Transcript
Hello, we're having some technical problems today. I'm not gonna know why I'm not good. I mean, except for my account down was like, five, three, one spirit, My soul. The stuff going live from a November scented hand soap. It's in the ESG Industries. Only weakly woke did a podcast. Today's ESG head cold called November 1st 2023, random ESG awesomeness, director appointment group think and a word from the great Paul Hutchins from eska. Just sounds like too much. We have too much. It's gonna be like a seven-hour show strap yourselves in people, because there's a lot happening and there's no where to go our show today is being sponsored by es gauge your ESG Data Solutions. Provider. That's right. Paul, well, jump on later to talk about ESG metrics in incense of plans. In fact, Paul has a call out for our listening audience Do you want to hear more this stuff? We want to. What more do you want? Paula report on? Do you want to hear more? Yes. You want to have what other skills excavator told us. They have a tremendous amount of data about incentive plans and they want to know if you want to hear more specific, things about the incentive plans. Now, frankly, You could just go to Skagen by the data and see all the data instead of listening to Paul and supporters. Yeah and then it would be worth it. You can also buy the data by different data from free flow analytics.com, which is. Yeah, first you think you should do it in the reverse order and then you should call the ESG CEO and say, why are you listening to freefloat business pants every week so much in fact that when we miss one sponsor to read last week that we could call for, come on what we got. Nothing else CEO to get busy doing other stuff. Come on, yeah, look, I'm a CEO. I know how this works. I hate that. I love it every time. Here we go, very nerdy. It got very nerdy stories. That's what I do on Wednesday, very nerdy stories. First one, a Tipping Point and equal pay auto makers are scrapping tiered wages. So one of the victories in the the four GM still antis, you know the labor They came to an agreement, right? They just have to. Yeah, it's just signed up. Everybody's happy. Still have to pass the agreement, but I can't imagine they won't pass. So for GM, still interested poised to become the latest us corporations to do away with tiered wage Arrangements, assistant that splits, the work force into halves and Have Nots by confining newer employees to lower wages. So since 2001 according to the Washington, post about singing, on a dozen corporations have started to a ball or she's tiered wages earlier this year. UPS narrowly, averted a strike by Green to equalize pay other companies. Recently to adopt this call again Boeing Harley-Davidson caterpillar, all because of the urging of workers unions. So this is an issue that I hadn't really thought a lot about. But now that I'm now that I am thinking about it right now, It's it's like this second. It's a major window. So what you had man is you had workers at these companies doing the exact same job making wildly different salaries? Yeah, well, I mean it was it was like well, kills everything. Yeah mandatory pay gaps, yes. Right. Like and if you know that women workers doing the same job as the their their mail, you know, colleagues get paid 80 cents on the dollar, that means you have a tiered system inside, that's true system. Well, and this is a lot of your longer tenure employees, would be men in the first place, because diversity hiring pushes are a new thing. Exactly. So there's like actually like if you think about the way the tearing works, this was accidentally or I probably accidentally discriminatory. I mean, it was not just against like new employees but the new employees tend to be more diverse and more, you know, diverse the racial ethnic diverse. The other thing that this may be unintentionally discriminates against or maybe intentionally is just the notion of unions themselves because when these new workers are coming on with these lower Pace structures, and they can never reach the pay that they're, that they're 10 years. Employees. Have a lot of them are probably like, what the f do I care about joining a union? Anyway, it's not helping me like, this is all bunch of bulshit. Anyways, like the unions for the old, dudes. So, anyway, there you go. There's a victory. See, this is good or we officially. Okay. Good news. Are we officially in the age of the Union? Like the that's the scent. It going on. I mean this is a after the union push at UPS and this incredible win at auto makers. It does feel that way. Although it feel what it feels like it is like strategic unionizing. This was this was the most strategic unionizing. I think I've ever witnessed the way. I mean, it the way they rolled out different strikes different times. Yeah, it would. And it was like, targeted at specific plants with specifically hard, right? Like a very basically? Yeah. You know what? I think, I think the union started getting free flow analytics data and they, they like proxy statements and annual reports and they were like, hey, this is what they're saying, let's hit them exactly where it hurts them the most. So that's what I think. Don't forget one of the big selling points on on these getting. These victories was talking about the CEO pay ratios. Well, that was one of the best like sort of emotional ploys use. All right, moving on. Here's a, here's a headline women on boards. Directive expected impact on Belgian listed companies. I know I'm in Let's do it. Here's I mean, look, the sidebar here is. I'm only picking the story because I'm gonna highlight our data but who cares. I'm a lot to do that. Yeah, so here's what happened in concert. Since 2011 Belgium had a quota, requiring one third of boards to be basically to be women, okay? One third of boards basically or to be women. Well, okay. It's the under its the underrepresented sex but obviously, that's gonna be women, right? Women were in control, it would have applied to men. It would have been that men have to serve at least a third up to be men. That's a well, written rule, right? Because you can't say it's discriminatory exactly. It's, that's a well, where the rule stop a lot of Companies in Belgium have a two-tier system, meaning there's a supervisory board and a management board and there was no quarter that applied to the management reports. There, you could do whatever you want it. Yeah. Right. It could be 10 men zero women. So this new quarter is aiming to kind of adjust that a little bit it's making its doing better with that which is all good news but here's what I really want to point out. Is that and you have covered this several times in the past. But there is a there is a reality going on that that needs to be pointed out repeatedly, which is that despite the fact that in Belgium 39% of boards are women. There is a considerable female power Gap because these because 39% of the board represents only 26% of actual influence. According to our data data that only you can get here only here, only only that's right. And this is because the average man and Belgium holds 12% of influence. The average woman holds seven percent and it gets even worse. If you drill down further map because 70% of directors, with 10% or more influence are men, and that goes up to all Belgian director, who hold it. 20% more influenced 89% of those directors are men. So the most powerful director's Belgium companies, Far and Away are men. Despite the Well-intentioned quotas that have increased body count. Let's pause for like, a nanosecond and say, when we say influence, what we mean is, these are people who are either well, connected to each other, they have been CEOs in the past or they have like some cache on their resume. But mostly what it means is they have chair roles, you know, prominent committee roles, they have Equity, their insiders. They were placed there by activists. There are people who have sort of structural power on the board and social power on the board. So we're not like making it on social science and you can see how horrible that kind of is. Then here's next Story. Another win, maybe? Well, no, it's a win, a sad win. Oh, Dave judge that. Yeah. Oh, day asset management is to close. Five months after allegations of sexual assault and harassment against its founder, Crispin odey. So here's the quote from the company odier Asset Management including Brooke Asset Management. No day wealth will be closing fund managers and fun to move to New Asset Management. I mean this is the first time we've seen the unraveling of a company so quickly after its founder and CEO. A caught up in a terrible sexual assault and harassment Scandal. The crazy thing about this Crispin odey jerk is that after the first 13 claims came out, he he, of course, denied all of them. But then, after the 20th woman came forward, he did finally broke down and admitted admitted the misconduct. So, so, that's the magic number. That's what we just, we wanted to pose like white men who have held on to power in our incredibly grumpy and heinous horrible human beings. You just need at least 20 people to step forward. That's, that's good to know. That's good to know. Yeah. His millions upon millions of dollars. There's no no sense of a claw back now. Oh, they ask it management. I believe is not publicly traded. This is a hedge fund. These are notoriously private and but still All the more of a victory that such a private Enterprise, that has probably gotten where the lot of bullshit over the years is actually managed to dismantle. I, I'm, I don't know. I so credit to the customers, I guess I'm guessing the customer's had a big part of this. They pulling out their credits to the 20 plus women that came forward. I mean that for coming forward, of course, but like him, keeping his millions, not so great. No, next story. This is this is one good one for us. CEOs, should tell more jokes on earnings calls. Stocks tend to perform better when they do, this is from a paper published in the review of accounting studies. They said, when managers use humor on an earnings call stock market returns are more positive, I but, you know, Matt, they might just all be in a good mood, because, yeah, opening is doing well and jokes, because the company is okay, here you researchers used machine learning tools to analyze a sample of about 12,000 earning calls. So they. So we're using their, we were using machine learning tools to identify humor. I mean, what I would love, unfortunately, this article, I got a, these are people. We got to get on the show because I would love to know how they found a joke in these terrible earnings calls. Well, they probably just looked in the transcript for the word giggle, or like or whatever the crowd erupts with Aurorus, somebody had to transcribe the laughter, but this is look, This is a step closer to your lifelong dream, which is that, which one of everyone in a company Pizza as a mandatory for performance reviews has to do a five minute stand up. Yeah, actually started 20 minutes, it started 20 and I've reduced it to 10. 20 is a Really long time. Add to it. I would rather be five minute comedy and then five minute of open mic night. A quiet reflection. Yeah, yeah. No, I want them to get a guitar. Morgan's. I don't know if you covered this story in my absence Morgan. Stanley's decision to award 20 million dollar, special bonuses to the runners up if its CEO succession party. This is crazy. Of course. So last week, Morgan Stanley announced that the new CEO would be Ted pick and that it's the two losers. I mean, you know, look, I'm I mean that's kind of, you know, I'm that's what. Yeah, correct. They lost and damn sink of its they will stay on but they are getting a 20 million dollar bonus which is roughly the equivalent of what they already earning annually. Um, but here's the kicker too. Is that what nobody of course reports it properly is that the retiring CEO James Gorman is staying on as executive chair. So he's not only, he's saying I was a Cherokees maintaining an executive presence, right? So what's the point? So this is a, this is a shit show in the making. No, I mean, you're clearly, you're throwing 20 million dollars a piece because clearly one or two of them threatened to leave. I'm guessing to bounce, right. So, you're throwing up some kind of a retention award to keep them around. All to keep the same amount as the other two, all three got the exact same number, I believe is yeah, it remains to be seen what's gonna happen eventually to Ted picks competition, going for, but they all got the same bonus to, to keep doing their job. So, keep making you Gorman. Who's owns a ton of shares is made Millions upon millions of dollars. Moving to the executive chair All where he still basically sits there. He was all three of their bosses, he was the CEOs boss. He's still gonna be there. He hand-picked the board, and he picks his successor, but it's really a successor in name only because the other three keep doing their job. Also got the same amount of money and their old boss is still there every day with executive chair. We'd have to do analysis. I like it an analysis of that announcement. Internally when James Gorman, picked Ted pick. Because do you think there was a I picked pick joke, like do you think there's a little bit of humor? We got to get the review of a company studies to help me. We definitely need machine learning to figure out whether anyone laughed. But I I think that's the only reason why he went with Ted picker just for that joke. Because because really he's not going anywhere. And, and there's basically three coats CEOs now. So, you know, I mean it was simply within that sounds like a law for me, right? Like you had to go with Ted pick? Yeah. How about this? I don't know if this is boring or not but this is, this is the day we do. Boring stories support for S&P. 500, say on pay planes increases for the first time in five years according to diligent, We got to work more with diligent. They do a lot of pay stuff, we got to get some on the show to do something. Oh well, Paul be mad, if we do that, I don't know. No, well, Paul's got all the data, we can get Paul to come on live and we'll drill him according to diligent, see support for say, on pay Rose to 89% up from, you know, 88 88%. So it's not much of a big deal here. But they're saying the reason for this, they are claiming others. There's no actual proof of this is that CEO average realized pay. Declined by 68% to 26 million dollars. Last year are compared to 80 million dollars 2021, but okay, yeah, go wait a minute. The first of all those numbers are hugely misleading, completely, of course. And you know why? Because anytime you report on the annual pay of any executive at the company, we talk about it is misleading because really, and, and Rick Marshall who, you know, the still the chair of our board, Rick Marshall card, a lot of great effort actually into showing the career earnings of these Executives. Because again, cherry picking one year of page does not tell even remotely the story of how much actual money. These guys are really and it's not even like these years, in particular are incredibly misleading because in 2020, they all took a dollar, right? And said, they were giving it up because a covid and they were magnanimous a dollar. Yeah, on their just their salary mean just stock options. Well, Market was at an all-time low say like the best options since 2008, the best ever, right? And then the first year, like, when a lot of those options vest and like, they start actually getting some of the money, they have this massive bump, so it looks like they get a bump. And then the next year, I mean, a lot of the CEO trick right now is to give themselves effectively giant, giant pay package with a tear. And when they meet the threshold three years from now, they get like 500 million dollars, like free, getting 20 million a year. Look, there is a very sad reality in these economies. That when the, the, when the general economy tanks, the executives who keep their jobs are gonna make a shit ton of money based just on Equity. Yeah, just on the equity Awards, that's when they pile. You notice like, like if you read all the filings, they don't Pile in when markets that are at all time highs, right? They pile into the stock options, When their stock is low and before they announced a buyback and like any time, you know, you're going to get a stock bump you Pile in the option, that's when you do it. Yeah, I wonder how thick The Masks were the covid masks were for CEOs during covid, because they knew that, if they could just survive covid, they were going to be really extra fun Rich, right. They were probably a lot thicker than your average person's mask. That's what, that's my wonder. How many of the CEOs? Said, something like that. On an earnings call, got a round of laughter, and then saw the stock go up, and they were happy with their options. Next, there was a shareholder vote at Bayou. Technique Corporation by am I saying that right? Biotech I should know this. This is one of the the 500 biggest companies in the in the US, I should know the name of this story because this is a bit of a preview. We're launching a new show soon, kind of like the, what are we calling this the process, right? We are we're laughing a new show, ya what we're going to be doing is we're gonna be going over specifically every show. We're going over vote meeting votes and then we're going to be previewing upcoming meetings, previewing those votes. So we're going to be helping you decide how to vote and then kind of laughing at how people just vote it, right? That's what ya think of it. Think of it like sports center, but for annual General meetings and proxies and in which, yeah, well, give you the Highlight Reel and then we'll give you our picks for upcoming, you know, games in proxies and all sorts of stuff. It's e e. I s. S p n. I like that one. Here we go. Biotech me. They had a vote. A couple days ago here, the headline, the big takeaway here only 35% of shareholders support say on pay. That's exactly. Wow. Dream defeat say on pay a biotechne and they've been struggling this area the last two years only 62% supported in 2022, only 55% in 2021, usually, you can trace this vote to a very sad stock price, which is happening at biotech. It's currently 53 dollars down from a high of 89 dollars in July, but here's the big kicker. CEO Charles cometh. All tough name. He announces retirement last year. And and in accordance to the proxy statement the competition committee discussed what to do about this how we're this is true. Matt I have a quote here, they discuss. How are we going to encourage Mr? Comment to remain and remain motivated through the next two years. I mean, really like, I mean you were telling me a story about something that happened at Middle School in your town before we started. Yeah, I mean, this is this not like dealing with children. I mean, how is he motivated? And he's already making 16 million dollars a year. Not motivation enough. Yeah, apparently not. When did he announce this? You know, he's retiring in 2024. He announced this in 2022 in June and let me tell you, Matt here's what they did to keep him motivated. Okay. First of all, this is just a bizarre story. Okay, so I guess the first of all the 16 million dollars was not enough. So what they did is they announced that they're going to give them a big boatload of options to keep them focused, right? And oh, yeah, no in the 2022 proxy. You know, it's the keep him motivated. They're gonna give him 200,000 options which is a lot of options to stay. That's a lot, but fixated. But next year came to the next year's proxy and they don't correct this. I don't know if it was a typo or if they intentionally put this wrong but it's not actually 200,000 options. Matt. It's oh, it's one million 200,000 1.2. So they they I don't know if it was like intentionally misleading or not but really what he got was. 1.2 million options to keep his eyelids open. So instead of the toothpicks, they could have just put in there to keep them all, like, an automatic Jerry cartoons, with one point with one point, two million. And this is probably why I shareholders are pissed among other reasons. Yeah, look, I think there's a lesson that we can take away here and maybe we can impart to anybody who's in an executive position. If you announce that, you're going to retire, two, three, four years from now, everyone will get incredibly worried that you won't do the job that you've been doing and paid for. So just announced your retirement now and just like tell your, go go into the office right now. Bang out the email that says, I want to let you know. I'm playing on retiring from my position in 20. I'm getting very sleepy. I'm getting a little bit. I just, and we're out of toothpicks. So I need six to seven million in options in order to keep doing my job. Okay so here's the here's the second big takeaway so the only 30% of shareholders supporters say on pay and if in fact they've been pissed at Sam pay for years. So there's this coming with owners probably just him let's look at the next logical. Question here is how do the shareholders vote against the compensation committee, right? These are the directors responsible for being chose. Yeah, they chose it, they chose it. Yeah, so first of all, there were three. This is the story gets a little deeper here. There were three compensation committee members responsible for this nightmare that was Joseph Keegan, Randall Randolph, steer and Rupert vessi. Can you get investigated? What? Yeah, the former pay chair who's been on the board since 1990 and has has almost as much influence on the board as the CEO, according to our data, he got 82%. Yes, vote. So look, credit goes to some, some shareholders for realizing that something smelled bad, and that was Randolph. Steer, right. But here's the crazy part Matt, is that what they did? I don't think I've ever seen this. This is like, we talked nauseam about all the all the companies that either they, that they screw something up, they apologized, and then they replaced the CEO of the woman, right? Yeah, of course. Yeah. But this, this is the first time I've seen it happen on our compensation committee. So what they did is they, they made Randolph. Steer step down from his role as compensation chair conversation, committee chair, he's still on the committee. Of course, I mean, yeah. Well he can't take them off and he was replaced by a woman, Julie Bushman. Right? So she was appointed chair. And here's the crazy thing. Julie Bushman, the new composition committee chair has a third has a 37 year career at 3M, right? She retired as Executive Vice President. CEO Charles cometh had a 24 year career at 3M. So that's a replacement. this is, Not. Commercial is so important. Right? I mean this is why women have so little influence because I just don't have enough friends I guess. But yeah that's what's going on there? Bioteknik I, you know, I can't get over the names. They all sound. Like they walked out of the Movie Trading, Places with Eddie Murphy and Dan Ackroyd, like it, like, Randolph. Sea steer doesn't it sounds like like a comic villain in some way and if you like yeah if you like that level of Python's please, I want you to stay tuned to our show that we will be announcing soon. The proxy show where we'll be doing stories. We got like this every week. Honestly, if you got a name suggestion, we're all ears. We got a we got a name the show but I How about better than glass Lewis? Is that we call that? I think that's available actually as an iPod podcast name. I do want to point out that Randolph steer still got more votes by more than double than the actual pay, right? Like, he got 82% of investor votes, believe me. I don't understand. I don't understand what investors are up to. I, yeah, 2%. What do you have to do? To get like voted out? Knowing all of these are advisory votes. I know we're afraid to piss anybody off, but they're still all like steer could stay on the board and it choose to ignore it, right? Like it's basically an advisory book shareholders that, you know the your company share price was at 130 dollars and twenty at the end of 2021. It's currently at 53 dollars, right? It continues to fall at a very steady and gradual rate. This guy's been on the board since 1990 his main function and you still still, you can't vote him out. You still need him around, still can't? You just can't quit? What happened? You don't want to offend them, right? You don't want to offend them, you know, if I get rid of Randolph, steer, how comes off as possible. Hey guys, this is, this is We are, let me wrap up my segment. This Show's gonna be 16 hours long. Finally, a quiz here for you Mac a little quick quiz. Okay, I love a quick quiz and here's the headline. Delta's, Chief sustainability officer is on a mission to use less fuel. Quick quiz is Delta's. Chief sustainability officer a man or a woman. Oh, wow. Surprise is taking you this long to get to make this guest. Well look there's an obvious answer and then try right like this like because it's Delta you have to do it like okay you know like this is a highly interconnected company foot like this is I'll give you a hint. Don't go too deep. I'm gonna go with women. Officer was a man has everybody. That's not true, that's not true. And there are chief sustainability officers but they and they are men. They tend to be a men of color. Okay. I tend to places that was my play. Yeah, absolutely. Right. That was gonna be my next point but but you know what? Chief sustainability officer and Chief Human Resources officer have in common Matt. They are both not in the pipeline to take over a CEO publicly traded. Which brings us to finally been waiting. I've been waiting all show for you Matt. I mean yeah, I haven't participated very much so far. All right, I got two things. One quick and one's a bit longer. First I want to Quick. This is another tease of the show coming up. Yeah, quick quick director appointment Roundup. Okay, ISS. PN Oh, God, that your acronyms are amazing. Please someone help Damian name the show this week in the past seven days, we saw some new directors, get added. And when I say added, I mean appointed because they don't get voted in, and then added, they get appointed and then you vote on them whenever the AGM is so these are directors who have been appointed by the boards, to the boards, and you'll get to vote on them later. First up, is root Inc appointed Donna, Dorsey. She's a black woman. She's diverse a human capital experience. They touted this all over the place and the reason why I'm mentioning her is because it doesn't matter. Adam. Tim the founder and CEO has 80% of the influence on the board and dual class share so no one cares so cheating. This is, yeah, don't cheat Adam. This is Adam Tim being like I'm gonna pick you from my board and then you are going to do what I say. So this forever for getting that one at this point like I'm almost okay if You're going to be founder, and CEO and controller company. I'm almost, okay, for at least doing with a one share, one vote like Yeah, do it. Yeah. Like if you actually just own a majority of the shares, I guess find you win but come on but it's cheesy shares. She shares. Which brings us to SEI Investments who appointed Stephanie Miller to the board? She's a 25 year, track record and asset management, including liquidity Administration, multi-asset classes, and it doesn't matter because Alfred West Junior is the executive chair and Foundry as 83% of the influence on the board and no one cares. It's another, it doesn't matter. Founder picked board. So congratulations to Stephanie for getting to Greenlight everything out for it says Next up, we got Altus power, Altus power, just to feel appointed friend, I smell a trend. Even though, I'm even though I've been stopped up, I've had cold since the last Tuesday. I smell a trend. I think you're onto something because Tina, Chan Reich, just joined their board at altice. She's adding she's actually being added directly to the nominating and audit committees. How often you don't see very often a new board member immediately joining committees. They usually like onboard them for a little while and then slowly bring them on. But Tina comes from Amex, she's got 25 year. Track record on risk management, so important. Or rolling. Greg Felton in the co-founders on collectively, 70. So no one cares, the gold, a couple of dudes making decisions two dudes deciding what happened which brings us to our good news of the week. There are companies that aren't basically controlled by their Founders. Who do add board members like this company, entertain PLC their, UK based entertainment, gambling company. So if you're not into the gambling thing, then too bad but they appointed Amanda Brown to the board. And they added her immediately to the compensation committee. That's not the audit committee, right? That's not the one where no one wants to listen to you because you're saying like, oh that decimal place is off. This is the one where it's like the CEO gets paid by you. Yeah, that's a powerful position. That's, you know, that's that's got something that's really no to it. And as we know 100% of competition companies, give the CEOs what they want. So that's, that's a good way to make friendship a friend. That's you, that's good for its friends. Yeah, it's that's what you're doing for friends for more friends. Um, but here's why this one matters because maintain is a socialist board. According to free flow analytics. Socialist boards are where all the Committees and the directors have roughly equal influence, you know? That sounds like it sounds like a board from the Europe or the UK. That's what that's my guess. It is a UK company. That's right. And it's one of the few companies with actually a massive Positive female power Gap, what plus 18%, female power Gap and they just added another woman to the board and put her on the comp committee. She is currently according to our data, unconnected to the other board members in any obvious way, we'll know more later, but honestly love this. I love this, this is great. This is, this is what I call a good appointment solid appointment, which brings me to the next segment, Which is less solid because you sent me this story. A new study from on Deck looked at which firms X employees becomes CEOs more often. They use LinkedIn data for Fortune, 500 companies and they have no time frame on this, but I assume these are current CEOs, and they looked at all, the CEOs on LinkedIn and checked their prior experience, and they wanted to see which forms they had in common. So, here is your download ready. First of all, Mackenzie is the number one prior experience firm 7% of current CEOs on the Fortune. 500 had worked at McKinsey at some point. Seven point one percent. That's a lot. It is a lane was 6.7%. Wait BC BCG. It's based in Kearney. Yeah. And the vulture the vulture circling Bane. Yeah. And well I mean I'm not sure that BCG Kearney and Oliver Wyman which round out the top five, notice that all of them are consulting firms. Everyone one of the top five all private, all private all Consulting. I'm beIN might be publicly traded, but I I I'm pretty sure that like, all of them are management consulting firms and then we get into more fun firms. Including, and if you ever wonder why we talk about this all the time on this show, the NFL the National Football League, the American Football League, supplied 4.8% of current CEOs. I don't know what that means. What do you mean? It means 4.8% of current Fortune. 500 CEOs had worked prior work experience. Inside the NFL star is correct. No that's incredible. Well good. All the more happy to crap on the NFL. Wow that's amazing. Yeah. Right up here and I'm guessing from all the stories that we've covered on the NFL. Those were not people of color. Those were white. No, no, no, no. Come on, yeah. I'm just saying, what kind of show are you? Running NFL? 70% of NFL players are black, but basically none of the owners and none of the head. Coaches know saying just say I mean the rounding out the top here lizard Emi Goldman P&G. In fact, 51.3% of current yeah, Procter & Gamble 51.3 percent of current Fortune 500 CEOs, come from these 10 firms. That's important information to know. I'm glad they did this study. Yeah. Why I thought, here's why I thought it was important because if we're talking about ten firms applying 50% of Fortune, 500 CEOs, that sounds like a massive amount of groupthink like, like the cultures 10. I mean, are controlling the charts off the charts. Yeah, of the CEOs, At The Fortune. 500. So, I want to add to your desperate, fear of groupthink using free flow analytics data. This is data supplied To Us by free flow analytics. Do you need any more of a reason to buy our data? I mean, we've had so many wonderful sprinkling of delicious free flow data in this show today. So here's what I looked at. I looked at the 450, large US largest US, companies, basically, mirroring roughly the Fortune, 500 and eighty 62% of them are 22 companies. I, I found directors on the board who at least two of them, went to the same exact school, we have data on, Undergrad, you know, PhD, like all the schools that they went to, there are 3100 directors at these 282 companies, and here are the most, incestuous School, director combinations. At those companies 20082 companies. This is the schools most represented where they have multiple directors on the board that went to those schools. I'm sure this will be a surprise but go ahead. Yeah, we want to guess the first one. Harvard. Yes it is a stand business or stand for by Harvard Harvard. Business School, right? Yes. Yeah. Everyone getting a Harvard Business School degree. 132 directors, 4.2% of the 3,100 directors went to Harvard Business School and they're on boards together, right? These are boards with multiple of going to school Stanford. Six directors, their next pen 66 directors. Harvard again, but this is undergrad Harvard, so that's roughly 6% represent just Harvard in general. Right? Exactly. And then call it 48 and Wharton, which is also Penn. So 100 directors Or Wharton. And Harvard is what we're really looking at what's wrong with you. What's going on over here at Princeton where you failing? Yep. Princeton yeah. What's wrong with you? Not even, not even in the running. And what was the University of Southern Maine, how, where they on the list, they they ranked? Yeah, they're somewhere. I think, um, like I'm really sad for brown, which is my alma mater. I just was getting a good education. I went to the ivy league. That no one likes and no one cares about apparently. Well, let's be real. The ivy league is Harvard. Let's be, let's be fair. Oh, apparently. But here is, I went after going all through, all this data, I wanted to pick your group. Think, company of the week. Are you ready? I don't know. That means I'm so excited. Yeah. Your group think company of the week is IBM. Oh, here's why. Yeah, National Business Machines, Martha Pollock, Fred Wardell, and Fred McNabb all directors at IBM to Fred. They all went to Dartmouth. Okay, I'm liking this. Yeah, in fact, I believe in public. Both went to Dartmouth and got their undergrad degrees there and they're two years apart in age. Which means they went there at the same exact time. They were actually same parties. Same parties, they go to the same reunion years. Pollock. McNab and Gorski all went to work too. So now we've got Two sets of directors that went to the same schools. So Pollock and McNab. They, they started Dartmouth and then they then they also went to work. They went to Warden, are they like married are they conjoined twins? What's the deal? But the data does say that fully 75% of the board is also connected through other boards. Meaning not only did they all go to the same Schools, she's 75% of them. Actually have friends in common on other boards that they've sat on. And that doesn't include Martha Pollock, who we who hasn't been on other boards, and we can't connect to anybody. So now, we are able to say more than 75% of the board is basically fully connected. Wow, in fact, the chair of the governance committee Andy liveris who is all over the place. He knows 31% of the current board. 90% of the board have been CEOs. Before 91% of the board, influence is held by directors connected to each other and they all perform according to free flow analytics performance metrics. Totally average. Well they are 50% rotation. But basically what you're getting is pure average from a group of people who all know each other When I be getting is what you're basically getting is a big lump of Play-Doh and no one has decided to like separate the Play-Doh and make different. Toys. Right? Just one lump of Play-Doh. I love that way. Is that what you're trying to say analogy that compares a board to play, though? I think that doesn't happen nearly enough. IBM does claim that its board is 25% diverse and 15% gender diverse which is pitiful to begin with percent 15 percent 15 percent gender 2023. Are you reading a proxy from 1992 know? This is this is today and but we could argue that they are actually zero percent diverse everyone on that board basically. Went to the same school knows each other's friends, you know, hangs out on boards. If they don't go to the Met Gala together, they're at the reunion together. That's pretty much the way. This works not to labor of 17 hour segments. But what's Point, what's 6 out to me, is that I wonder if there are other 15% in the S&P 500 is is absurdly low, right? I wonder if other boards of this nature was such ridiculously low amount of women on the boards, all so suffer from some of the same group think, nonsense, right? Because that again, 15%. I mean, I want 1987 talking. I'm I may have said, well, I mean, IBM is basically stuck in 1987, in some way IBM. Exactly. So I but I do want to congratulate them. This is, this is a victory that's hard, to achieve. Its really hard in in 2023 to stack the board. This completely with people who all went to the same schools, who all work on the same boards, and there is Phase. Basically, no diversity. That's IBM. I mean, you have to work at that. Outside, I actually left him cold cold cold. Let him inside, I know you now know. I'm not, I don't like, people hovering over me, I don't wait outside and also, here's ball. Here's Paul talking about some deep ESG metrics. Paul come in. Hello pole. Hudson here with skates statistic of the week. I just got in my inbox and email from a gender week publication to Financial Times. Indicating that some boards may be re-examining their use of ESG metrics, and incentive plans in the face of criticism. From Sutton investors who say companies are using the qualitative goals to pay her over issues with financial performance. Now, I can't comment on that, but it wouldn't be the first time that companies use soft targets to excuse, poor, performance against hard targets. But what I can do is tell you, how many of the S&P 500, and the rust 3000 actually uses ESG metrics in their incentive plans. So what we're looking at, for the whole Russell 3000 are 1,665, Standalone ESG metrics for all Executives 2,627 ESG metrics included, in business strategy. Scorecards And 1,988 ESG metrics included in individual performance, assessments for executives. So that's quite a lot of people covered by ASG metrics. Now, some of those Executives might have two or three ESG metrics assigned to them either in individual performance metrics or as a standalone metric, but just looking at the kind of overall statistics for the use of ESG performance metrics in the Russell 3000, there is something like 55%, so just over half of companies have no ESG metrics in their incentive plans. So it's not as widespread in the Russell 3000 as it is, in the S&P 500, where less, than a quarter have no ESG metrics in their incentive plan. So there's 24.3% so more than three quarters of companies, in the S&P 500, have in adopted ESG metrics in their incentive plans. The majority of those are using them in individual performance assessments. So, for example, if an executive has a whole list of performance targets assigned to them individually, there will be an ESG metric or one or more ESG metrics within that individual performance assessment the next, most common 35.2%. Are being used in a strategic scorecard. So a business strategy scorecard. So again these could be for individual Executives or they could be for the executive team as a whole. There's a whole list of financial targets and other types of Targets in there as well, that could be ESG related or could be strategically significant for the company and then the smallest number smallest percentage rather a 31.4% Is for individual Standalone metrics. So that's so, for example, for the whole executive team, you might have a return on Capital metric profitability metric. And then for the whole executive team, a single Standalone, ESG metric worn, or no, more single Standalone, ESG metrics, which could have something to do with ghg emission reduction targets. It could have something to do with the diversity, equity and inclusion Target. So, the most common ESG metrics, are carbon footprint and emission reductions diversity inclusion. Employee health and safety customer satisfaction and cybersecurity. The other thing that can be seen over time, just looking at the S&P 500 is that there has been a fairly significant growth over the years that we've been looking at it at s gauge since 2021, fairly significant growth in the use of such metrics. So so just to look at this kind of negative aspect of it. So it's gone down from just over a third in 2021 with no ESG metrics. Now to just under a quarter, most of the growth in there has been in the use of ESG metrics in Strategic scorecards so business strategy, caught the school cards and in Standalone metrics as part of individual performance assessment, the numbers of drops likely there in that particular usage. But overall grown over time, So this is Paul Hodgson with the SK statistic of the week signing off. Paul. I have a request for you. That's a lot of statistics about how much he is, Gene metrics are in Pay, but nothing about how much pay they get for the ESG metrics. Because the answer to that question is almost none. Isn't it like a pointless number? Paul answer my question, but Paul help me your dad is Paul. That's Paul Hudson from skh. She's really pissed because I left him outside for so long. So he left immediately. I am here. Analyst Omaha that was Damian rawlas. We are free floats, go get ESG data. But only after you get free flow analytics data, And look out for our new show. We're actually gonna record our first episode next week. We're gonna drop it soon thereafter. We don't know what it's gonna be called. You got a name, suggestion, hit us on LinkedIn. Hit us on social, send us email. The proxy show is horrible, so crazy probably gonna end up being that. It's horrible. It's like my brother named his stuffed elephant when he was a kid elephante, that's what you did. We'll be back on Friday to wrap the week until then good. Bye.