FANCY EXPERT: The Nell Minow Podcast

Recorded from a dark Cellar on a fancy expert, Thursday. It's fancy exit for Thursday, business pants. It is November the 9th of 2023. Today, we're dropping our full hour-long interview with the exceptional, the Godmother of governance, the queen of the proxy Castle, Neil minnow will cover in the interview, the anti-woke, the history of ISS and the corporate library, how some things have changed, how some things haven't, it's all here, but no more for me. Here's now. We had the great now minnow on the show today. Know, I found so many ways. That way way, hold on, I'm getting there. I have so many different ways to describe her. Allow me to hit my list. Here we go in and you guys can choose. Which one do you prefer? And yes, Matt, you do have a vote here in early game, I like Queen of good. The queen of good of good corporate governance from Business Week, although I always called you the queen of corporate governance period, I didn't know. It was good. Corporate governance, right? I didn't know. There's a distinction. Yeah, there's just we could just describe you buy your lifetime achievement awards from icgn corporate secretary. I know you just entered some kind of Hall of Fame with with one of our frequent guests, Doug Shaw, right? You're in some Hall of Fame now? Yes, we are. Yeah, that's also the corporate secretaries. That one is especially dear to my heart because it's one thing. If the people who are on your side, give you Awards, but when the people that you're fighting with give you Awards, that's kind of sweet. No, that's not. Yeah. You're not just in the Echo chamber. You're in the, the other chamber, whatever that's called the movie mom, of course, which is how most people around, at least in Portland, the corporate library, they like to refer you just the movie, mom, your co-founder of I the corporate library in GMI ratings. Anything else, I'm missing, I'm not Okay, you are you are co-founder of ISS with Bob monks? And then you're currently Vice chair at Value Edge advisors. But is there a better way to describe you? How do you, how do you announce yourself? Usually? Um, usually I just say I'm an advocate for shareholders, okay? Queen of shareholders advocacy. OC, you added the queen. Well, is much more succinct. So again, thanks for joining us. So I I sent to you yesterday, that we're going to kind of break this up into three parts. We're gonna have a big General discussion about just sort of ESG so that could go anywhere. But I know Matt and I are kind of keen to go back a little bit too. He, you know, he just had your textbook in his hand. So, I think Matt's feeling a little bit historical, but then we'll just do like we do with a lot of our guests will play a couple of silly game. I have an honor of succession, which I think is kind of the, the Pinnacle of ESG in pop culture programming. I have a few succession like movies TV shows, I'd like to get your thoughts on and then we have a at the very end, we have a game. The same game we played with John McCormack, just want to get your your reaction to some Quite I called the the quick and dirty nerdy agree, or disagree, corporate governance game just to get your action about just some of the lingering things in corporate governance that we've got that Matt. And I talked about, Repeatedly pithy names for everything. The quick and nerdy, dirty dirty. We're trying to make ESG in corporate governance seem interesting. Okay. This is our goal here at this company. It's a high bar. Yeah. So let's start and Matt and and now both of you, I mean this is not like a straw, doesn't have to be a structured thing. So feel free to to take this into conversation mode but let's start. I want to start with the corporate library. Because you know that's where I was born in the corporate governance world and founded around 2000. I mean, can we at least go back and do you have any like, distinct, I'm really calling it. Like the birthplace of corporate governance to kind of birthplace of ESG. Do you have any distinct memories? You at least like to share from that time? Well, I have to go back a little Go ahead. Um, you know, I'm at Bob Longs when we were both working in the government. He was at a much higher level, he was working directly with the, then Vice President George HW Bush. I was working at the office management and budget and we hit it off. We got a long, very well. And I was pregnant with my second child, and not really wanting to stay in my current job. I wanted to work part-time and he said, well, I'm starting this new company, institutional, shareholder services and we're going to guide large institutional investors on corporate governance and of that sentence. I was familiar with the words guide and the but I none of it not. I didn't know anybody named the other words and certainly none of the things that I have done in the world of corporate governance ever came up when I was in law school, that nothing nothing at all. Like what I learned in law school so he explained it to me. And so that I could work part-time and said um you know and I said to myself, well this is great. It's never going anywhere. The entrenched interests and the corporations will never let this move forward and we can have a lot of fun and we can be on the side of the good guys, and write some interesting, op-eds and file, some Amigos briefs, and I'll work part-time forever because it's never gonna get off the ground. Well, Bob monks was and is an incredible Visionary, he was 100% right? We hit the ground just as the world of corporate governance was beginning. And the reason for that was that there was like a crash of two different forces on the same railroad track, you know, rushing at each other. One of them was the rise of the large Institutional, Investor, the mutual funds, the Pension funds, the index funds, Which made all of a sudden, a group of shareholders who are big enough, and smart enough, and stuck and enough to care about the issues that were put to them on proxy cards and the other was because of the creation of Securities that could make any size of transaction. Possible, including a lot of hostile transactions, you'll have this huge number of abuses of shareholders, don't matter that much. If all your voting on is reelect, the board of directors approve, the Auditors. But if all of a sudden you've got all these very thorny issues about Golden parachutes and green mail, Uh you've got a bunch of investors who, as I said are big and stuck and smart and they're fiduciaries, they have to do a good job. All of a sudden they were saying, like where is the independent guidance that we can get on these issues. So, Bob was just an incredible Visionary, right from the beginning. And that was a creation of ISS. And when we sold ISS, we and we sold the, the other company. We started and investment fund. The first really, like the best. It was lens. Yeah, I really liked the best was our in-house research and we said, let's keep that part and we'll give it because we are our reputations at that time were very, you know, that we were very conflict oriented. We said, we'll give it the most boring name. We can think of the most boring institutional name we can pop up with and Rick Marshall, came up with the name of the corporate library. And so, that's how I got called the corporate library and I said, okay, you know something I've always wanted to do is look at CEO employment contracts, which are public but Nobody ever looks at them, so let's do two things. Well, right to all the companies and we'll say could you send us your CEO employment contract and will grade them on how quickly they respond. And we'll evaluate the contracts and we did. And and I was thinking, I made a terrible mistake because they were all essentially drafted by the same two lawyers. They all were identical until we got one. That was so horrible. I said we have a winner. This is the worst that was Of course I do. And it was it was a global Crossing Global crossing, right? Yeah. And that one had Not only was the make and model of the Mercedes. He was being given as I fell down, but And Not only was he had to, he had to move from the east coast to the West Coast as one often. Does you have to move when you have a new job? Well, not going to pay all those expenses. It's fine. But they were also going to fly his family out to visit in once a month. First class, including his mother. This is all in the contract first class. Yeah. But the part that which, I know the mother thing would would be fun. But the part that really got me was that they were giving him 2 million options at 10 dollars, a share below Market. So which was yeah, okay, yeah, options that, you know, options are supposed to align your interests with the shareholders. Yeah. Above Market was, was the point, but there's no, there's nothing illegal about that, right? I mean, it's it's technically. Okay, okay, yeah, sure. Of course it was terrible. So that's between him and the IRS, it's not legal. So that became later on the 11th. Biggest bankruptcy and History of the United States, so that made us look, smart, it was all the trips from his mom. I mean, As I said at the time, you know, I'm a mom and we moms love it. When our boys want to spend time with us, yeah, but we're out of them when they externalized, those costs under the show. That's, that's what my mom says. Yeah, I say that. So anyway, that's how the corporate library got started and then later we merged with a couple of or bought a couple of other companies and took the name. So before the corporate library started to build a database and start actual ratings. What was the original intention? Just a place to do research kind of a You wanted to kind of write articles and write letters that kind of a thing, or did you at that point early on? Did you think you were gonna want to rate companies and like, what, what was the intentional? My dream ever, since I had been at ISS was to rate Boards of directors, like bonds, you know, there was a Idea that you just automatically vote for the for the board. But of course the board is picked by and payed by, and informed, by the CEO, and some of them are better than others. When I first got into this business, it's hard to believe but OJ Simpson was on five boards. Yeah, definitely is one Comcast right? A lot of committee. Yeah, he was on the audit Committee of one of them. Right? Even know, anything more about auditing, you know? Then a toddler. So that would be the kind of thing that I would explain to the shareholders. I say this should be a risk factor for you. If somebody puts OJ Simpson on the audit committee that isn't because he wants the audacity to do a good job. So and there were a number of people who were on 10 boards. And that was not good either. So I said, you know, let's and, you know, they have to tell you whether they attend at least 75% of the meetings. and, If they don't, you know, maybe that's something we should respond to in some way. So I said, so the corporate library only began with this idea that we were going to rate for directors, in terms of the risk that they provide for investor, well we couldn't get any investors interested in it but A, we did get. I thought this was the greatest Market test in the world, the director and officer liability insurers interested, right? And we were very good at predicting, bad. We were not good at all, predicting good, but. But if you can tell people what are the riskier Investments? If you can explain that to them that, in addition to the traditional indicators that they look at that they've got, you know, the OJ Simpson problem, or something like that, you know, that's a value. And my dream was that the DNA liability insurance would walk into the boardroom and say, well, we're raising your premiums because Nell says, you're a terrible board and I love that and that kind of, that kind of happens. So, yes, so that was the corporate library and that that was we did that for quite a while. I don't like I the How do you feel that? Basically the global Crossing I just read like a proxy in which the CEO gave himself zero dollars but 450 million dollars worth of options and his annual salary. Looks like it's you know, 30,000 bucks a year or something he gets 45000 dollars in private security a year and then 450 million in options. Basically Global Crossing is the template for the modern contract. Well, and it's amazing to me that these, the people that we that we pay the most in the whole world don't want to pay for anything them. Else. I mean seriously the man has got enough money to pay for his own whatever his Mercedes his at one company. We had two two housekeepers and the man's home. This is. Yeah. In the it was in this contract, it's in the contract, the contract. Wow. What it was it was hidden what they'd said was that there would be two employees of the company who would be assigned to his home for Hygiene purposes. Oh, yeah. And that was just made and what? I don't even understand the rationale there. Why not just increase the salary or increase the bonus and not tell us what he's up to in his home. I don't I don't understand that at all, you know, the world are also in a way the cheapest people in the world because at some point I mean this is just sort of Behavioral economics at some point. When you can buy everything in the world, the most valuable thing to you is something you. You can't buy or something, you don't have to buy. And so they they're all kinds of weird things, I think probably the worst. And this is actually the thing that got me interested in employment contracts is that when we were at Lens, we would invest in companies, that, that was an investment fund. And we were investing companies that as my parents used to say, about me, we're not living up to their potential and we would go in and try to make governance changes so that they would do better, and we did very well on that and sold it in 2000. But anyway, one of the companies we invested in this is the only time that's ever happened to me. I got a call from a portfolio manager on Wall Street. Who was also invested in the company. And he said, have you seen this guy's see? It is pay and I said, yeah, I read the proxy, he went without a bonus because because the company didn't meet its goals, I thought that was actually pretty good. he said, oh, You know. The month after the proxy was printed, they adopted a new contract with him. Did you see that? And I said no. And he said I'm faxing it to you. This was a while ago, so he faxed it to me and standing in the room with the facts machine, I read it as it came off and then I immediately faxed it to the New York Times which printed it and he was fired. Here's what was in his contract. As I said, they hadn't met their goals, the stock was tanking and he was awarded, first of all, his homes and the Texas on his two homes, we're going to be paid for by the company because he needed them to do. His job is supposed to the rest of us who just have our homes as a hobby or something. I don't. Okay. All so he had a five-year Pair play, so he was fired but he did get the full five years, the present value, but the thing that really blew my mind was that he got a boatload of stock options at a strike price to be named later. We're gonna wait see how low the stock was going to go. Before they decided. Who was this? This was CEO. Oh my gosh. I'm gonna have to think about it for a minute. I'll have to tell you later. I can't remember the company right now. Wow. But here's the thing, you, I mean, like Global Crossing effectively becomes a template for future employment contracts that we're seeing still today, like, with their own sanity. It's just kind of backwards, insanity. And the dream of raiding directors, right? Which we are currently trying to do ourselves now like years and years later, we're still getting the same reactions that you got. Investors aren't interested and the directors of that board, okay? The contract, and then fire him has anything changed. I mean, like, I know things are changing in terms of like things are getting disclosed more, but it does seem like there's a certain entrenchment in the expectations of directors and, and CEOs. And that hasn't really, you know, I have a very dickensian best of times. Worst of times feeling about it, because as I think, Back on. Bob, and In the early days of ISS because it took us three years. Before we got any client other than Bob's college, friend who took video And that's some college friends, Matt, apparently that's what we're missing. Yeah. And so we had a lot of time just, you know, to talk about things and say what, how will we know if we've succeeded? Sure. And what ways was that corporate governance would be taught in Business Schools and law schools? That's certainly has happened but overall I would say that boards are vastly better. Oh yeah, no, there's no doubt. Yeah, no, no, we don't have the OJ Simpsons, we don't have the museum director, who was on the risk committee at, was it Lehman Brothers. We don't have, you know. So so all of that vastly better. There was a brief period where directors were getting retirement plans. You know, you don't need a retirement plan from part time job. Thank goodness for the wonderful shareholder activist Bill. Steiner he knocked all of those out and in the Facebook, a couple years. So and and investors are vastly more, engaged more interested, more aware of these issues and they ever were, so all of that, Very good. I just read something about how investors are really pushing back on Golden parachutes. Good for them. Thanks to sarbanes, actually, and Dad Frank. Yes, we have better disclosure. We also have more shareholder power shareholders, have say on pay. It may not be a lot, but it's a little And and there are many more shareholder proposals. So I think in some ways, things are a lot better certainly with regard to CEO pay. I mean, I laugh now and I think that the first CEO pay plan I ever complained about was 11 million dollars which is chump change today. Yeah. Yeah. I wanted to talk about CEO pay specifically because it's it does seem to be the one area that the popular culture has caught up to. Like it's you see it in the vernacular of the like, it's the one element of corporate governance of ESG that people, they really just gets their attention, right? And and in fact, in the in the United Auto Workers strike against the 4 GM install, they use CEO pay ratio as a way to kind of get at the emotions of regular people. So, yeah, sag and writer skills. Right. Exactly. Right. And Netflix was an easy target there because they have two CEOs making hundreds of millions of dollars. But no two, Cocos ending and founder chair. Yeah, right. Three CEOs. So my question is then why why do those totals they keep, just astronomically rising at this very steady pace. And even though there's a mechanism in the annual meeting for shareholders to show up, and I know that they're not, they're not binding, unfortunately, but why can't we get any control over this? It's like, but because you're right because when you look at boards and Matt, now I always and I always joke about like the boards in the United Kingdom because they're so boring because they really do corporate governance well and from an analyst perspective, I got nothing to complain about which sucks for me but why pay why can't we do anything with pay? What's the deal there? I don't understand it. Yeah. The problem. But I goes back to what I already said, who who picks the board of directors. The CEO, who pays the board of directors, who picks the competition committees, who picks the compensation committees. I remember I was talking to a CEO some years ago and I asked him about his board and basically what he said was, he had nine white men and a black professor woman, professor of diversity studies. And I said, I hope she's out on the compensation committee and he said, yeah, of course, she is. You know, why wouldn't she be? And so, Uh you know that's the problem. What I have said over and over is that nobody should be allowed to serve on a board unless you can get at least 50% of the shareholder vote. And if we can't vote off, Directors, who overpay the CEO, you know, you have somebody like, Ken langone, who served on the compensation Committees of three of the most outrageous pay plans in history. If we can't vote those people off the island, then then we'll never see a change. But right now, it's do you have any ends? Yeah. Do you have any insight as to why we can't seem to vote off those people. So we so we just covered yesterday, a company called bio technique where 65%. I'm sure there's voted against say on pay which is incredible. But one thing we always look at we cover this almost weekly is that none of these shareholders targeted. The compensation committee that has been coming up with these terrible pay plans year after year. In fact, Matt, we have potential clients pushing back on us saying, you know, you don't want you to rate directors, we think you're being a little too aggressive. We don't want to offend directors. So having Insight is Why, what's going on? Why is everyone a snowflake? I just don't. Yeah, we just don't understand. I mean. And why wouldn't? Okay, let me just, I said a lot of things. Why wouldn't investors at least Target the compensation committee if they're so angry at on at the paper, really great. You and I have said over and over to institutional shareholders. If you're voting against the play, pay plan, vote against the comp committee, otherwise, it's not meaningful at all. Also said, when I have spoken to Securities analysts, why isn't this a bigger Factor since it's the single best predictor? Of bad results. Why don't you look at copay because the lessons, right? Yeah, that's the moment. The less sensitive is to Performance, duh. The worst performance we get and that's been proven over and over and over and over. So I don't I don't really know. I will say this as much as I love the institutional shareholder Community, generally speaking, unless you're Ackman or I can or somebody like that, you don't go into that line of work if you like to be out front and you like to Rattle the cages and you like to Make changes, but even when given data. So like what we what we try are trying to do now, right? Like we have performance attribution for individual directors. So we can tell you which directors historically have paid CEOs more, for instance, on every board they've ever been on over the course of their careers and when presented the data in advance, right? Like as in saying, well, they are not paying the CEO a lot now. But you just added a director who has a history of paying a lot. Yeah, like, I mean, like, there's so much that's obvious when you just now you have a data set in front of you and we are told routinely that like the data, we don't have enough data. You know, like I said, we get told now ISS and glass Lewis or black boxes and, you know, but when presented the date they say, wow, that feels really aggressive. And it's like, I don't like, it's feels as if institutional investors have decided that we all live in, you know, Prairie Home Companion, where everybody's above average and, you know, All the women are strong and and it's like, 96% is the average vote for a director. Oh, I can't, I can't gel. It's like, it's easier to be reactive than proactive. I, I know that but when given the data even then we're seems like investors have there's like a to your point about behavioral economics just like a social game happening that happens. Off balance sheet. listen I this is this is a related, not direct answer, but I was once arguing with a woman who her entire family were blue collar workers, they were by, no means, you know, they were barely in the middle class and she was voting for people who wanted to cut taxes for the wealthy. And I asked her about that and I said, you know, these proposals to tax billionaires are not going to affect you. In any way, they will benefit you because you, perhaps pay fewer taxes, but you know, the taxes will go for communities and, and all kinds of good things infection. When one of her daughter's in law was a teacher, I said this, this is this is what taxes do. And she said, but someday my son could be a billionaire, right? I mean yeah I can't work today. It's subverting the American dream in some way. Yeah. And so I think they're sort of that cowboy ethos. But believe me, what you're asking is been a big frustration in my life since I've been in this field because I am somebody who is an advocate, I do speak out. I do want to Rattle cages, I do want to change things and it's very, very hard to get, you know, to to move the sleeping elephant. Um, I want to jump to different topic and and the reason why I started with the corporate library because I kind of want to, you know, to now that we're 20 years later, at least from the corporate library, but even further from, of course, when you met Bob, The anti-esg anti-walk movement, we don't really know what to call it over here. This is a topic that we didn't think we would be covering when we started our company. But now of course it is a, you know, a weekly occurrence and I know you testified and for our Congress recently matte and I watched together and loved your testimony but Quick thoughts on the anti ESG Movement. Like is it's not, could have you predicted it like I yeah, go ahead. It calls itself. An anti ESG movement. But I'm calling it that, I don't know. Yeah, that's fine. It calls itself, any and anti ESG movement in the same way the Anti Reproductive Rights people, call themselves pro-life. It's a, it's a fake term and it has nothing to do with anything. And even the people who call themselves anti-esg are pretty much okay with G and, and some of us. Well, that's the joke. Yeah, that's our joke is that they are ESG analysts, they're just, yes. Find different ways to all of the, and, of course that's true. And, you know, who is one of the biggest in terms of rhetoric? One of the biggest anti-esg, figures is presidential candidate Vivek ramaswamy but his financial disclosure show that his personal Investments are very ESG. He started in anti-esg fund, which is underperforming and he started in SG proxy advisory service, Which is far, as I can tell, only has one client. And as far as I, I asked him for a copy of one of their analysis, but they didn't send it to me. And I'm under, I've been told they're announces. Just vote with management. That's that's what They're promoting. So, you know, it's, it's just completely phony. It is hugely funded by the fuel, by the fossil fuel companies. And it is absolutely baloney and I have testified for congress many many times. I'm used to being asked very tough questions, I enjoy that because to be honest with you, I do the stuff 24/7. They do it one week out of the year, it shows. And can I just say it? Definitely shows, you know, obviously, and those hearings. Yeah. Yeah. They didn't ask me hard questions, they just pretended, I wasn't there. And every time the four men who were testifying on behalf of the Republicans said things that were absolutely not true. I would say, well actually, for example, they would say they love this term and they would say, glass Lewis and I assess are a duopoly and no one can compete. And I said, well as a matter of fact, presidential candidate, vague Rebel Swami as a side. Hustle set up this competitor. So obviously that's not true. I said, I've done it before. I could set up one in two weeks, right? And the easier. Now that it was when we did it because believe it or not, we had to get everything on paper. They didn't have everything online. We had to get the proxy statements and male our analysis out on paper. We had a Derek's machine going all the time. So it's a lot easier to do it now and all the industries have been established. She's a lot easier. I said, that's ridiculous to say that duopoly. Or, you know, so, and and they would talk about the incredible burdensome of Cheryl proposals. And I would say, give me an example of a shareholder proposal that you think is not legitimate to be voted on by the shareholders, they don't have one. You threw out a stat during the Congressional hearing about like, you know, you're really talking about like 2% of all proposals, like 98% are just directors and you're talking about it for like the top 50 companies, biggest companies in the world. Yeah, right. Like like these are the people who are the most well-funded. So when you're talking about like the difficulty and responding to a shareholder proposal, you're talking about who Amazon's difficulty or what, what are you talking about? Exactly. That's what they, that's what their lawyers are there for. And when they say, you know, there's I said there, it's self-reported, they say it costs us this amount of money to respond to these things. That's not an audited figure. I think they just made it up so the and the number they made up I actually frankly was something like Hundred and fifty thousand dollars or 600,000, it was like less than a million dollars per proposal to companies that literally are making billions and billions a second, right? Like, what are we talking? Why wouldn't you want to know what your shareholders think? It's non-binding worst thing that happened is 100% of your shareholders, vote in favour of the proposal and then you go tell them, go back home. We'll see you next year, you know. I mean they do. Yeah, absolutely it's absolutely ridiculous. And with particularly calling to me is that the Republican party which is supposed to stand for free markets and economic Russian ality is promoting this sort of Nanny State idea that the smartest Financial. Experts and the world. Are so ignorant and lazy that they cannot evaluate. What was this is, what makes our head spin constantly? Yeah, I guess it's, the true irony to me, is that one of the pioneers of corporate governance came from the Reagan Administration. And I enough said there, that's Bob monks and now we're flash forward to the future and the party of Reagan is now trying to. Yeah. Trying to bring in corporations. It's a it's a funny irony. Yeah. But like that. Both working, I'm a Democrat but we Had working in the rain and rest. Right. I mean credit, where credit is due here because like Vivek was on our show before we announced his run and and one of the things when you analyze strive, I know. Like this is something that like sustainalytics our morning star did but they'd actually didn't look at the director votes. They they don't actually vote entirely with management. They vote out in a two to one ratio women on boards. They actually tend to find powerful women and the data is showing us that they target powerful women in vote, no against them. Now, they're so pitifully small as did not make a difference, I'm sorry. Yeah. But but, and then you have and you wrote about this, the Microsoft proposal, you know, then the national league, like it does seem that there is a war. Like, like there's a very clever sort of, underhanded, war against any brown people, people who identify as women, it is a social construct to mask. What you showed as like the fossil fuel Industries funding of this. And I'm wondering if it's just a distraction, it's it might be the most brilliant distraction tactic ever. Well, I think one of the things that drives me bananas, and that I've spent like the last I when I think back in the end of my life and the pandemic, this is what I'm gonna think about. Because this is what I spent my time during pandemic is that the fossil fuel companies and other corporations have created, Dozens possibly hundreds of these fake groups with names, like the Franklin Institute or the national Center on legal policy and they're all funded by the same people. They are run by the same people and And they, they filed comments with the government, on rulemaking that appear to be coming from objective private, think tanks that are absolutely Bonkers. And with regard to the children proposal that you're talking about at Microsoft, I was happy that Doug independently came to the same conclusion and he wrote about it on his blog too. But yeah, it begins it, you know, the if you just look at the proposal itself, it looks kind of legitimate. It says you know, we want to have some some information about gender disparity and hey you go. Okay. And then I said, I better look at that one and so I look at it and it goes into this thing. About how It's unfair for women, be who had to decide to have children? Yeah, because they make less money. Well, you know what? That's a big societal problem but it's not correct to say that there's an incentive to get an abortion and you know, can I pair something? You said no on LinkedIn because to me it's even worse than that because it's the language I use. Is the most odious language I've seen today and this is from the national legal in policy Center. And the quote is from, this is from The Proposal women who choose not to abort their pre-born children. I mean and you also called out using the term transition and quotes. I mean, this is really the most Insidious thing I've seen. It's just pure hateful theater, it's crazy. Itself. Who is behind this? Yeah. What is in eight of for the national Center on legal policy or whatever it is you know, really It. Well, first of all I can tell you. It's probably as I said in what I wrote, I'm predicting it will not get enough of a vote for resubmission. Okay, holders are smart and they do things and but yeah it's it is we've been tracking these and they're all like what? Matt. They're like below 1%. A lot of them, right? Oh yeah. The average of these is abysmal. Yeah, yeah. Can I can I interject one other thing? I did some research on this group this morning and they have a, they have a section. This is a national legal, impulse Center, they have a section and this is the parrot. Your point map about targeting women and targeting people of color. They have a section on their website about their highlights about the targets of who their attacking. And they've they've listed 20 people since 1993 roughly. 11 of them are people of color eight or women and since 2019 5 out of the last six targets have been women of color. They are They are systematically targeting, but look a specific no but I'm saying like that's the game, right? This is like it's not an anti-esg thing. They're they're going after a segment of our population. It's right there and they're highlights. And and and yet they call themselves The National Center at legal policy. Yeah. National white National. I suppose. Yeah. No, seriously, like, it's right there in the data, they present. Yeah. Yeah. No. They're yeah. And and I, I in an attachment, an appendix to my testimony, I had a letter that I wrote to my old office at the office management budget, which many people don't know this outside of Washington, but they are kind of the quality control on a conveyor belt of federal regulations, everything has to go through them before goes out and that's a good thing because It makes sure that there's consistency between different Regulatory Agencies is a good, it's a good deal. But anyway I said I said to them, here are the names of some of these fake groups that you guys are giving credibility to and you're meeting with and you need to know who's behind it. And what I recommend is that when Federal agency is proposed rules because they have to propose a rule and get comments before they can make the rule final. That they should say. You don't have to tell us who is paying you to file this comment but if you don't, we're going to keep that in mind. Yeah. Yeah, well complier explained kind of a version of that and the funders if you look at Source watch you can see who's behind the national Center. There are two groups, they're unlike in the same office, the national Center on legal policy and the national policy Center for what they say basically the same and that's another thing. If I, if I were spending a hundred thousand dollars to fight Cheryl proposals, I would have taken those two to the SEC and said, this is the same group under two different names. You know. Knock it out. Yeah. Let's let's play, Let's play the, the short game. What? Why don't we start with the? We'll stay in the yes, she just stay with go to the quick and dirty nerdy agree or disagree, corporate governance game catchy, names all the time. This is what we do. I was a riding major Overland. I I had to, you know, I had to come up with things. It sounds like what? You get it IHOP, you know? Yeah, it does, it does. It's the number of maybe with indigestion. I don't know. All right. So I'm just yeah, here we go, pretty simple, pretty nerdy. First one, disparate voting rights. You know, the the non one share, one vote. Should they just be completely banned agree or disagree? Wow. Agree or disagree. Is that there has never been a world class newspaper that didn't have dual class, because because of family. Because, because their family control. Why is that? Don't know, I just know that every newspaper that switched from dual-class to single class tanked immediately afterward. Is that right? I think that we have a societal interest and an independent media and so I would I would Reserve that and possibly as a transition but I'm with these Council of investors, that said that companies that do go public will do a class should have to Sunset. Okay. Yeah, you know, it's funny you mentioned me media because it really is media and now a big Tech, which really, I guess is a modern day version of media. They're the ones who are most known for basically having public companies right there, they're controlled company. Check is a platform. They're not the media, right? Like the Germans is. Yeah, is that true man? I mean, do you know how many Stories, we cover where they say that people now go to tiktok for, you know, for the news. And so, I don't know how true that is anymore. Yeah, I mean, but like a 14 year old snorting, you know, like a detergent pod is not the same as someone on the ground in future surgeon, right? I'm just, I'm just saying, like content creators, I think there is a differentiation between a content creator who can be a 12 year old like doing tiktok dances and a journalist and Tech, leverages like content creators and says, they're, they're providing information. When the reality is they're not. Well, okay, that's a lot to say about that, but go on to your next question. Well, this is something we talk about all the time. This is Matt, this is your favorite topic. Control companies, you know, companies like meta platforms. As an example, we call them here, fake public companies. What we're wondering is it, should they even be allowed anymore to list on these exchanges? Like why? I know there's a controlled company exemption but you know why? And the question is here, should they just be considered a private? Should we move on from controlled companies? um, you know the record of those controlled companies over decades is not good. It's, you know, again, that should be a transitional thing. It's exactly the same as the Dual class issue. So buyer, beware I think in terms of investors there. Yeah I mean the problem is I guess now I mean this is this was not the case when I started you know in corporate governance 10-15 years ago. But but now what we have is we have these big data companies who are almost to a rule controlled companies and they're the ones sort of guiding our culture into these, you know, dystopic, Futures. So it's like now the issue becomes a little bit different, right? Because now we want we need oversight over Mark, Zuckerberg in a way that, like, back in the day, talking about needing oversight at a chicken processing. Company was a little bit different, right? So the issue has changed, I think which is why we hire you can't avoid investing. I mean like your average retail investor buys it ETF now they buy. Index, right? So they get put on the index and you're forced to have them and your vote doesn't matter because so, the the Gap actually, to me is the buyer can't beware because the buyer is, it either not Savvy enough to, like, set up their own full portfolio and manage it X controlled companies. Or they are Savvy and they can do that. But there are money and like they're gambling on those companies and that's their choice. And they tend to end up being the largest companies in the world and the backers of them, right? Like it's like the Visa, I see a little bit of a pin prick of light at the end of that tunnel. Because I think that the, you know, musk's disastrous acquisition of Twitter Has opened up possibilities for competitors. I'm on every I'm on blue sky. I'm on Macedon, I'm on everything and one like post, where you can make micropayments to read news articles. I think is very promising. I think that and, and I also think that musk is learning that advertisers do not want to be surrounded by the kind of junkies allowing on the platform. So I I see a little bit of potential there. I will say musk is a fascinating case in general because he's like he's the example of me of of ESG going, right, because in the sense that you're seeing especially in the last two or three years, you're seeing the public react to who he is as a CEO, how he treats his workers, how he you know, it's just the way he how he treats, the all stakeholders and they're pulling back from him, which really is kind of a analogy of the ESU world. Like, what you were saying about originally about how you originally were just putting just I identifying risk, right? You just kind of putting red flags and things. And that's I think where ESG gets things, right? With people like Elon Musk on the board. I know where it's even writer than that. Is everybody's favorite guy in the witness stand Samuel bankman freed because yeah there couldn't be a bigger. G red flag. Then a computer board doesn't have a CFO, doesn't have a risk officer or risk and compliance officer. Nobody. think, you know, nobody in the, in the US, Could possibly have thought about investing in him with any any kind of rational assessment, right? I mean, the middle of Michael Lewis's book, and I read his book which I love and I disagree with a lot of criticism of it. And I'm now reading number go up, which is the other book about crypto, which I'm enjoying very much and I will send you guys the article. I wrote about my ideas about crypto, right? I love it. Next question, this is when I can't find a lot of people to agree with me on this one CEOs should be excluded from boards. Oh, I don't think it would make any difference whatsoever. Why there is a limit to structural, structural changes, structural Solutions and you take the CEO off as a board member. He's still going to be in the room, right? That's true. I'm gonna see. He's still in the room. He's still controls the quantity quality and timing of the information. They receive has X and their access to other employees. So I don't think it would have any effect whatsoever. Okay. It's one thing we don't talk about because we can't quantify it appropriately, but is that it's who is also in those boardrooms like, who was at those, you know, we always talk about the Emeritus chair, and how ridiculous is that, there's, they founded the company, there's sitting there staring at everybody and, but you're right, like, it's something I forget, is that there are other people in those rooms who are not voting members, who are making everyone else. Feel uncomfortable, right? I mean, that's just the way it is. Yeah, you should talk to Doug child about that. That he's been he's been in the room where it happens that's coming back on the show. Well we get asked him, how about this one? This is a Ultra nerdy one. This is something that pissed you off. Matt recently there's this tendency in at least in America where boards. Yes. There's the song and dance at the annual meeting voting on directors, but what they do is they appoint the director first to the board. And then they asked the shareholders to basically rubber stamp that appointment. So our question is, should we should we abolish this practice? Should the shoulder? Yeah, okay. Yeah, all right, finally, one agrees with me. I it drives me bananas, you sign a contract with with a person and put them on the board and then like three months later, you're asking investors to approve it or ratify it. And it's like at that point who's gonna say no. You just so, so there's no sleep anymore, right? Like you're not gonna vote that person out. It's like so proxy access. Actually. It's like a end around proxy access. Go board is full. We appointed the director. Yeah, absolutely. What about having a contested slate like having directors, instead of just putting up One Direction? What about putting up? Two directors for one slot? Do you, what do you think about? Do you like that as a solution? Having you having the nominating committee put up to directors? Yeah. For any slot, you have to you have to do more than one. No. No. My solution as I said, is that no one should be allowed to serve, unless he, or she gets more than 50% of the vote and that, that way we get to vote them off, but I don't think if the kind of people that serve on boards, which is a whole other conversation, but the kind of people serve on boards, have no interest in subjecting themselves to something like that. Really? I like, is everybody a? Snowman guy asked him about this. I was like, wouldn't it be great if everybody had to get up on stage and give like a stump speech, right. Like I at the AGM and then like investors are like, wow I really like what you know Jack's philosophy is, but the strategy, the Jane had the sale as you very well know. I just can't believe like how how delicate everybody seems to be like no they wouldn't subject themselves to that. It's 200,000 dollars a year and you show up three times I think you can you can handle like four questions before you get the appointment I would hope. I don't know how many have you ever been to where you've asked questions of the board members directly? Not enough, honestly, not enough. I've been, I've been to some but you're right. There's a lot of ego in those rooms that I've been in to that point. Do you think Matt and I always argue about this? Do you think that the younger Generations are gonna Embrace like, just the idea of this alternative democracy that is shareholder voting and I do another positive note, I think that the younger generation now is a lot more like not like people think of baby boomers now but like the Baby Boomers actually were right demonstrating in the streets or Vietnam women, Women's Rights, Voting Rights, all of that. And auntie, auntie commercialism. I think this is the most anti-commercial generation since the Baby Boomers. And and I think that as consumers and as investors and as employees, they've shown that they make climate change priority. And so yeah, I think I have a very positive feeling about them. We just got oh, both in for shareholder matters in on political matters, that would be great. So that's a win for me. Matt in that one. That's when she is a green with me. Matt on that. Yeah, because I just, I honestly don't, I think they're too busy, like in their crypto wallets and their tiktok to pay attention. They like Rage. And this is a perfect sort of medium for outside manufacture more. Now, help us manufacture more you know, in their lifetime, they've seen fail. In major. Yes. And I so I think they have a lot of skepticism and, and a lot of idealism, too. Yeah. And this is direct access to that. I mean, we call it the alternative democracy, but this is direct access to having an input into these into things that they do care about and talked about quite often. All right, Matt's telling me to rush to get it to get to wrap it up. I have one more question, I'm telling, you know, has a life. I know I'm enjoying this, I'm enjoying this, okay, this is my, this is my final question of the day. okay, so I keep kind of fantasizing about kind of reimagining the American Board model and kind of Modeling at after some kind of a version of a stakeholder. Capitalism where instead of kind of randomly assigning board seats that we have defined roles and in the sense, that as an example, like should boards have at least one employee representative like should should there, you know? I mean, should there be Up just having a CEO from another company. Should these seats mean something? Should they represent something like represent some stakeholder constituent, like this board seat was brought to you by the hemsley's family, right? Like, whatever you want to call it. But yeah, I mean, as a different way of attacking like the skills necessary for what these boards are trying to accomplish. Yeah, I mean it has never worked. And tried. I'm certainly very open. Mind about it. And my answer to you is we it's a big wonderful world out there and the First Corporation is step forward and say, this is our vision. This is how we're going to do. Well, let the market decide how that how that plays out. You know, I'm glad you said like that because yeah I know I've never I've been looking at these proxies for so many years. I've never seen actually a company reimagine it. Interpretation of what the board is or everyone is sort of Really doing the same thing, right? I mean, Boards, however, have improved tremendously in terms. Sure. Quality of the people around him and the and the focus that they put on it in terms of the stock ownership of the board members, you know, I one of the first reports I ever did and I assess was a list of board member who didn't own, a single share of stock and, you know, who was at the top of that list. Enron. Ah well they were busy selling off this stuff. Yeah anyway so and at that time Enron was you know was everybody's darling, everybody loved it. But if the shirt, if the directors don't want to buy the stock then, you know, that's that you the canaries are dying in the coal. Mine. So When I say to the extent, it's been tried. I'm thinking about Germany where they have second board. I'm thinking about companies where the employees owned the company, like United Airlines for a while and there was a mining company where you employees owned it and all of them have turned out very badly. There were there been companies where the ESOP owned the company turned out very badly so nobody's figured out dressing What what makes the model? Bad in like say Germany for example, is it just too many people in the boardroom like what better? It be the rhetoric is very very far from the reality. Okay, board. Has almost no Authority and they're muted. Okay. Yeah, no surprise. Okay, yeah, that's all I have Matt. You want to wrap us up. I mean well this was awesome. Whatever moniker you want to go buy the Godmother into the show, governance the Maestro of corporate accountability, whatever you like, movie Mom, all the things but I had like, in in the run-up to this, I was thinking about, like, oh, we should do games about like the, you know, which movie character's that are billionaires. Would you vote again or like? Well, like I had like, they're just About corporate governance? Yes, wait is a classic movie? It's a woman's world as a CEO succession movie. Those are movies from the four days and, of course, I have a whole long list of corporate governance movies that I see, I didn't know this C. And this is yeah, that you've never heard of that is the one that I recommend the most often. It's based on a true story. Owning mahowny with, okay, Philip Seymour Hoffman. Oh, I already love it. And it's a true story of the biggest bank, embezzlement, in the history of Canada. And And it's the movie is a classic example about how every single person in the movie. The embezzler, the bank board, the Royal Canadian amount of police who are investigating, it the casino manager, who can tell that this guy shouldn't be betting, millions of dollars, but he is everybody's assessing risk all the time and some do it better, the loan, the company, the bank turns down, and the first thing in the movie, The Bank turns down, one of the biggest depositors for a loan and she's the one because they're assessing Totally Miss. Assessing the risk because her account is about to be embezzled. So, So, it's wonderful. Wonderful, corporate, governance movie. And of course, Philip Seymour Hoffman. Absolutely terrific and great. These are all the way places that we need to go next time. That's it. A huge thanks to Nell for joining us. We're definitely gonna have our back again since Damian had like 35 questions. He didn't actually ask her in that. Our this show today was brought to you by free flow analytics. The only platform that you can get the data that you can use to rate your directors performance, thus, fulfilling Nell's life, long dream of riding direct to Performance. You can get that their free flow, analytics.com. Go check that out. We'll be back tomorrow to wrap the week until then goodbye.