerce Committee, via YouTube
A founder exits
Jack Dorsey, Twitter’s C.E.O., said yesterday that he was stepping down from the social media company 15 years after founding it. His replacement is Parag Agrawal, Twitter’s 37-year-old chief technology officer. The move comes about a year and a half after the activist hedge fund Elliott Management pushed for Dorsey’s ouster, saying that he couldn’t effectively run both Twitter and Square, the payments firm he founded and where he remains C.E.O.
Dorsey stressed that the decision to leave was his alone, and has said he wants to focus on cryptocurrency and philanthropy. Where does this leave Twitter, whose large cultural influence has often overshadowed its patchy financial performance?
Dorsey’s departure raises questions about founder-led companies. Though entrepreneurs and investors have exalted the founder-C.E.O. as the best person to run a world-beating business, Twitter has always tested that theory: Under co-founders Ev Williams and Dorsey, the company has faced criticism for its financial performance, technological innovation and ability to clamp down on misinformation. (Dorsey was pushed out of Twitter in 2008 over concerns about his management, and returned in 2015.)
Dorsey himself has criticized the obsession with founder-C.E.O.s. “I believe that’s severely limiting and a single point of failure,” he said yesterday. “I believe it’s critical a company can stand on its own, free of its founder’s influence or direction.” (Might he be referring to another social media founder who is also facing calls to go?) Dorsey has leaned on Agrawal for everything from overhauling Twitter’s infrastructure to retrofitting the company for decentralization. Twitter’s new chief will hope to follow the example of Apple’s Tim Cook in showing how to build on a founder’s legacy — and not, say, Dick Costolo of … Twitter, who took over from Williams in 2010 before making way for Dorsey’s return after a period of underperformance.
Twitter’s succession plan was updated last year, with Elliott’s input. As a settlement with the activist investor, Twitter added Elliott’s Jesse Cohn and Silver Lake’s Egon Durban to a five-member board committee that reviewed the company’s corporate governance and succession plans. The committee completed its review last year, and DealBook hears that it had identified Agrawal as a potential successor, though it is unclear whether a formal plan was put in motion then.
“It’s big shoes to fill,” said Daniel Ives, an analyst at Wedbush Securities. But investors seem unsure whether Agrawal is the right choice to fill them: Twitter’s shares jumped on the news of Dorsey’s departure, but closed down about 2.7 percent after his replacement was named. Still, many analysts agreed it was time for a change, given the attention Twitter needs to keep pace with its peers.
HERE’S WHAT’S HAPPENING
Regulators order a redo of an Amazon unionization vote. A regional office of the National Labor Relations Board said that workers at an Alabama warehouse must vote again on whether to form a union, after organizers said the election wasn’t fair. Amazon, which had won decisively, could appeal to the board’s top office in Washington.
The F.T.C. seeks more information on companies’ supply chains. The agency polled Amazon, Walmart and others about their practices, to help determine whether shortages are leading to anticompetitive behavior. Meanwhile, President Biden told top retail leaders he was committed to making sure their shelves were stocked for the holidays, and smaller stores are hoarding far more inventory than usual.
Inflation in the eurozone hits a new high. New data out this morning showed inflation reaching 4.9 percent for November, exceeding analysts’ expectations. The news will add pressure on the European Central Bank to outline how it plans to combat persistently rising prices.
Elizabeth Holmes accused her ex-boyfriend and business partner of abuse. In her fourth day of testimony, the Theranos founder said that Sunny Balwani, who was the company’s president, had sexually abused her and pushed her to work punishingly long days. (A lawyer for Balwani denied the allegations.)
Goldman Sachs adds new benefits to address worker complaints. The Wall Street giant is offering paid leave for pregnancy loss, larger matching contributions to retirement funds and more. It’s the latest response by Goldman to complaints by junior employees about onerous working conditions leading to burnout.
The scramble to contain Omicron
Markets rebounded yesterday amid hope that the newest coronavirus “variant of concern” may not pose as big a risk as initially thought. But investors were spooked again today, as public health officials, pharmaceutical executives and analysts warned that Omicron shouldn’t be written off just yet.
U.S. futures and European and Asian markets are down this morning, as investors react to headlines:
Stéphane Bancel, the C.E.O. of Moderna, told The Financial Times that he expected a “material drop” in current vaccines’ effectiveness against the variant, and Regeneron said that tests showed its antibody drug was less effective against the new strain. (But Albert Bourla, Pfizer’s C.E.O., said his company’s new Covid pill should work against Omicron.)
Jay Powell, the Fed chair, will tell lawmakers today that the new variant could prolong a period of high inflation.
Retailers in Britain told the government that Omicron could stifle Christmas sales and called for greater clarity on renewed pandemic restrictions.
Governments are responding in different ways, and finger-pointing, lack of coordination, sparse information and fear are once again influencing policy, The Times’s Jason Horowitz writes. President Biden said the new variant was a “cause for concern, not a cause for panic,” and he is relying on a travel ban to buy time to devise a response. The C.D.C. urged all American adults to get booster shots. New York City urged people to wear masks indoors, regardless of their vaccination status.
“Ever since Eve was tempting Adam with the apple, women have been blamed for the bad behavior of men.”
—Bobbi Sternheim, a lawyer for Ghislaine Maxwell, in the opening arguments of her trial on sex trafficking and other charges related to her ties with Jeffrey Epstein. Maxwell was “filling an empty chair” left by the death of Epstein in 2019, the lawyer told the jury, describing her as a scapegoat for his actions.
“The defendant and Epstein made young girls believe that their dreams could come true. They made them feel special, but that was a cover.”
—Lara Pomerantz, a federal prosecutor, arguing to the jury that Maxwell helped Epstein recruit, groom and abuse young girls over a decade. “Behind closed doors,” Pomerantz said, “the defendant and Epstein were committing heinous crimes.”
A financial crisis case gets a court date, finally
More than a decade later, financiers are still fighting over who should cover billions in losses from the 2008 financial crisis. Last week, a judge presiding over a long-running dispute between the insurer Ambac and the former mortgage broker Countrywide, which was bought by Bank of America in 2008, finally set a court date for the trial: September 2022.
Ambac v. Countrywide is one of the last significant court battles still lingering from the housing bust. A study in late 2013 found that 927 cases had been filed that were related to the financial crisis. In 2018, analysts at KBW calculated that banks had paid out about $250 billion in crisis-related fines and settlements. Of those, about three dozen were between lenders and insurers. Earlier this year, Credit Suisse agreed to pay MBIA $600 million to settle a case the insurer filed in 2009.
Ambac is seeking $2 billion in damages. The case relates to thousands of negative amortization, or pay option, home loans that Countrywide made, and Ambac insured, going back as far as 2004. By 2010, Ambac was paying out about $120 million a month on claims tied to mortgages that borrowers were no longer paying. A year later, Ambac sued Countrywide, accusing the lender of misrepresenting the loans as safer than they actually were. Bank of America countered, in a reply in 2015, that the Ambac case was a “hindsight effort to shift blame for its own recklessness.”
The Ambac case has lingered because the insurer claimed that Countrywide had committed fraud, as well as breach of contract. The fraud claim has since been dismissed. And an initial ruling that Ambac had missed its window to sue was overturned. The final delay came last year when the bank and the insurance firm sparred over whether the case needed to be tried in person. A judge said yes, siding with Ambac, paving the way for the 2022 court date.
The prolonged timeline of financial crisis cases has some lawyers worried that pandemic-related insurance cases could be litigated into the 2030s. Hundreds of cases have been brought by companies whose insurers denied business interruption claims tied to the coronavirus. But David Zaring, a professor of legal studies and ethics at the Wharton School, said that those fears don’t seem to be playing out — at least for now. Earlier this year, a judge dismissed one of the most prominent cases, a $700 million suit from Ralph Lauren against its insurer. “The cases are getting resolved,” Zaring said.
THE SPEED READ
Edgewell, the parent of Schick, will buy the women’s razor maker Billie, months after federal antitrust regulators blocked Procter & Gamble from buying the smaller brand. (WSJ)
The activist investor Bluebell Capital Partners urged the mining giant Glencore to spin off its coal assets to lift its stock price. (FT)
The Brazilian fintech Nubank reportedly may cut its I.P.O. valuation. (Bloomberg)
Fenway Sports, the owner of the Boston Red Sox and other teams, agreed to buy the N.H.L.’s Pittsburgh Penguins. (CNBC)
Britain’s antitrust regulator formally ordered Meta, Facebook’s parent, to sell the online image platform Giphy, while the country’s privacy watchdog fined the facial recognition company Clearview AI for breaching data protection laws. (CNBC, NYT)
Concerns about corruption in Congo’s state-owned mining company are threatening to slow a global push toward electric vehicles. (NYT)
Disney+ recently premiered in Hong Kong — minus an episode of “The Simpsons” that satirized Chinese efforts to suppress public memories of the Tiananmen Square massacre. (NYT)
Here’s how the new infrastructure law raises taxes on crypto investors. (CNBC)
Best of the rest
Data from shipping vessels in Chinese waters has largely disappeared, posing a new headache for global supply chains. (CNN Business)
New documents show the CNN anchor Chris Cuomo used his contacts to keep tabs on media investigations into his brother, the former New York governor Andrew Cuomo. (NYT)
Movie theaters must “urgently” rethink their business to survive the pandemic, a new study finds. (NYT)
In his first in-depth interview since a February car crash, Tiger Woods discussed his potential return to golf and other plans. (Golf Digest)
AMC and Sony offered 86,000 nonfungible tokens to people who booked advance tickets for “Spider-Man: No Way Home,” while Budweiser unveiled a line of retro-themed NFTs. (CNBC, Insider)
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