Welcome to the Week in Review

This is our weekly news roundup. Find out what went down in the world of activist investing, corporate leadership and beyond.

What Went Down at Davos 2019?

Davos, the World Economic Forum’s annual unforgettable senior year Swiss Alps ski trip for the world’s political and financial leaders, is wrapping up today. Some highlights from the week:
 
Who didn’t go: Donald Trump, who is doing this, and the rest of what would have been his delegation, Theresa May, who’s coming up with a plan B for Brexit and Emmanuel Macron, who is trying to respond to France’s “Yellow Vests” protests. Justin Trudeau skipped because it was revealed his trip last year cost Canadian taxpayers $700,000.

Who did go: Apple CEO Tim Cook, Microsoft CEO Satya Nadella, and Brazil’s newly elected far-right president Jair Bolsonaro were all there and had dinner together. The internet took note.
 
What else happened? Sheryl Sandberg said that Mark Zuckerberg should remain Facebook's chair and CEO, despite the company’s seemingly endless backslide into “That Wasn’t a Great Way to Handle That Problem” Canyon. Fellow employees apparently agree. Regardless, a proposal to break up his roles as Chair and CEO will be voted on at Facebook’s upcoming shareholder’s meeting.
 
Anything else? Michael Dell laughed during a panel conversation when asked about New York Congresswoman’s Alexandria Ocasio Cortez’s proposal that the world’s billionaires pay 70% tax rates to grow the economy. Dell, who is worth $30 billion, responded “name a country where that’s worked—ever,” to which fellow panelist Erik Brynjalfsson, director of MIT’s Initiative on the Digital Economy, quipped  “the United States,” pointing out that the top marginal tax rate in the US was over 90 percent during World War II and 70% in the ‘60s, into the ‘80s. “Those were actually pretty good years for growth,” Brynjalfsson said.

Quote of the Week:

“Now true, the people might have to pay a little bit of interest, but the idea that it’s paycheck or zero is not a really valid idea.”
 

Commerce Secretary Wilbur Ross on not understanding why Federal Employees might not have the ability to take out a loan or need to turn to Food Banks during the Government Shutdown, which reopened for three weeks today.

More People Want CEOs To Fix Society’s Problems

Hot on the heels of Larry Fink’s call to CEOs to link purpose and profit, Edelman has released its annual “Trust Barometer" report.
 
Its findings: 76% of people think CEOs and corporate executives should “take the lead on change instead of waiting for government to impose it,” using their company policies to address issues of pay inequality, discrimination and the environment.
 
The report, per Axios, recommends that CEOs can show their commitment to addressing social and environmental issues by helping to solve problems in the communities they operate out of, by empowering employees to have more of a voice in how the companies they work for operate, and by giving to philanthropic causes that also address these issues.
 
More shareholders and employees are aligning in the tech world: In November, Google employees staged a public walk-out over its handling of sexual harassment cases, pushing the company to end forced arbitration for such cases. It did not respond to walk-out organizers' demands to put an employee representative on its board. Contracted workers, which now account for half of Google’s workforce, are now publicly calling for better benefits and similar board representation. Google is also being sued by shareholders over its sexual harassment policies.
 
In November, Amazon told employees who voiced public outcry about its facial recognition software and its potential to infringe on civil liberties that it would proceed with selling it to law enforcement. A proposal to more thoroughly review the software’s capabilities will now be voted on at its next shareholder meeting.

Podcast of the Week! 

Two Activist Hedge Funds Zero-In on eBay

Fresh from telling Pernod Ricard to stop being so French, hedge fund Elliott Management is back to give eBay some business advice, revealing it has more than a 4% stake in the company. 
 
Wanted: A totally different business model: Activist investors Starboard have announced stake in the company too and a similar vision for the e-commerce site as Elliott. Though they’re working separately, Elliott wants eBay to sell or spin off their StubHub ticketing and classified-ads businesses, saying they could be worth more on their own and eBay should focus on its core marketplace.
 
 In recent years, eBay has tried to break out of its image as an online auction house and purveyor of half-eaten Brachs to compete with Amazon and its third-party business sales. It now touts that 80% of the items for sale on its site are new. Investors and consumers have mostly been kind of “oh” about that, though, and shares have languished. eBay’s stock is down 17% this year.
 
But Also, PayPal: In 2015, Carl Icahn led a similar campaign for eBay to spin off PayPal, which was successful and doubled PayPal’s shares. But, as some have pointed out, PayPal was and is a way bigger company than StubHub. Also, that was four years ago, which is about 150 years in Internet Time. Back in 2015, Amazon was just a little hundred-billion dollar one-stop shop. To compete with the trillion-dollar e-commerce monolith now might be tougher than Elliott and Starboard realize.

Headline of the Week:

Numbers break!

190K

The amount of dollars raised for Fyre Festival caterer MaryAnne Rolle on GoFundMe. Rolle sunk her savings of $50,000 into the doomed festival, which the organizers never paid back.

36

The number of people it now takes to match the wealth of the poorest 3.8 billion people on the planet. That's down from 43 last year. 

0

The number of Sweetheart "conversation" hearts on shelves this Valentine's Day. The company that makes them went out of business last year. (They'll return under a different producer in 2020.)

45.6

The percentage of S&P 500 companies with CEOs who also serve as chairperson. That's down from 48.7% the year before and is the lowest percentage in 10 years.

Companies’ Compostable Items Might Not Be Fixing Much

Companies like Nestle, Pepsi and UniLever have replaced ocean and landfill-clogging plastic with more eco-friendly compostable products in recent years that break down over time.
 
That’s great, except: Compostable products only decompose if they’re actually composted.
 
Per the Wall Street Journal:
 
“[Compostable products] need high heat and moisture, conditions found mainly in special industrial facilities. Inadequate labeling and a lack of infrastructure mean many of these products end up in regular trash bins, industry executives say. Compostable products are then burned or sent to landfills, where—deprived of oxygen and microorganisms—they don’t degrade.”
 
One problem: Many people are confused about how composting works or where they would even do it. New York City recently halted a household composting pilot program because only 11% of organic garbage was actually put in the brown composting bins given out by the city.
 
Meanwhile: Bloomberg reported this week that some companies are looking for ways to profit from global warming.
 
7,000 companies worldwide (including 1,800 in the U.S.) responded to a survey by UK corporate social responsibility non-profit  CDP, asking companies how they plan on preparing for climate change.  
 
Though many companies are taking legitimate steps to consider their impact on the environment, the survey offered some disturbing forward thinking.
 
Per Earther:
 
"Pharmaceutical giant Merck is planning on an expanding market for cures to “tropical and weather-related diseases including waterborne illness.” Google sees rising weather damages as an “opportunity driver could have a positive impact on our brands” like Google Earth. Home Depot is looking forward to selling more air conditioners thanks to more intense heat waves."

You can read additional highlights from the report on Axios.

 

Want companies to listen to you? You can now submit proposals to the companies you own through Say. Your proposals will be featured on our app allowing verified shareholders to weigh in on the suggestions of fellow everyday investors.