Transcript
We will it gets worse every time. That's, it's worse and worse. I don't know what's going on. Yeah. Live From right about here. It's the ESG industry's, only weakly woke data podcast. Featuring BS man. Matt mascardi take about Matt. Um, I am bowing. It's audio know. I can tell and today's Effortless effortless. Spaghetti gas. You're, you're algorithm is broken called May 10th 2023. Random ESG headlines. Proxy vote observations and an incredibly nerdy ESG. Deep dive from Memphis guardi, right? Yeah, it's worse than dirty. It's boring. I'll be judge of that. Oh, before we get started, I know we want to talk about our sponsor s gauge. Our show today is being sponsored by ESG, your ESG Data Solutions provider. Or is it data? Well what would Paul say a data data? All right, Paul. A clap for data. I also want to say that if you happen to be in the Portland, Maine area. Yeah. June 3rd through June. What 9th? Yeah, it's about a week. The port Fringe Festival is featuring yeah. The business pants, corporate theater players. Yes. They have four or five different shows going on. So stop in and they'll yesterday's show they did earnings calls was fantastic listening to beer company earnings call while all the people were drunk. The transcript was my favorite thing of the day. So yeah go book, your hotel's, airbnb's campsites, now do it now, it's a good weekend away. If you're from Boston, New York, Mumbai, wherever you're coming from. Yeah, great weekend away, but you literally need to do it now. There's already nothing left. So cheap, do it. Ready. Random ESG headlines. Oh random. We're we're selling. Our thing hard today random. Aren't they all kind of random though? Is there a structure in ESG that we've discovered ours? I believe you listening to the show. You've been indoctrinated into random. Wednesday is for our nerds, for our ESG, analyst nerds. Because you know what, I know you work at companies that ESG research providers and they don't get you together enough and discuss stories like this. But so we do. Yeah. I mean they actually they ask you actively to have no fun to talk like robots. And while you want to do is like, stand around you, the toaster oven and figure out who melted the cheese on the inside of it and what their ESG scores should be, and why does everything smell like tuna? Ready? Yeah, let's do it. Thread up dual lists. Oh, you're done thread up dual lists on long-term Stock Exchange bolstering, ESG, commitment. That's the headline Duelists. Yeah, so this is the long-term Stock Exchange which we talked about a while back thread up is the time ago. Thread up is now only one of two companies listed on the platform alongside a sauna. Okay. Long-term Stock Exchange. Is a principal's Base Exchange, requiring listed companies to detail in public policies. That offer stakeholders insight into how a company builds its business for the long term. It's very stakeholder friendly. Very stakeholder Centric. And there's a focus on the long-term, not the short-term. I don't know why. They only have two people. Yeah. Does that mean only two companies care about the long-term and that's it. Yeah. And let me tell you what, these two companies have in common, Matt. Is it yes? Yeah. You're going to Young Founders. Yeah, that's that says of things about stakeholders. Yes and sustainability. Yeah, absolutely. Ain't it? And that's it. And what's the key governance governance feature of both companies? Oh, let me guess. Glass. Share. Yes. So here's the Oddity of the long-term Stock Exchange and if any of you are from that changer listening, I know you are just reach out to us. I'd like to have this conversation, both companies have dual class stock structures, both have the exact same structure Class B shares getting 10 votes per share. So at a sauna two men control 89% of the voting power. And those two men are actually are Facebook alums Dustin moskovitz who also co-founded Facebook and Justin Rosenstein. So that's where you're getting an assignment and it thread up, six directors control, just under 50% of the actual outstanding shares but control over 90% of the total voting power. So what kind of exchange is this Matt, why wouldn't they? What is this, why wouldn't they give? They want to control six director's, own 49.8% of the outstanding shares just make the shares that they own work 1.001 vote. And then it's a 51, get another get a buy a few more shares and get rid of this, horrible rule, but Matt seriously. So what kind of exchange is this is like, invest with us, you don't have a say, but you can watch us over the long-term do stuff. Is that what this is? I mean, I mean like the what it? So we can view the long term to the the lens of some companies. You know what the bet is here? Yeah, the bet is, if you listed on the long-term Stock Exchange because of the requirements of the long term Stock Exchange, you don't need to control them because you can feel like, oh well they're long-term focused because give them control. It doesn't focus on the long term. Yeah I don't buy it but good for them. Moving on, I have a few anti-esg, woke Wars updates, they both apply to me. Oh, which is all I care about. They both just happened to be about me. Really first in May, good news and bad news first in the state of Maine. Where that The where Matt you talking about the French Festival, right? Yeah, right here. In Maine. Maine legislator, dismisses anti-esg. Bill, they Struck it down. Wow, they just missed it. What Did it was it the the Playbook legislation that we seen everywhere else? Do you know like yeah? Yeah, I was the same thing. Like Banning anyone from discriminating, against fossil fuels, which of which main has no companies that like are involved in fossil fuels, is that, yeah, this is just sort of a straight. Like, if it smells like ESG, it's no good for anybody, get rid of it. No. Okay. Well, they would be right about that. Yes, she does smell like tuna in a toaster oven, in an msci office but this bill is now dead and unfortunately, no Ohio where I went to college Ohio bill would ban colleges from discussing diversity and climate change. Wow! He feels like a bold move. We are going to ban the discussion of an entire topic. And here's one more. One more Rider on this bill diverse is diversity. Is not all the Build tackles it all requires, colleges to severe any ties with the Chinese government, or Chinese schools. Oh, really? They don't want a single Chinese student. Yeah. So now even more, even more. So openly, the anti ESG movement is openly racist. I'm just playing that out. I mean, and against climate change. I mean, okay, I guess like, I've never, I've not heard of school, other than a religious school that literally said, there are topics that we are not allowed to discuss here. Well, what we're not covering today is Governor Ron DeSantis. I don't know if you read this, he's also now preventing Chinese from buying property in. I saw that. Yeah, yeah. That's that's, What I mean? Like, what if you were Chinese? Born? American. Yeah. There's there's limitations on that too. So now you can on property in Florida, like yeah, well welcome Italian oil firm any faces lawsuit, alleging early knowledge of climate crisis. This will be the first loss of its kind in Italy. Yeah, they already had this lawsuit and a bunch of other places. They had Royal Dutch Shell. Yeah, that was the big one. Yeah. Credit Suisse CEO to join UBS bored. What do you think about this all? Corner. Who was the CEO of the of the failure that was Credit Suisse is joining the board at UBS following the the deal. The 3.25 billion dollar deal in his role corner, will be responsible for ensuring credits. We saw operational continuity, blah blah and all existing Credit Suisse executive board members will report to him. So, Why keep the failure? What do you think about this? He wasn't the only like, in fairness, so she sure he started. He got the job as CEO in July of 2022. Yeah, they've been cycling through. Just see them out, right? Like over and over again. So, It's it's more like anyone from Credit Suisse should end up on the board of UBS is the is the travesty not this guy. This guy actually arguably had less to do with the failure of Credit. Suisse probably have very little to do with it. I mean the Credit Suisse Falls because of a depositor run, right? Like but they have been a shit company shit Bank from every perspective for a long time so it can't all be him and he came from the asset management division. You didn't even come from. The banking division can't be his fault, right? It could be. And is a way to my next, my next line of boring topics. All right. Southern. They're having their annual meeting tomorrow miles. So we'll see if shareholders are angry or not. Tomorrow waiting is tomorrow. The know, it's not tomorrow. I think it was today, was there a congressional hearing on ESG? okay, you're you're jumping to your your your ADHD my headline there, but maybe Yeah, we're really. In fact, we were supposed to live stream it and we completely forgot. Yeah, that's what happened. Yeah. Before I hit it over to you, Matt, I have a few observations from recent. Annual meeting votes. I call these proxy observations. Why don't you play me into proxy observation? Give me something. You want proxy observation music? Yeah give me a theme. I got you covered. Oh same. So disappointed. We're just talking about Fortune, 250 votes here. The 2K, 250, the biggest companies in America. I just wanted to point this out to you, I was comparing two groups of shareholder proponents. The first is the anti-walk the national Center for Public Policy research. Yeah, the races. Yeah, they've had nine votes so far in 2023 cover their most, their most favorite topic is civil rights audit, right? This is the yeah, yeah. Well, well to be clear. They talk about a civil rights audit, but what they mean is discrimination against white people, that's what they mean in their civil rights, what they mean. It's not the civil rights that I understood. No, it's not America and that we all learned about. It's the different one, which you maybe will know longer be able to learn about in Ohio. I'm not sure or Florida or yeah, the Carolinas or anywhere. So they had nine votes so far in 2023 7 or these are in the bottom, 10 for the least amount of support. So people are, they're not into these guys, Matt, they're not shareholders. Don't seem to be into the national Center for Public Policy research. That's sad for them. Yeah, overall they have an average vote of 2.8%. Oh, wait a minute. How much of that 2.8% is Strive every time. Good question. Can I tell you what's amazing about this? And why I picked the story is that last year, Matt, they had 13 votes up the exact same. Percentage of votes 2.8. Building momentum. He's building. Actually you're wrong. It actually is dipped Point 05 percent. I rounded up but it's still credit. It's still 2.8%. Look, they have time. If we can get that up to 2.9%, they anti-walk will have something to talk about. I wonder how Larry Fink is complicit in the fact that nobody likes them, is he think he's part? I mean, yeah, they're voting. So their vote, maybe they're all talking about voting against them, not that they ever voted for anything really ever. But I think that black this means that black rock controls 97.2% of the rest of the vote. I mean not like legally and technically, but in philosophically. Yeah. Obviously, obviously, and sisters that the nuns, the sisters, and the brothers, the monks. So, they Brothers fryers. Brothers, sisters, brothers and sisters. Sure. Okay. They've had seven votes so far in 2020 through they even average support of 24%. That's pretty high. Wow, so what I'm trying to tell you, is it, it's better to be a nun. Then a racist misogynistic jerk. Let me ask you a question. Yeah. Prior to, about one year ago, would anyone have called nuns woke? Look times are changing. I mean, like, when I grew up the nuns were the ones was rulers. Slapping your hands for like you know, saying stuff wearing weird clothes, having earrings, whatever like eating tuna fish in a from a toaster oven. Those are the nuns. So, Uh, and overall so far 2023, only five shareholder votes have passed only five so far. Two of them, two of them at Wells Fargo. All shareholder votes. Only two have passed. No, five have passed five, have passed. How many votes have we had out of the fortune? 250, I think about five. No, no 2 to 300. So listen people, I can look while you're talking the Alternatives democracy is a democracy, only, if you go vote for things, if you don't vote for things, it's not really a democracy because if you pass Five proposals out of two plus hundred proposals. What you're saying? Is that what shareholders are asking for 98% of it? You don't care about and you're not going to vote for that. Shocking number to me. And finally, before heading over to you say on Pavo, There's been no rejection so far in the 25th really. Okay. Oh, that's sad for strive because that is the one thing that we agree on all the time, they vote against say, on pale all the time, all the time, it hasn't had any effect. Oh Matt what do you go? You got that was really uplifting. So I'm gonna I'm gonna bring us back to reality with the wonky Deep dive I've ever done on this show. Yeah and it's about CME Group Chicago Mercantile Exchange, speaking of exchanges and speaking of boring boats. Yep. So their proxy came out and their vote just happened. And their vote is turning into basically a clown car disaster on annual basis. My favorite here is why there are five no less than five classes of shares at CME Group. It is rare. When you have two classes. It is rarer when you have three classes, but five is like Platinum, level class shares. Like that is, that is just diamond and crusted shares. There are class B shares, but not just Class. B, it is B1 B2 B3 and B4 shares. Yeah, why not bcde? Oh, and I wonder what that? No, no, they didn't go with the alphabet. They would ever be bees one through four. I would have liked to be in that meeting. I would have been an interesting meeting to decide that and then you have class at those, those shares. Those Class. B shares are owned by actually the CME membership. So, in order to work, you know, trade on the exchange, you have to you become a member of The Exchange and you can trade. So the membership when they IPO got those shares Class, A shares is every other idiot. That's it's Black Rock and Damian rawlas. That's who has class A shares like it. Class. B shares. Entitled, you to six Class B directors. These are they can only be elected from the membership of CME exchanges. So class B1 gets three directors class, B2 gets two directors class. B3 gets one and B4 gets to vote on them the membership directors. Basically, okay. And This board has. So if you have six directors that are voted in by these other classes, How many directors would you say that the board? How you'd say they have? The average board has, you know, eight to ten directors. So they probably have like Class A gets four or five directors and Class B gets control, right? It's usually about half, you know, a little about half and half so instead. CME. Thought it was a good idea to have 17 other directors. There are 17 Class A directors 17. This sounds like a very manageable board meeting. There are 23 total people. I mean at every board meeting and in case you're wondering, yeah, there were six board meetings. This year two special meetings for the entire year. And the directors in total, you know, how much it costs to pay 23 directors on your board. Oh, that's a lot of cheeseburgers. How much is it costs? The the stink coming out of that. Toaster oven is exceptional at 6.5 million dollars in director salaries every single year. What the average about 270,000 dollars each. But really the white, I know we've described Chicago it was like it's like sort of the business Mafia capital of the we have said that right? Yeah. Do you think they're just handing out favors like why are they doing this? Why would you want? A board. So large, I mean, does it give this my question to you? Is that Does it give the CEO more power if the board is just a big shitshow, if nothing can happen? Nothing gets done. There's a, does it give the CEO even more? Of a voice. So that would be my natural instinct to say, like, this is consolidating power with the CEO, this is just terrible, right? This is just like, what's going on. I have no idea. What is the CEO thing? Like not even that like what time is the meeting. I'm going to turn my face off on the zoom call and no one would know because I'm on page two of the you know like the panels on a zoom call when you I'm on page two of the gallery. No one knows him. Even here. So registry me as attended Here's the reality. Okay, and what got me going on. This is, first of all, the Ridiculousness of it, it's a 23 person board. They only managed to find two brown people. They have a diversity Matrix. Yeah, basically, they put 23 in the white collar, like or what, 21 in the white column and two in the not white column. This is, we're not talking about like Utah, The highest influence member of this board is the CEO Terrence Duffy at 15% influence. Like because there's so many people get diluted. Well, here's the story. Okay. And let's let's do some. Do we have some Story music? I'll put up with Story music in and post. Here's here's the story. Apparently, they've been trying to get rid of the Class B shares for nearly a decade, okay? In 2014, they put up to vote to the the shareholders, getting rid of Class B share, but the class B shareholders had to vote for it and they turned it down, put up the boat man management. Put up the boat that right. Okay management, why? He was very unusual in 2018 four years later. They tried again, in fact, this time they offered the members 10 million dollars for between them to get rid of them, they basically were willing to pay well to Shell out money to get rid of Class B, also not a proof okay in 2021. The board actually amended its own bylaws so that the nominating committee would select all the board members themselves. So the votes would go to the different classes because the way the votes work is the B1, shareholders elect, three directors themselves, their their own class. They get their own directors. It's like a whole separate vote, but the board said, wasn't in the bylaws and make the nominating Committee of the class, the class, A nominating committee, choose all of the directors and then at least they're picking from our directors, right? Right. So what happened was class? B shareholders. Did not like this. There are not that many of them. They did not like this at all though this felt like a runaround. So for the last two years, what they've done to get back at the board who amended the bylaws was, they didn't show up to vote. And according to the Charter, yeah, they require a quorum for each of the Class B shares, otherwise, the existing directors just sit in their seats until they get a course. Okay? So for the last two years Class, B shareholders, just don't show up about 14% of them showed up this year to vote, okay, for directors. And because they don't get a quorum, then, they can't elect anybody knew they can't. So they can't put in the new nominating committee people. They just keep the old ones. Wow. The directors who were there. Mm-hmm. Are the following six people. Bill Hobart, he's a Class B, one nominee director. He has two percent of the influence five years of tenure. He sits on the Clearing House committee. Oh they're basically gave him a nothing ball committee. Yeah, you forgot to mention that this company has eight committees eight different committees. Yeah, that's a lot of committees but you can have eight committees when you're effectively the size of an elementary school kindergarten class like yeah, it's a gigantic to be fair. One of the Committees is who was responsible for buying bagels for the meeting. I think that was, it was the who's turned it to clean out the toaster oven, I'll spare you all the people. Sure. Except for one, Elizabeth Cook, she's a class B3, be directly, that sounds important. She has the third highest influence on the board overall 7%. She's been there for eight years and now they can't get rid of. Liz, cook can't get rid of her, okay? And because they can't get a quorum voted out. She is on the audit and the compensation committee, okay? The total b share influence of the the B shared directors is 19%, so they do not control the room which means right? You have here's the situation if Class A Shareholders. Vote to reduce the board to a manageable size. They can't get rid of the Class B shareholders without worm without a quorum and they're not going to show up. So, by reducing the size of the, a shareholders, from 17, to something manageable, they would actually increase the influence of the Class B shareholders. You would hand control to the class B people, so they actually had to create a 23 person board, just to drown out. The people will not go away. This is sort of how the Democrats want to solve the Supreme Court problem, right? They want to add Supreme Court, just yeah. And the CME, blames the lack of diversity overall. They could only find true brown. People can't wait to hear this. The membership of the CME The, the member the class B. They are. There's a, there's by my total count, there's 27,000 of them. Possible, who can get elected to the board and that includes like someone on The Mailroom floor. Who's happens to be a member, right? Like, it's like, nobody's The membership is so, not diverse that the six people, there are almost entirely white people. In fact, when you look at them, it's five, white men and one white woman. That's what it is. You know, in Chicago. And so they're basically saying, oh, 17, other people are diverse Like there's more the percentage of diversity. We'd be much higher if you remove those people I see So that's the situation. I don't have any takeaway here except that it's Insanity. That's more than when I threw this story at you. Though. That was more than I bargained for. I didn't think you'd find it. Oh, I can say is, it's always Chicago. It's always Chicago. We can end with its always Chicago right as our index. That toaster oven of a human is Damon Raul's. I am full of BS. This was what Wednesday it was something very heavy, very heavy ESG. I mean it's the wonky is saying I've ever heard? Are they gonna try to ban us next? Because we talk about esche on, I hope so. Before they ban us, write us. Send us to a friend. I don't know why people don't like that. We I don't see new ratings come in. I don't I'll be honest. Matt when with us. Tell me a podcast. You're listening to. I don't. Listen, I'm just like, don't talk to me. Okay. But we're the one that you should send. We're the one. Yeah, we're the one that you should. I mean, how many other podcasts had the future presidential candidates. Thank you. Thank none. None. Tune in tomorrow until then goodbye.