Thursday, November 14, 2019

CEO Social Media Strategy & Corporate Governance

Recent news reports claim that T-Mobile CEO John Legere may be in discussions with WeWork for him to leave T-Moble to take over as CEO at WeWork.  Legere came to my attention because of social media ads featuring videos of him bedecked in T-Mobile gear and hawking its services.   You've probably seen the ads as well. By all accounts, T-Mobile has grown dramatically under his leadership.  Legere's name recognition and public visibility has also grown with the CEO becoming the ubiquitous face of the company.  In contrast, I cannot readily name or picture the CEOs of Verizon, Sprint, or AT&T.

T-Mobile may have spent millions to promote itself and also generate Legere's visibility and name recognition.  It's difficult to recall a T-Mobile advertisement without him in it. He now has about 6.5 million followers on Twitter.  In contrast, T-Mobile itself only has 1.2 million followers.  If he goes to WeWork, will his Twitter account go with him?  What does this mean for T-Mobile's brand?  Is using corporate resources to secure additional social media followers for yourself ever a breach of the duty of loyalty to the corporation?

This strikes me as a corporate governance issue that boards should be thinking about.  The celebrity CEO strategy comes with its own risks and rewards.  Recall George Zimmer, the former CEO of Mens Wearhouse.  When the Mens Wearhouse board ousted him as the CEO, the Mens Wearhouse also lost their key brand pitchman.

The possible loss of John Legere might be even bigger for T-Mobile.  Legere's Twitter account even made it into a T-Mobile 10-K.  It's referenced this way:

Investors and others should note that we announce material financial and operational information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We intend to also use the @TMobileIR Twitter account (https://twitter.com/TMobileIR) and the @JohnLegere Twitter (https://twitter.com/JohnLegere), Facebook and Periscope accounts, which Mr. Legere also uses as means for personal communications and observations, as means of disclosing information about us and our services and for complying with our disclosure obligations under Regulation FD. The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. The social media channels that we intend to use as a means of disclosing the information described above may be updated from time to time as listed on our investor relations website.

 

https://lawprofessors.typepad.com/business_law/2019/11/ceo-social-media-strategy-corporate-governance.html

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Comments

How about the fact that the controlling stockholder of WeWork is the same as the controlling stockholder of Sprint with whom Legere is negotiating a merger on behalf of T-Mobile? Let's see how my students apply DGCL 144 to that one!

Posted by: Steve Diamond | Nov 14, 2019 10:31:01 PM

Compare to the (non-CEO) actor Paul Marcarelli, who after being featured in the the "Can you hear me now?" Verizon ads appeared in ads for Sprint, even referring to his former tag line.
Walter

Posted by: Walter Effross | Nov 15, 2019 4:55:37 AM

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