Transcript
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 paid by an 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, one Comcast right odd committee. Yeah, he was on the audit Committee of 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, to the shareholders. I said 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 ten 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 really began with this idea that we were going to rate for kids of directors and terms of the risk that they provide for an 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 now, 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. 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. Is 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 Um, quick thoughts on the anti-esg movement, like is, okay, it's not could, it 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 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. I 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 ramaswami. But his financial disclosure show that his personal Investments are very yes. She 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 them for a copy of one of their analyzes, but they didn't send it to me and I'm under, I've been told their analysis is just vote with management. That's that's what 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, those hearings. Yeah. But in this case they didn't ask me hard questions. They just pretended, I wasn't there. And every time the four men who are 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. They would say glass Lewis and I assess our duopoly and no one can compete. And I said, well, as a matter of fact, presidential candidate, 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 than 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 xerox machine going. All the time. So it's a lot easier to do it now and also the industry has been established a lot easier. I said that's ridiculous to say that a 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, 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 going 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 in 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 corporations. It's a it's a funny irony. Yeah. But like that. Both working. I'm a Democrat but we've met working in the Reagan, administ. I mean a 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 to 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, there's a very clever sort of, underhanded, war against any brown people, people who identify as women, it is a social construct to Mass 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 Of the things that drives me, bananas. And that I've spent like the last I when I think back and 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 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, thank 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 his blog too. But yeah, it begins, 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 guys can I pair something? You said no on LinkedIn. Because to me, it's even worse than that because the language I use is the most odious language I've seen today and this is from the national legal and 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. It is All. Who is behind this? Yeah. What is in Adobe 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 a 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 list 20 people since 1993 roughly, 11 of them are people of color eight or women. And since 2019 five 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 called themselves, the national Center, a legal policy. Yeah. National white National, I suppose, I don't. Yeah. No. But 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 it 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's paying you to file this comment, but if you don't, we're going to keep that in mind. Yeah, yeah well comply or explain 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. And that's another thing. If I, if I were spending a hundred thousand dollars to fight, Cheryl der 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.