Good morning.
If you are wondering why the scam at Theranos went on for a decade without any of the departed employees who were aware of the fraud blowing the whistle, there is an easy answer: NDAs. These agreements have become de-rigueur in Silicon Valley, and ever more expansive. They make it hard for ex-employees to finger miscreants engaging in fraud, sexual misconduct, etc.
Legal experts say many judges would likely find these broad agreements unenforceable. But the cost of a court fight is enough to cow most ex-employees into silence. “The agreements have the effect of terrorizing people,” says Widener University law professor Alan Garfield, a longtime critic of NDAs. “Maybe you do have a good public policy claim, but who wants to risk having high-powered lawyers threatening to sue you?”
You can read Jeff John Roberts analysis of the spread of these agreements here. There’s little likelihood companies will reform this runaway practice on their own. Instead, this is one where political leaders should get involved. Numerous laws protect government whistleblowers; perhaps private sector whistleblowers need the same.
More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
Bayer Revolt
Bayer's shareholders revolted at Friday night's AGM, with a majority refusing to endorse the board's actions in the last year—notably the Monsanto purchase that, thanks to lawsuits from cancer sufferers, has knocked two-fifths off Bayer's share price. This was effectively a no-confidence vote, albeit one that is not legally binding. CEO Werner Baumann is clinging on with the support of Bayer's supervisory board, and also of some shareholders who voted against him as a rebuke but want management to stay on for now, to avoid risking greater chaos. Reuters
Boeing Safety
The FAA has received four whistleblower hotline submissions regarding Boeing's grounded 737 Max. Boeing employees told the regulator their concerns about "a previously unreported issue involving damage to the wiring of the [plane's] angle of attack sensor by a foreign object," and about the switches that disengage the plane's anti-stall system, which may have been responsible for the crashes of two 737 Max passenger jets. Meanwhile, the WSJ also reports Boeing did not tell carriers before the crashes that it had disabled a safety feature warning about sensor malfunctions. CNN
Avengers Triumph
Avengers: Endgame took $1.2 billion on its opening weekend. That's four times Disney's own cautious forecast, and by far the biggest opening weekend in cinematic history (the previous record-holder was Avengers: Infinity War one year ago, with a relatively modest $640.5 million.) Fortune
Musk Agreement
Elon Musk and the SEC have reached a deal—which still requires judicial approval—that lets the Tesla CEO off the hook over his tweeting. The deal would mean Musk won't be held in contempt over violation of an earlier settlement, in exchange for which he will agree to have Tesla's legal counsel vet his public statements about issues such as the company's finances. Reuters
Around the Water Cooler
Deutsche Bank
Deutsche Bank chairman Paul Achleitner does not personally see a need for a fundamental strategic overhaul, he told the Financial Times. Many investors and regulators think otherwise, but Achleitner can point to recent profitability to back his case, and that of CEO Christian Sewing. Achleitner also dismissed suggestions that Deutsche Bank started its abortive merger talks with Commerzbank after deciding it could not fix its problems on its own. Financial Times
DBS Profits
The Southeast Asian banking giant DBS has reported record quarterly profits of $1.21 billion, representing an increase of 9% where analyst consensus predicted a fall. The rise was due to increased profitability of DBS's lending activities, which offset poorer performance in wealth management and investment banking fees. CNBC
Spanish Election
Spain's center-left Socialists have won the national election quite firmly—they got almost 30% of the vote—but not firmly enough to win a majority of parliamentary seats. That means the party, PSOE, will need to find a coalition partner. The center-right Ciudadanos party has ruled itself out, which leaves the far-left Podemos populists and a bunch of smaller regional parties, such as Basque and Catalan nationalists. Deutsche Welle
Trade Talking
One reason the U.S.-China trade deal is taking so long to thrash out is that it's very difficult to agree on the right phrasing that will work in both English and Mandarin. There was apparently a two-hour discussion about a single word (no resolution was found.) Different cultures also have very different ideas about linguistic precision and "creative ambiguity." South China Morning Post
This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.
