Transcript
oh, Yeah. oh, Live your ears react from a woke. Pete, ma bog buried underneath the liberal New Hampshire. I Are their liberal New Hampshire rights. It's yeah, another not anymore, Wednesday edition of business pants. Joined as always by analysts whole Matt mascardi. Yeah. Today's cat dander. in the in the cat dander or on the surface of like somewhere buried in the dance, called January 24th, 2024 the top nine, stories from our ESG news headline randomizer And a bowling deep dive part for 4000. You know what? You used to have a lot more like devices. I've lost my all my good humor, you've lost your time or devices. Yes, correct. You have lost your touch. Our show today is being sponsored by free flow analytics. The only ESG data platform to measure a real board influence and diversity power Gap. Thank you for telling. No one else is willing to solve. No one else is trying. That's because you keep swearing, I don't actually know. You're the square. I don't swear. And it's and and you know, like so rarely swear. It's a big conservative asset managers. You know they're afraid of swears they don't swear ever. There's no one at these companies who swears. That's why you venture capitalists? Probably. They don't swear. No, they just hug. Let's do some nine. Yeah, come on stories. Got some good ones. I gotta start at the top at Starbucks. I can't believe there's another anecdote related to Howard Schultz about corporate governance that I didn't know. I'm ashamed. I didn't know this. Maybe maybe you knew this map, but this is just, this just takes the cake. I had to start with the story. Like, that's the headline out of the financial times was how unions are fighting a boardroom battle at Starbucks. We've actually covered this several times, the Strategic organizing Center is using their proxy access to get three. Directors up for election. This year, Mariachi veste Joshua Gautam and Wilma Liebman. So they're, they're trying a different. It's a different approach to fighting the good old labor fight at Starbucks. Yeah. Does the Strategic organizing Center who works with unions realize that the people who run the companies matter? I think that clearly clearly they do. Yeah, clearly they do. Yeah. So here's the story and this is from the financial times. There's a famous story about Starbucks that is often cited during discussions of governance, At board meetings, there is an empty chair to represent the interests of the coffee Giants employees. The idea, the idea was proposed by its former CEO and founder Howard Schultz to show to show that the companies Baristas have a symbolic seat at the table. That is there a better story in the world of ESG ever than that? That's the best story I've ever heard. What incredible and gesture. It's the best ESG empty gesture ever. Wow, I did not know that this was an empty chair. This is Cornell according to the financial times. I don't even know what could you say to this incredible. Do you think they asked the empty chair what it thinks about how many different conversations did Howard in the board? Have with that chair? Is what I wanted to know? Was it like that moment when Clint Eastwood yes like talk to an empty chair, like the 2012 Republican convention, he took a empty chair on stage. That was supposed to represent Obama and he yelled at the chair for like four hours. So that's really what it was. Was it that it was like, no idea be like f you And yeah, another reason to support this strategic organizing Center and yeah, another reason to care who the directors are that run your company. That's all I'm gonna say like but you know, if Starbucks comes out and says, which they have, that there are against basically everybody put up by the Strategic recording and organizing Center and is that does that mean that they prefer the empty employee chair to an actual in the chair? Because that's what they're saying to investor. That we just talked to Matt. Nobody cares about the people who run the company. Nobody cares about directors. That's correct. No one cares about evidently strategic organizing Center which represents like hundreds of thousands of actual workers. It's funny how little people care until like the company implodes or there's a strike and then all the sudden it's where was the governance who was that many of you after? The fact, it's always after. But now we can actually say actually in their defense, if there's a massive strike, can't Howard Schultz, say you were represented by the other chair, let you down, didn't really, I have to ask and maybe you can ask your followers on LinkedIn. Would investors vote out the empty chair? I think Empty Chairs, get voted out on a point three percent right up. Okay, next story outrageous. CEO pay targeted a new bill for Bernie Sanders of course and the Democrats is a union back proposal. That would also require a treasury guidelines to prevent companies from avoiding the tax by using contract contractors rather than employees. So, what they want to do is this measure would raise the tax rate on companies whose CEO to worker salary ratio was above 50 to 1, going all the way up, to 500 times to one and those companies, when her attacks penalty of 5% of points, it also sounds great is speaks right into our wheelhouse map. The big problem with this of course, is that the bill Would need 60 votes to clear the Senate? And we know that that's impossible. It's impossible. It's already dead. It's dead, you know, maybe some of the fun ideas, some of the foe, Republican populace will get behind this who knows? It would be lovely if Bernie Sanders actually presented this bill to an empty chair and asked him to vote. Well, I mean isn't that kind of what the Senate has become? the next story here, from ESG, randomizer the financial reporting Council, the FRC has removed all Yes, they have removed all references to ESG in a new version of the UK corporate governance code of all things. Wait, this isn't very fast. The acronym because it's called the Corpus Christi that's according to this reporting. The the direct final draft document before. This final ducking came out contained, 14 actual references to the term. Yes. And those of Alvin stripped, they've also decided to drop. Many plan changes, including those relating to the role of audit committees on ESG, modifications to existing Provisions around diversity. Overboarding Etc. So it looks like another version of people kind of buckling to anti ESG pressure You people know that esg's just a data set. That's all. I don't know what they know anymore. I don't know what this is. The financial reporting Council. I well look In fairness to the financial reporting Council. They never knew about what ESG was, right. Like ESG was like two dozen cow boys and girls collecting data and thinking it's interesting and that was kind of it like that so that they didn't know what it meant is really not surprising that they feel the need to scrub. It is really sort of asinine like get real. Speaking of anti-esg anti-wolf stories. This is a, I don't like, there's a conspiracy going around about the Oscar nominations. So, the 96 Academy Awards nominations came out yesterday. And what are they do? Matt, they, they nominated the actor who played Ken in the Barbie movie, but they did not. They did not nominate Barbie herself, nor did they nominate the feminist director Greta Gerwig. Who directed? Barbie yet. They did they nominated the picture itself Barbie for best picture. So you see what's happening? Anti-esg has infiltrated the Oscars suddenly somehow? Well, I mean I did there were a lot of memes should Fairly, even Ryan, Gosling himself, the actor, who plays Ken is pissed off. He should be pissed off because it makes him look weird. Have you seen Barbara? I have to say, I have not seen it but I support it. I support it. It's feminist ideas. I, I tried to see it when we're in Connecticut, but you know, it just didn't happen. Well, I haven't seen it. I so I don't know, maybe the maybe it's possible that the directing and the and Margot Robbie were terrible and sure and it was really Ryan Gosling's and the overall. Overall, she's good somehow was not responsible for Her Direction. Her directions is an impossibility. Yeah. Next year, I really hope the Academy Awards. Just nominates an empty chair to win for that. I can't get over the empty chair. I want that story. Moving on, JP Morgan's Jamie. Dimon talks d, e. I that's the headline, which could be scary. But yeah, I don't like this is a good news, is a good story. He says, quote, I'm gonna start by telling you that I'm a full throated red blooded patriotic unwoke capitalist CEO. He said this, okay? And at an event hosted by the female quotient at the world economic Forum. I don't know what that is. You know what the female quotient is? No, I don't. Is that the denominator of female? I don't know, but he says he says, I'm not woke anything, but then he went on to say, he says, still the bank, which is recording record profits, as we speak and is approaching a market value. Of 500 billion dollars is not retreating from its diversity efforts, despite the ridiculous ESG Dei groups coming at us. So he's, they're not retreating. He also called a story back in the day. He said, that JP Morgan's HR department used to brag years ago about the firm's diversity progress, but they did this by fusing all the underrepresented groups under one lump category. He's, he responded by saying don't lump it together. Come back and show me the numbers. You know, buy VPS, executive directors, managing directors, hiring retention like that. And they did good. And he's and he went on to say that. That the data showed that for women. Excellent. Hispanic. Excellent. Lgbtq excellent, Asian-American. Excellent, black average. He goes on to say, we're still the bank had been had been recruiting, historically, black colleges and universities for years. And he said that. That's not JP Morgan, we don't want to be average, so blah, blah, blah, blah. The point is that unlike his cohort over Black Rock. And I guess the the financial reporting Council in the UK, he is leaving in ESG and d e. I he's supporting it. But here's what I don't like. Every one of these morons has to now preface it with a minority statement, saying I'm a red. I'm still a man. I'm still ahead of sexual but do they grab their Christ? Well, they do sleep with women but It's okay. Yeah no. I know it's just so you know I sleep in a bit of money not and then I hire black. Not a virgin I'm a heterosexual why we have to qualify. It just say support it. We hire the best support people and we try to get the widest and we have records record profits. Yeah who's complaining at this point if we hired all black people from now on if we win what do you give a fuck? Yeah. Like I just don't understand why we have to open with the red blooded Patriots. This is he wave a flag when he said it too like it's just so stupid. Moving on oh was a good one. Matt Dwayne Johnson, you know, Dwayne Johnson is Yeah, The Rock The Rock. Of course, I know the rock is gonna be a new director and our database, he joined the board of TKO. so, first of all, First of all, rock, I have to tell you you're going to have 0% influence the wrong controlled company and no one can that might be true, but he may not care. Matt, because he also entered into a Services agreement with the company, which he will receive 30 million dollars in stock. Oh, that's a pretty good directing gig, huh? I but I like that. He's there. I like you. I, I have a sense that he will probably ask questions, that will, like be decent questions that will play off is I'm dumb? Someone explain this to me. Like, I can imagine like, the whole Aura of it and they'll just all they were gonna want to do is like fist, bump him, and have him out. There is this the some version of when Papa John's added Shack? Oh dare you. Well know, but no. Isn't this like distraction from the fact that like Vince McMahon is listed as a Factor you add the rock. Like now we can squash the wrist because we have a big man who comes. I will say, two things. First of all, this is a board where it is appropriate to have an empty chair because wrestlers love to throw chairs at each other. Do they know? But yes, the second what I'm gonna disagree, this is not a shack situation. Dwayne Johnson is an employee of the company. So what I'm hoping is that this is the start of a stakeholder Revolution where we start to add employees to the boards of American company. That's what I'm not sure this. No, I don't have a million dollar stock Based Services agreement does not qualify as an employee. So what reggae was it seems is that TKO Dwayne Johnson will fill the empty chair that represents employees. Whereas at Starbucks, it'll stay empty. Right? And let's shareholders support the Slate of directors being put up by the Strategic organization, organizing, not support them just that have the employee chair there and perpetuity they don't really good tenure. They got some good. Yeah, they've seen a lot. You're gonna talk about airline's next but brief story here, Southwest Airlines flight attendance of voted to approve, a strike or authorization over 90% Of the members voted in favor. Two more stories about this. This is a story about a direct Tesla. Yeah, there are those. It says, here's the story Kimball Musk. Director at Tesla should be a swear. Now said, he quote felt the voice of God and quote after a near-death experience and later taking Ayahuasca the psychedelic drug. Yeah. Here's a question. Can we get it? Would it be considered overboarding if you took the empty chair and replace Kimball musk with it, is the empty chair then overboard because it's on more than one board gonna say it's to Tesla investors, you know how about another director who's taking iOS good and saying that, he felt the voice of God and you're still like, you don't care, you don't know. I like that. There was stories that broke like, just a few weeks ago, when the Wall Street Journal did that expose on musk himself and his brother. Where they went to Kimball the board members went to Canada. Asked if Elon was okay, meanwhile, Kimball's like what smoking a reefer and taking Ayahuasca and being like yeah, dude he's great. Yeah, I was gonna say that like what that's the drug I know where? Not only do you get to talk to God? But you're also throwing up and having like diarrhea at the same time like everything comes out at once. So this is the Tesla boy. I don't like that. I don't like that. I don't. And finally, another great story today, is the been a good Wednesday of random. Yes she's stories. Here's the headline out of Fortune Magazine, I don't know if it deserves a drum roll like Trump over 2000. Shell companies have directors aged 123 years or older according to research by Moody's Analytics they found 21 million red flags associated. With shell companies, that could be used to enable Financial crimes, from ancient directors to dubious. Addresses one listed director, Matt was 942 years old. I mean, look, there's also that's to them for making that Milestone. It's really hard to be a director for that one. There's also thousands of examples of directors below the age of five. That's right. Five. Oh, that's not good. 22,000 entities with a registered address, Egypt's pyramids. Meanwhile, one individual held over 5,000 rolls at 2800. Different entities. A they call is a term. I haven't heard of. Is that the empty chair? This is a term. I haven't heard of according to Moody's Analytics, they said that a typical directorship is just one of seven key behaviors, highlighted in the research. But but again, I'm gonna repeat sarcastically that we were just told by an investor last week that nobody cares about the directors of the people. So so really you should throw away this Moody's Analytics, throw away this these evidence of financial crime, right? What does it matter? First of all, Like I know we use free flow analytics data, I'm here but Moody's Analytics is on a tear. They've done some really good governance stuff. They actually did an anti woke proposal paper. They are they seem to be on top of the governance game as in Someone at Moody's has said, hey, you know what matters, who runs companies. Let's, let's look at them and they're doing a good job looking at it. Second of all this, if there's anything that should show that you should, at least do like the bare minimum of due diligence. One thing you might notice is that someone was listed as 942 years old, don't matter for it. Like, that's seems like something you would notice. All I got, Matt, what do you got today? That was fabulous with. That was, I wish I had more of that. I'm not gonna be able to find one. I'm not gonna be able to find an empty chair at a board meeting. It's gonna take me a long time, like I'm really pissed that we did not predict empty chairman. Howard Schultz. Yes, she gives the keeps giving. Yeah. So I just have an update on everybody's favorite worst company ever, which is that right? Right. Talk about, I'm glad you talked about Boeing because I tagged several stories this morning map of like, you know, I don't I'm gonna paraphrase like things falling off of like no, like yes, nose thing. Like fire shooting out, I don't know. There's just like a weird stuff going on. So there was fire shooting out that apparently had more to do with like birds or something. It didn't have to do with ancient failure. Wasn't David Calhoun or what Dave? Kelly? Did not jump into the engine because it was better than running Boeing right now here for fun. Headlines, for everybody's favorite company. First up is United CEO. Seems to subtly threaten a move away from Boeing saying, the max 9, grounding is the straw that broke the camel's back. Thank you. This is someone's getting angry at something. Yeah, somebody cares about who's running Boeing and the somebody didn't even get named in the headlines, it just as United CEO. And that is Scott and related. Know, we have a young listener, who pointed out to me yesterday that he appreciates the our reporting on this one, issue? That that News, organizations, do not name the executive or directors. So we do have one listener appreciates this sentiment. I'm glad and hopefully they are alive. And in fact, now, he's not as a kid, he's a, he's a teenager. Knighted CEOs. Name is Scott Kirby. And what he said was, quote, the max 9 grounding is probably the straw that broke the camel's back for us. We're gonna build an alternative plan that just doesn't have the max 10 in it, and this is the United place to order for Max 10 planes, expecting them soon. But he now believes the best case for deliveries are five years behind schedule. Five years behind schedule. That's the best case. What is the we talk about talking about the duopoly that exists in this industry? What is the alternative plan is? It's just another bone is and Airbus is the reason why Boeing fast tracked the max 8 planes that killed hundreds of people because they were competing, but it's all this problem in turnley, they promoted someone who was already on the board in the first place to run the company. The obvious choice would have been the somebody who got the position that the man, the man providing oversight on the CEO, who screwed everything up was promoted to be the next CEO. Yeah, I mean well it was like a self-promotion because like when you're the guy who's the boss of the boss and you say well it's just easier if I'm the boss and the boss. That's that's the way that worked out. Here's another headline also emitting Scott Kirby's name, United CEO is so concerned about Boeing's latest disaster, he's been venting to colleagues and lobbying Pete. Buttigieg, oh, sources. Say, so apparently, the transportation department doesn't actually have legal authority to dictate changes at Boeing's leadership but no one cares about the leadership because those are just people, we don't really we're not thinking about them, but they can, and they may take enforcement action or other steps against the company. But United CEO, Scott Kirby is not just saying he's pissed about, not getting Plains. He's actually calling Pete buttigieg and saying this isn't, okay, what can we remind the audience that did current CEO? Dave Cullen became a director at Boeing in 2009. And then that's correct. And in 2018, he became the lead independent director and then an independent in 2020. When was that 2020? When Dennis muilenburg? I believe his name was the CEO stepped down. Dave Calhoun essentially promoted himself as one of the leaders of the board to again to internally fix this problem and yet like years later, we had the same problems going on. I'm just gonna well I'm gonna remind people why it's important to focus on the people who run your company. Well, these are there, but these are new problems and they include a story that you pulled. That is knows. Wheel falls off Boeing 757 while waiting. I don't even know, I don't even want to know what? Oh, no, a nose wheel. I know what that means. I know. Yeah, I know is he'll under the okay? That's not. So, so Delta Airlines Boeing 757 was lining up on the tarmac to take off and the wheel fell off and the wheel Fell off and rolled down a hill. Okay, this shoe. That's nice. I've never seen a hill at an airport. I like that. I yeah, it's yeah. I mean it was cute and like, rolled off and went down some Hill, and everyone was like, we don't have a wheel anymore. What happened to that at some point? Don't you say? I'm not sure we should get in these things anymore. Well, what point is that? The, the answer, because they are finding every day they have grounded. Now, they're saying the door plugs need to be looked at immediately like as soon as possible and it's the second airplane, they're going back through older models and finding that they've taken shortcuts on older models. And there are reports that upon delivery. There are some people who are finding like the air lines are finding things like, wrenches underneath the floorboards and things that don't work and they have to call up bowing and be like, hey, why is there a wrench in inside the plane is in that supposed to have not been in the plane. So, Boeing not doing great and using it now. Since this is an all Union show, the Boeing in Seattle area unions, have had to delay contract negotiations. Well Because of this effort. In fact, they could be a good time to delay him, right? I mean, right, well, you think so but part of the reason why is because the International Association of machinists and Aerospace workers which is the union, they've been named as a party in the National Transportation. Safety board investigation into the door plug. So they're trying to blame the workers. The workers, there are no cost cutting, it's not the cost cutting. And speaking of the cost cutting, here's what I do for you today because I know you love human beings so much. I do, I like them. I don't, I went through the 2011 Boeing board that green led the max 8 planes and I took my own version of a skills made 2011. Again, would put the current CEO, Dave, Calhoun, he had been already been on that board for three years. Yes, he was already on the board and he actually prior to that knew everybody on the point because he was at GE for a long time. Like there was a frosty was at GE Jim McNerney. I think, was that GE half? The board had been at GE at the same time so they all right. Now I'm gonna have how much that I'll say what? There's no probably better way to provide credible, oversight than to have like a bunch of your buddies kind of show up with some sushi and right. Yeah, you know like when like I went to go watch the first time, the Patriots were like in the playoffs and like a decade with all my friends. Those were the people that I think should provide me Sound business advice. Yeah. Actually like to hear that. Yeah, we ate two pastrami, Reuben sandwiches each and and it was a debaucherous night. Well, so, I did my own skills Matrix because I actually took like what are their degrees? What is their history? Because when they, when you look at the Boeing skills Matrix today, it claims that everybody almost everyone on the board has engineering expertise. Yeah, bump. It is one of the here's, this is one of the things that we have complained about for many years is that, oh, first of all, the disclosure of who these directors really are, and their skill sets is inadequate and in the Pro, right? That I would say, that's an understatement. So companies can report all kinds of different things and they can create their own skills metrics table, and they could really, unfortunately say anything they want. They could basically tell investors that if you worked at a company that even has an engineering department, maybe your skilled an engineering and you can just tell investors that Well, here's the thing that I noticed that on this board, like currently on the board is, which one is it? Currently on the board, is somebody who I'm just going to say I can't I didn't tag the person but there's somebody who's on the Chevron board or was on the Chevron board and they in the or Exxon board in the Exxon skills Matrix they are not listed as having engineering expertise oh Boeing skills match major. It's they are listed as having engineering expertise so these skills may just seize are effectively whatever you decide is your skill is your skill. So I looked at where they actually work which is I mean look not to, I don't want to you drive a whole but that's basically fraud is it not fraud to misrepresent the skillsets and the experience of your actual board members? A little bit of frauds. Just let's just say it's, it's like, it's like when you're accounting for something you're just making a judgment that maybe goes in this box and not that box. And depending on where you go, you could put it at any bucks you want. It's just organizational differences. But in this case I did our own version of a skills Matrix and I did it for the 2011 Boeing board and the 2023 Boeing board because I wanted to see what the difference is were. And what I found out was, Will shock approximately 0 people in 2011? Only 8% of the board members were engineers at one point in their careers and degrees in engineering. That's one person effectively. Like, that's one person was one of 12. The bowling. Yeah. Um, Meanwhile 42% had mba's and 33% had undergrad degrees in finance or something Finance related, like accounting or or economics. So the vast majority of the board in 2011 was focused on counting dollars, right? In fact, 42%, then went on to work in finance our accounting and a third of the board was actually hired strictly because of their government contacts. They were designed to Lobby the Pentagon on the FAA. They were ex-government. So we have a board with one engineer on it. Green lighting the max 8 plane. And everybody else on the board. For the most part is in finance or government. Like they're just lobbying the Pentagon and they're counting the dollars. Since then, in 2023, they've added actual Engineers 31% of the current board has an engineering background. That's pretty good. Right in response to the the crash. No doubt. Well took several 100. People dying for them to say, maybe an engineer or is worthwhile. Oh, but still, they actually also added their Finance background. 54% of the board, has a Finance in accounting background now, not not the 42% that had it before so they've added the engineers, we've got more Engineers but we've drowned them out with a few more people in finance. They got rid of all the government lobbying because it's not helping it really didn't do them any favors and they added a bit of finance and sales but here's the kicker because I looked at the thing that matters most that comes from free flow analytics which is influence. It doesn't matter if you have 31% of the board with an engineering background, if no one listens to the engineers, they have no influence and no one listens to the engineer. 63% of board influence is with accounting 22% of board influences engineering. 55% of the board influence, got their undergrad degrees in finance and more than a third of the board influence actually is marketing. So this is what I'm saying. The people you may not care about but that they know something seems like it's relevant to the to the conversation when special companies like Boeing. When the wheel of the nose, under the nose of the plane falls off. Yeah. Like something you want to know. I I think that no am I wrong. And I think the man you were referring to was Laurence Kellner. Who is an interesting case because he sits on both the X on a Boeing board. Now he was the CEO of Continental Airlines, but he became CEO like because he was the CFO first. So we actually, he has no skill set and Engineering. His skillset is in finance, but Boeing is fudging that because he was a CEO of a major airline That's how they're doing. That they're fudge is you engineering. Leader leadership started off as a CFO, you know, you know what doesn't help, yo door plugs having engineering leadership. Forget the door plugs. I want that nose wheel. That's all we got that. Hazelnut roles. I am your anus hole at. We are free float. Come back tomorrow. We have a proxy countdown show. We're covering on the big vote for Apple. That's the that's it. That's the most. That's the only company in the world. Really? That's the big one. Apple. I mean, it's the company covering it, we're gonna give you vote recommendations. If you own a share of Apple, you want to vote your proxy tomorrow, show is for you go somewhere. Otherwise we're we'll be back on Friday where everyone wrap up with everybody else in free float until then goodbye.