Transcript
Hello. Hello, feels like Monday live from the ESG Shake Shack. It's a, I barely mentioned musk Monday, edition of business bands. All right, join us always by our lord of the BS. Matt mascardi. I'm gonna keep talking in. Today's ESG, encrusted mildew stain. Called January 30th, 2023 sexy. Apologies anti CEO pop music in a sleazy academic paper. Is that we have a sleazy academic paper? I have a one-liner from what the best. One-liner papers. I've ever seen. It made everything. So simple for me. You ready for some CEO? Apologies? Am I? Okay let's do this thing. I like a good parade music for an apology. We haven't. Covered these in a while. I get these like lists, these accruing lists of things I want to do, and then they kind of take it back on Mondays. Yeah, dusting them off. Here we go. Elon Musk. This is the only musk talk, Elon Musk. Finally apologizes for creepy conspiracy theory about Paul Pelosi attack. What is his apology though? Did it was it was it one of those hedge topologies where he says, yeah. Yes. Well no. Yeah. Maybe actually because he started with the word it started with nonetheless. Yeah. I apologize. Yeah. Which which, which creates a there is a I'm not all wrong like you're like I might be right? We don't have proof. We there's not enough to say that I will totally wrong. I will apologize. For What appears to be wrong, but we don't know. Except we knew before that, the conspiracy theory was right? We just tweeted that out. Yeah, I don't know if it's wrong, I hate everything. Go ahead up. Next, mining giant Rio Tinto, there's always fun. Stuff. Out of minding companies. This didn't we say that msci? Always fun stuff happening in mining our mutual friend, Sam block. Who's the head? Who's been the head of mine ever called a long time and msci. ESG, he loves a good mining company, he loves himself. So he probably knows the story. Mining giant Rio Tinto, mining Giants as apologized for this is, this is a good story. I mean, I gotta be fair as a Paul guys for losing a tiny radioactive capsule. That went missing as it was being transported across Western Australia. An emergency hunt for the device, which is about the size of a p is underway along the roughly 1,000 mile route. So wow, The capsule contains a small quantity of Radioactive Radioactive cesium 137, which could cause serious illness to anyone who comes into contact with it, including skin damage Burns radiation sickness blah, blah blah. So they did, they alert all any local field trips like tell. Your kindergartner is not to pick up piece size, devices in the desert. I mean, I'm guessing they only alerted those weird dudes with the male detectors. There there's 100% chance though like some iguana already ate. It isn't there Simon Trot Simon Trot Rio. Tinto's iron or CEOs that that's not CEO though, right? That's not like an ad. That's not like a way of being like cool CEO or like right like friendly its iron ore. He's a CEO of iron ore, can you be the CEO of an? Or I don't know, he said in the statement. Listen to this apology. We are sorry for the alarm, it has caused in the Western Australian community so he didn't even apologize for the act, right? He was for the alarm that the Western Australia, which is Unity had, which is really his way of saying that. Like, you people don't handle Adverse Events very well. I mean, it does seem like a little bit of a weird. I like it, is it I can't. Is this a big deal or a little deal? Well, it's a little, it's a little radioactive. I know, it's a little tiny thing but like the worst case scenario in this thing, is one person picks it up and burns their finger know. I think it's a quite bit more than a burnt finger is it? That's what I'm trying to get. Like I want to know, like do they have like cancer forever when they walk probably probably knowing Rio Tinto? Yes, they probably made a cancer capsule. Oh, well, there you go. All right, well, they should no one should have so much alarm about this. How about this? One? I just I just like to Itsy of this one. And this again, this I feel like this sort of dovetails ball. Some of our one of our predictions. We talked about cybersecurity So, and part of that, is this acknowledgment that we live in a world where cyber attacks are going to increase and increase, and yet companies are managed by 90 year olds. Yeah, who don't even what they don't even know our own prediction paper actually that the financial sector in the United States has the is the oldest by age influence, with influence weighted age meaning the decision-makers are all like octogenarians. So speaking of which Ticketmaster CEO, and this is a company that, of course, would be a target for this type of thing, right? Ticketmaster CEO apologizes for Taylor. Swift concert ticket debacle blames Bots and Cyber attack. That. I don't know. Are you allowed to play? I mean, you love to blame. Isn't that your job to like put up a wall around Bots and cyber? I mean, is that a fair way to get out of that one? Can you blame bots in cyber attacks for anything? Yeah I don't know how to kill about that one. Yeah yeah and also It's Taylor Swift. Do I already don't care? So I don't really care about the, what prompted, the apology. I just like that. You a CEO. Feels like he can shift blame away by somehow by saying like, That. The yes, something happened and we didn't prevent it from happening like we should have but it's not our fault. Sorry. It's like, it's something. I don't know. I just, you know, I'm trying to say here, I'm not saying a little bit but I mostly am just thinking of like Upset. Preteens who borrowed. Parents money to spend 200 dollars on seats to Taylor Swift and it didn't work out. This one feels like the one where you'd say, I'm sorry for the alarm. We caused the community. That seems like this apology. Here's the best to pull you the day. This is just a long-winded and crazy. This is a this CEO of San Francisco Bay tech company has issued an apology after quoting civil rights Champion. Martin Luther King and Samuel announcing layoffs. First of all, I I take umbrage with civil rights Champion. I don't know if I like that term. Is that what Martin Luther? King was a civil rights Champion. I don't know if I like the word Champion there. Yeah. What would you prefer? Just how about just leader? Champion. I don't know. Yeah. I mean, I'm sorry superheroes. I love them. I love gonna be like, I don't know. All right, here we go. It's got to be. It should have been superhero. This is the company is pager Duty. CEO's name is Jennifer Tejada. The apology. Here's the first, the apology I'll start with the apology. There are a number of things I would do differently. If I could She could get a time machine. First of all, I mean, she, but she get an editor. Yeah, forget that. The quote I included from Dr. Martin Luther. King was inappropriate. Insensitive I should have been more up front about the layoffs in the email, more thoughtful about my tone and more concise. I'm sorry. And it's funny that she says, she should have been more concise because that even that apology has seven phrases attached to 25, conjunctions. So okay, so Matt, the original letter was 1600 and 71 words, wow. Imagine when you used to have an actual job, getting a email from your CEO 1670 words. And as a point of reference about the Gettysburg Address is 272 words. All right, so it took her 376 367 words just to get to the layoffs part of the email. So you gotta do a lot of skimming words. Doing, what did you say? And okay, let me, I'm gonna highlight a few things that I hated about this email. First of all, she starts off by she addresses, the the email to do Tony and she calls her workers, do Tony and Okay. Can we like that? Can we make a rule at free flow that we never give you ourselves like stupid floaters floating tweets and like or free Floats or whatever. Oh, okay then so okay, so 367 words in she finally announced his eliminating roughly 7% of roles globally And then she goes on to say great things like I regard, dude. Tony, and as more than employees, They are accomplished deeply, talented individuals, who hashtag bring themselves, why we hashtagging in an email, why we doing that? And then she's she goes on to say that she's looking forward to the future and she says I am excited to a point Jeremy commit senior, vice president North America. So she She lays everybody off and then she's all excited about It feels like two different emails and then she goes on to say that none of this would be possible without you our leadership and our board. Oh, So I don't really. Yeah. So she's your fired. Yeah. And it wouldn't have been possible to fire you elevate this guy without the leadership in the board. I want to thank them and here's her Holocaust blanket moment. She says, I'm reminded in moments like this of something, Martin Luther King said and first of all I call bulshit she didn't have this quote on top of her mind. She wasn't reminded of a quote. Let me just say. Yeah, if you find yourself typing incident in time like these that I'm reminded of EX person's quote. No One Believes you. Yeah, just say here's what I found while Google Martin Luther King know, like literally 10 best quotes, Martin Luther King. That's what she putting her, okay, Here's the quote that she was reminded of in moments like this quote, the ultimate measure of a leader is not where they stand in the moments of comfort and convenience but where they stand in times of Challenge and controversy. So she made reference to a King quote about leadership. Is she talking about herself? I think she say I reminded that I myself. Am a leader? Yeah, because of the tone of my email and then she goes on to say that paid your duty stands for an equitable world, where we transform critical work. So all teams can Delight their customers and build trust. Matt, here's what the company actually does according to his website. They transform critical work for modern business powerful and unique platform. Make sure you can take the right action when second matter from developers and reliability Engineers to customers security. We empowered teams to the time and efficiency to build the future. I don't know that's good. Equitable world or transforming? I don't understand, I don't know what world, I don't know what world they're in. I don't know what they do. I don't know anything yet. And then there's something a little something. This reminds me of a quote from somebody. Oh no, Malcolm X. Uh one more apology this isn't really apology but they're making fun of Spotify. CEO, Daniel Eck for for announcing layoffs, with too much toxic positivity, they're calling it toxic, toxic positivity. Yeah. So positivity, he said, he was too ambitious. And for that reason, these laying off 6% of the company. And then he said, personally, these changes will allow me to get back to the part where I do my best work spending more time working on the future of spotify and I can't wait to share more about all the things we have coming. Whoa. All right yeah, there you go. You're all gone so I could do my job. That's my apology Roundup before I hit it over to you. Matt, I found this wonderful pearl of a story over the weekend and this, here's the, the headline, Indie super group. Who is she? That's the name of the group. Who is she, who is she dropped as Seattle? Kraken house Band After dissing, Jeff Bezos, and Amazon Arena. Okay. Do you get what anything about what I'm saying is that makes sense to you. So I live in Seattle for a few years. So um, some of this makes a little second, it sounds like a very popular, Indie band was taking off of a show because they just Jeff Bezos. Yes, in the arena owned by Amazon and owned by Jeff Bezos called all things called climate pledge Arena. I mean, Yeah, I got a green one. Yeah. So they came out. The band came out and said in an unfortunate turn of events. Apparently, we are not welcome back at Jeff bezos's climate pledge Arena so they got fired right. Um, and they were told they were fired. They were told, because a leadership decided, you're not a good fit for hockey. Fired. So here's what got them fired. They were they played a version of La Tigres. My, my MetroCard. So Latigo was a was a Indie band about 20 years ago. Here also female band who had a protest song about Rudy Giuliani at the time when he was the mayor of New York City called my MetroCard. So this band had a song called my my my ORCA card, I guess Orca cards, the Seattle's version of the Metro cards. Yeah, that's okay. So here's the, you don't have a metro, really, I'll play a snippet of the song. You probably won't understand the lyrics. But I'll be here to translate those lyrics here, here for your mouth. Okay? So I'm gonna play a little snipper here. All right, I'm excited. This is what got the band fired at Jeff bezos's, climate pledge Arena. Okay, well let me tell you this, that the video that matches played, does the audience the favor of putting up the lyrics with the words without the heart, without the words of lyrics, you have no idea what they're saying, what they actually said was. Oh no. Jeffrey Bezos. He's such a total jerk. Shut down all the bookstores billionaires. Do not work. So I just want to look, I don't know what. I don't have a takeaway here. I just I just love the the now I love the Indy super group. Who is she? I love the fact that they got so upset by the by lyrics at no one could understand that they ended up firing them and saying that they're not a good fit for hockey. I just love every I just like I like what you get triggered I like it. Can we reach out to them and make it? Official opening music when you open up board saber metrics, that's the song. That's right. That plays we Have. I mean this is great are we haven't had a story like this in a while a band playing an anti CEO song at a hockey game and then immediately getting fired by a triggered. See I mean this is good I don't think it was a triggered CEO. I'm sure that was a triggered middle like I was. No. The correct management were like scared that. Yeah they're terrified. That was that, was it for that. All right let's do something totally different. I have something very short for you. Thank god. Um and it's a fun little paper that I read this is your weekly nerd alert. I've been sitting on this one for a couple weeks actually because it's so simple. I was looking for the right time and now feels like the right time, the authors of this paper are Alexander dick, Adair, Morse, and Luigi's and Galas. Louis, the paper was published on January 5th. So it's brand new paper. And the title basically implies the entirety of the paper, are you ready? Here's the title. How pervasive is Corporate fraud? Oh, this sounds, this actually sounds important. That's it. It's just that So they basically are going to go on to Define. I'm going to bury the lead because it's so short, they're gonna define fraud as Financial misrepresentation exposed by Auditors. Misrepresentation that leads to an SCC enforcement restatements which is a really fraud but they're basically kind of like on the edge there and then Harbinger. Yeah, yeah, that's kind of what they're going with and SEC section 10B, 5 fraud cases. So actual open case course. Okay, yeah, they're focused period is old. They are specifically answering the question about Arthur Anderson. Who if you're like a young ESG analyst, go get her at glass Lewis and you're loved holding, you know, corporates countable, the original OG sort of governance Community comes out of the fall of Enron and Arthur Andersen. Yeah, forget about that. I forget about Arthur Andersen. You forget about that name. Yeah, they're the ones who basically enabled the fraud to happen on the broader side and water side so their time. It's for looking at this our 1997 to 2005. There's a pre Arthur Andersen fail and a post Arthur and so old. But okay, I'm still, I'm still interested so well because a lot they got to see. It was like an actual real-world experiment where they get to see, who says something different after Arthur, and just fails and all of Arthur. Anderson's clients, come to light like, how much were they enabling their clients to do fraudy things, right? Here. Here are the three key findings. our evidence suggests that in normal times, only one third of corporate frauds are detected Okay, I would say that, that sounds like a success story. So 66% of corporate fraud is happening without us knowing it. I believe that Finding number two, we estimate that on average. 10% of large publicly traded firms are committing Securities fraud every year. Okay, 10% that doesn't, that doesn't feel shocking to me either. I would have guessed the almost A Little Higher One in ten, one in ten large, these are large cap companies. They're not talking about I'm with like okay and then we estimate that corporate fraud destroys 1.6% of equity value each year equal to 830 billion dollars in 2021. So there you go. Nearly a trillion dollars of equity value disintegrated because of unseen, undetected, corporate fraud. What is it? That's the paper, that's it. You don't have a clever takeaway here, takeaway here. One of the things I did is I used msci's, AGR, which is, I know, a year, our friend Agnes. I love ADR actually EGR is Is like accounting anomalies, right? It's forensic. Forensic accounting. Yeah, it's looking for anomalies in the accounting based on what peer companies are doing. It's highly complicated. It's very large data set but they have an indicator that says like these companies are maybe like there's a lot of risk accounting risk here and I was matching it up with our, with our board, saber metrics to see which directors are basically have a high exposure and I'll give you one name and if you want the rest, you have to call us up. And I can I do. I you all. So, how you collected you? Okay. The one named I'll give you is Charles Scharf one named World. I'll give you. I know that name. That's it, that was good. I like that. We're gonna keep it simple. That's all we got for a Monday. As Damian Ross, I'm at Scott, he was a very apology Monday, why not? That's great. And cross the Stars off my list of these. If you haven't read our predictions paper, it's out on the website on social. It's the best paper. You're gonna read this year. Bar none. If you have read it you want to get in touch with us about the data behind us. Do that otherwise come back tomorrow for corporate theater players and then all week will be here until then goodbye.