Transcript
Welcome to shareholder Primacy from free float medium podcasts about activist investing, Securities Law and all the ways, the financial legal world's intersect in Collide, in real life. I'm here with and Lipton law professor at Tulane in New Orleans who teaches and researches Securities and business law. She holds up the legal end of the podcast. And that's Mike Levin an activist investor who lives and works. In Chicago. We covers the financial side of our podcast. I have a question. Am I pronouncing your fair City correctly? All right, people actually well the the the end is actually like real natives like real but they they have a slightly I can't even say it so that the separating the E and the a is actually real serious. Natives do that. They do it in a slightly different way that I can't that I can't imitate most of us who lives here now. Like now that I've come here, we say Morales, New Orleans, New Orleans, New Orleans would Mark. He was not living here. I've had people call me out on this after listening to the podcast. Oh yeah, I would say in New Orleans but people who like the people on my faculty who are like true natives, they actually separate the a but there's a different way that they do it that I can't. I'm not changing but anyway, we are a couple of fun subjects that aren't about how to pronounce and lipton's home City this week. We'll talk about another way ESG Investments can go astray and awry, and lead to lawsuits. There was an issue when filed this week related to retirement plan beneficiaries that don't want ESG funds in their 401k. Menu of options and how the employer was somehow responsible for that, but we'll dig into that and we'll take another look at Boards of directors as a kind of profession and see what the National Association of corporate directors actually does. All right, let's dig into it. Let's talk about this new case which involves a different part of law. Your Risa retirement law which I know I'm barely familiar with that and how much you've dug into it. But you probably a little bit, it's not my field but it relates so much to Securities Law that I have to pay attention to it. So it's the employee retirement income, Security Act. It was passed in 1974 to protect workers who have employer-sponsored retirement plans. So the problem the statue was dealing with was employers prior to 1974, they would promise workers some kind of retirement income, usually a pension plan and then the worker would put in like 30 years of work and the promise would just disappear on the eve of their retirement. There were still companies that like, really Minutes serious fraud here. Yes, it was passed to try to make sure that the money would be there when the employee retires and these days though, most companies don't offer pension plans. They offer these defined contribution plans where the employer creates a menu of different kinds of Investments, usually, mutual funds, and the worker can choose to allocate some portion of their salary to whatever funds they pick from the menu and those Investments are then available to them when they retire. But the employer has a fiduciary responsibility to oversee the funds. On the menu. They have to offer a selection of suitable funds. They're in the workers best financial interests. So when you're an employer, if you're setting up a 401k plan, whose funds do you? Imagine you include on that menu. Basically BlackRock Vanguard State Street things like that the big Index Fund providers. So across the country. These funds are included in retirement plans. And that's just what American Airlines did it set up a 401k plan for its employees and there were a couple of different options. But in general, they could choose to allocate fun. To several different Black Rock funds. And these were just ordinary index funds, they were like yes and pee. Yes, exactly. We don't know exactly what they were. Basic vanilla index funds. Good International fund and so forth. You've seen it. You have like this. I've seen them. So it's and and American Airlines chose to contract with black rock in this case right mothers to make these funds available. Okay, exactly. Okay, so there was a case, a pilot brought a class action on behalf of around. 100,000 participants in this erisa plan alleging that American Airlines violated its fiduciary obligations by including these BlackRock funds in the plan and the reason was because BlackRock and Larry Fink the head of BlackRock had announced that as part of their stewardship, they would urge portfolio companies to prepare for the costs associated with changing climate. So the phrase ESG gets thrown around. It gets thrown around and Reporting on this case. The phrase ESG is all over the actual opinion, but that's kind of a distraction. It wasn't about ESG in some general sense. This was about climate change and specific subset of e. Yeah, it was exactly. It was about black rocks, climate change stuff and the pilot argued that black rocks, climate activism, was intended to advance a social goal and wasn't really about maximizing The Well of the funds and that, it sacrificed returns returns. Oh, interesting. Okay, so American Airlines, according to the pilot, Violated its fiduciary duties to plan participants because it didn't take any action to discipline BlackRock. And this pilot, he filed this case in the Northern District of Texas where he was actually sure to get this famously aggressive. Conservative, judge, judge, shopping going. There was a absolutely judge shopping and I mean this judge had previously struck down the Affordable Care Act, he rejects gun regulation he's really sort of famous for this. And after a bench trial, judge O'Connor just, you know, like last week or very recently agreed that American Airlines had violated its fiduciary obligation to the erisa plan participants by, including by, not over by including the black rep funds or by not disciplining Black Rock, not trying to get. That was something. I, I just know something, I kind of thought is that the pilots were objecting to one or another ESG oriented fund know. These are exactly, exactly. These were just index funds. All of them were just normal index Funds. It was the fact that they were BlackRock funds and BlackRock was doing climate activists and black rock. Expressed its expresses its activism in two or three different ways. Larry Fink hasn't done it yet this year, but he usually writes he's backed off after all of this web, right? He sees slow down, but you know, customarily here, it's a letter to all the CEOs of portfolio companies and password, you should say, stuff about how we got to be careful custodians of the environment and then they also vote. In very ways and they have very extensive stewardship policies about how they are not going to deal with environmental issues and climate change. They aren't really much of their own activists, right? Never sponsored that no music, right? But he, but, but black rock and others would vote sometimes. Would vote in favor of these. Climate change Revolution resolution. So this, right? So, this was the evidence that was put forward to show that they were pursuing a social agenda and not maximizing the wealth of the funds, right? And so this is a very broad indictment. Yeah, I'm using that term loosely because of how American Airlines kind of police the choice of funds in their, in their quite frankly how every employer does because black brothers. So I mean there's so much going on here. I don't really know where to begin. So I mean like Let's talk about how business law ordinarily Works. Suppose you have an operating company, not a mutual fund, just a normal company. And the directors of that company, decide they're going to reduce their carbon emissions. They're going to start making products that can be powered by wind or something like that. If its shareholder brings a lawsuit saying you are sacrificing profits to advance a social goal that claim is going to be thrown out of court. Why? Absolutely because the Judgment rule it's the business judgment rule. In other words courts defer the business decisions of corporate directors. They're the ones who get to set corporate strategy and it's plausible that this is well maximizing. Maybe you think they're going to be new admissions regulations. Maybe you think, consumers prefer Greener products? Or that wind power is going to get cheaper? If you're right, then these adjustments to your product, mix are absolutely well, maximizing and normally a court, like a Delaware Court would defer to that choice and reject any challenge by a shareholder, but there's a caveat and that's you, Mike, you personally, if the directors adopt a bad strategy, That actually is reducing shareholder returns for climate change purposes. It's actually. It's costing the company money and it has no Financial justification. Mike, what are you personally going to do? I'm gonna go after the guy, you're gonna go after that, you're gonna do activism and you can do that because these companies are responsive to public markets. And so that's why courts have the business judgment role because they say forget it, I can dismiss the shareholder challenge because I know the markets are going to take care of this kind of thing. The market for corporate control is we call exactly. That's what's going to take care of this. So courts don't have to get involved. But let's say we're not talking about, not operating company, we're talking about the Strategic choice of a mutual fund. It's not clear the same Market operates in the same way. There's no activism in an open. In mutual fund shareholders are retail, they're unsophisticated, they're locked in through their employers, retirement plan, it's just not as obvious that the market mechanisms work that way. That's why we have a So I can actually see a case that would say something like for a court to say you know, I'm not just going to defer to Aristotle's or mutual fund advisors and when they say they're adopting a wealth maximizing strategy, I'm actually going to look a little harder to make sure that the evidence and look at the evidence against that part. Yeah. Right. That part I can kind of see and that's what judge O'Connor did here. He actually explicitly said I'm not just going to defer because you play lip service. I'm going to seriously look and make sure that you really articulate a strategy. Okay fine, you're going to look closely the strategy but after saying that he doesn't actually look at know, I think the record of his okay he immediately pronounces that if shareholders are concerned about climate change, they must be pursuing a social agenda and the opinion when it came down, literally Los Angeles was on fire. Estimates where something like 150 billion dollars in Damages but if any insurance oh really is that where it was that the last supplies that was 150. If any shareholders concerned about this, they must not be interested in long-term wealth maximization, his only evidence. If you could even call it that for the idea that focusing on climate change sacrifice is shareholder. Wealth, is he has this statistic that in 2023 ESG funds under the form. Underperformed indexes. He doesn't cite the study. By the way, I have no idea what this study was. There's no, there's not even footnoted. There's not even put noted. I don't know what the study was but even if you say, it's a legitimate study and that one year, ESG funds, underperformed indexes, these were not ESG. Funds, ESG, funds, where you select companies based on criteria. These were index funds. He also spent some time on the proxy contest at Exxon from a few years ago and I didn't read the decision. I didn't know, I have to decision. Yeah. So it's really it's 70 pages but it's double space so it's easy but he What size font, is it bigger Leather. So it's always like 12 or 14 because judges are old and they can't read but spend some time on the proxy contest at Exxon from a few years ago where BlackRock along with instit, Voted out three sitting Exxon, directors, in favor of these dissidents who ran on a campaign, of course. Engine number one. I know, right? Right. They went on this climate change campaign and judge O'Connor just declares out of nowhere. That there's no, rational economic sense for that vote. That's the phrase, he uses, no rational economic. That's, that's a sight. Okay? Yeah, he actually says that, but what he doesn't do is actually look at the campaign and that case, because if he had, he'd have noted that the entire campaign was economic, the argument that was made by the dissidents was Exxon underperformed, the market because it was not making necessary adjustments to the business. Risks associated with climate change and like a lesser demand for oil and gas. And I just have to point out by the way. That Steve Bainbridge was sure. You know, the name is a professor, you see? He's a huge shareholder, wealth maximization. He is the most hardened shareholder, wealth, maximization and board, Primacy as all of that, all of that, and he wrote in his book about shareholder. Wealth maximization that the only reason this campaign at Exxon, succeeded was because the dissidents made a financial case made an economic exactly, right? So, judge O'Connor highlights that BlackRock sent letters to 120 companies. These, this is the letters you're talking about, asking them to report on climate change, in line with the recommendations of the financial stability, task force, Financial stability, boards task force on climate change related, Financial disclosure. It's a framework. The tcfd framework, the task force of climate-related financial disclosures and BlackRock urged the companies adopted, but that is a financial framework. It's a framework for pricing climate change and just one other point on this because this is a drive me crazy. He accused American Airlines of being in League with the social responsibility Mission because one member of the board that was overseeing. The plan email to round this article, a New York Times article about making 401K plans more socially responsible, but that article explicitly said, you could make 401K plans more Social responsible without any Financial sacrifices correct performance. Exactly. Judge O'Connor quotes, the headline of the article multiple times, which is how to make your 401k a little less evil, but he never actually quotes the part of the art that says that's very good the article or didn't care. Yeah. So that's so I can sort of understand the train of thought that leads us to looking more closely than you would an operating company at to what you're doing. But he doesn't actually look right. So there's so there's a procedurally. Yeah. The way he went about this clearly had an apparently had an agenda. Yeah. Yeah. He was using using this case to kind of push it. So yeah. So What. Let's talk a little more about the American Airlines into this. So they're they're the defendant here. Yeah. They're the fact that black rock, not Black Rock, right? So if if American Airlines, I mean they have a choice here. Can they like? Yeah, I mean what if black car is like somehow Harming shareholders and causing American Airlines to breach, its fiduciary duty to 401K beneficiaries. What, why would they do that? And what, what could what could happen? And what's what's possible here? Yeah. Yeah, I mean you think like so he has to have a story for why American Airlines wasn't taking action to like stamp out this climate activism? If that's what it was. And he says that American Airlines was motivated to overlook black rocks activism for a couple of different reasons. Partly, because BlackRock is a large shareholder of American Airlines and a dead holder of American Airlines, so it has Market power. So we thinks that American Airlines is sort of enthralled. A black rock beholding. Yeah, right and which again, I point out, every company is if that's true of American Airlines. That's true of everybody. But the other reason that he thinks that American Airlines allowed, this was, because American Airlines had its own non-financial sustainability goals, and it thought that BlackRock was sort of pursuing the same goals that American Airlines. So there's some commonality of Interest In exactly. But he know where not once not ever makes. Any attempt to show that American Airlines, that company had any non-financial goals American Airlines talks about climate sustainability. But again, he immediately leads to the conclusion that American Airlines of all. So was not pursuing shareholder interests, was not, you know, trying to well Mac wealth maximize, but had its own non-financial sustainability agenda, with no evidence at all other than the fact that American Airlines Express concerned about climate. So, I I have like every business law, every introductory business law student, like the business law case, like introductory Business Law class, every single one of them, every business law student reads. This one case, it's called Dodge vs Ford sure. Yes, a pro-market just had an article. Yeah. So it's this really famous business, law, case from 1919 decided by the Supreme Court admission. It's about Henry, Ford. He stops paying a special dividend to his shareholders, so he can use the money to expand his factories, and the shareholders, The Dodge Brothers, the founders of I mean, they ultimately they've got a competitor, the shareholders Sue because they want the money to set up their competing business they too. And they claim that Ford is stopping these dividend to pursue a social agenda and they base their claims on Ford's own testimony. Ford says he wants to expand his factories and make cheaper cars because he wants to benefit society and raise up the condition of the working classes, he actually gets on the stand, he gets on the stand and he testifies, it's wrong for businesses to make too much profit because they should give back to their communities. The actual quote is we don't seem to be able to keep profits down from this testimony. The shareholders are arguing, you are pursuing a social agenda that's why and you're running the company badly and they win the court holds that Ford is violating Exactly worded in favor of Dodge. Okay? Yeah, the court holds. The Ford is violating his fiduciary duties to the Dodge Brothers and Order City pays this dividend and the case I got to tell you it's historical laughing stock at the time. The company was in a fierce unionization battle ford was trying to break the unions. Of course. He said he was running the company to benefit employees. What else what he say why on Earth would you believe him? That's how this opinion reads, if Larry Fink and American Airlines? To talk about the planet and sustainability, and only incidentally about numbers. That must be the God's honest truth. There's no such thing as public relations in this world, right? Oh man. So and now so this case was just decided like last week or two, so presumably it's and this is at the federal district level, it's a federal district level. So assuming it doesn't Settle and that's always on the table. We have some things that Joanna left open, he didn't decide yet. Whether there's any calculable Financial damage, they're going to be further hearings on that. So we don't know if he's going to award damages or if he's just gonna order an injunction. And once that just, that's decided American Airlines can appeal. But it goes to the 5th circuit, which is the same court. That's struck down the NASDAQ diversity rule. So, I don't know where that the appeals court, that's gonna hear would hear this. Might be favorable, just two or three with this. Yeah, exactly. But, but even leaving aside the ESG thing, one of the big themes in this opinion, is that BlackRock along with a few other asset managers like Vanguard like State Street dominate, the public markets, they hold large stakes in every company they administer the 4017, they set the standard of care for how the plan should be administered. And that's a situation that's Rife with conflict. And to be honest, I mean, this is all throughout his opinion that like, American Airlines is completely because it's ongoing relationship with black rock. And to be honest on that front, I can't even say he's wrong. It's just that black rock much more than other players. Draws a lot of conservative iron and that's because Larry Fink talked about climate change. So I'm actually sympathetic to the big, it's all one company problem but not the climate change thing. But I mean that's that's an issue that activists have yeah, for a long time. Objected to that like you Fidelity and Vanguard Were Always In Cahoots because the companies those funds wanted to manage exactly. They want to mention exactly that's been written up and so that's that that's an ongoing. And now it's not even that American that the Black Rock wants to cater to American Airlines so it can manage its funds. It's actually he's concerned. The other way American Airlines wants to cater to Black Rock because BlackRock is such a big shareholder and I can't say that that's, you know. Illogically. I think that's a thing to think about, but I don't think it's not in this context, but this was a little too, too far. Apart from that, I will say though there is this also another theme where business decisions these days are being targeted, politically as violations, of managers through to Sherry duties to shareholders. So, not long ago. Conservatives organized a boycott of Target because I carried this lgbtq merchandise, right? Its stock price dropped and then a shareholder suit saying that targets bored fail to oversee the risks of its ESG activism and a Florida courts. A state that complained that case is going forward as a Federal Security. That's gonna that's going well, they're mediation now and because a court seemed to think that it was so obvious that carrying gay themed merchandise would result in shareholder boycott. So it was so obvious that it's plausible to allege that the corporate managers weren't pursuing shareholder interests. They were pursuing their own agenda. So we've talked a few times now about whether companies will consider leaving Delaware and incorporating another jurisdiction's, and I think these cases highlight why that would be risky because I mean, these are federal cases. The Blackberry cases of federal case the target case of Federal Security Right? But imagine you're a company incorporating in Texas. If you make a decision to attract a liberal customer base. Like you make a movie with a trans character. Are you at risk of being sued? You could be sued for violation of your fiduciary duties. We know what a delicate Workhorse would say. The Delaware Court is going to say that's business, judgment go away. But are you sure that a Texas court is going to say that? Oh, I mean, a Delaware Court did say that a shareholder challenge, Disney's opposition to desantis's don't say gay law and Delaware tossed it, are you sure that a Texas Court? Which I don't know. It's exactly. I mean, here's the thing is we don't know. It's we I mean there's some evidence that Texas. Jurisprudence might kind of favor a little bit but we don't know in Texas, but it's still new and so politically. And, and right now, this is become such a politically Hot Potato that I don't know that these judges who have two year terms and appointed by God, Greg Abbott are going, whether they're gonna turn out to be social or conservative social justice Warriors as well and no company knows. So I think that that's, you know, that that's why you know, Delaware still in the running here like despite all the right, but I will say one other thing and then I'm going to we can move on but the just sound good. The judge found that American Airlines didn't even oversee. Black rocks, voting behavior that and that it was industry standard to essentially, ignore how funds were being voted, they invested in the phones, they chose the funds, but they don't really look at the voting behavior. And he said that standard, well, why is that? According to the judge. It's because of all these conflicts but I actually think the likely explanation is The voting behavior doesn't matter. These are climate change resolutions, they're not binding, they're predatory. They're just suggestions and they're vague. They have to be under SEC rules because if they're too specific the SEC will say they're interviewing with management prerogatives. So in a broad sense, I think that ride O'Connor is actually write BlackRock really was pursuing its own agenda, but it wasn't a agenda to save the world from climate change. It's a public relations agenda. It was brownie points with the public for appearing to care about climate change. Maybe BlackRock avoids tighter regulation, maybe BlackRock helps companies burnish their own sustainability, you know? Yeah, exactly. If they adopt these long-term sustainability plans, that don't actually do anything. So there is a real argument. That black rock is using pension fund assets for its own purposes, but Rito Connor, got the purposes wrong, it's not necessarily the change the world, it's to make black rock look. Like a hero because BlackRock, and BlackRock has in fact changed the little bit and they're a little less interested. I mean, you know, that doesn't benefit BlackRock much anymore. This case, probably related to decisions that American Airlines made in 2020 21 202. Exactly exactly. Exactly, but The American Airlines is not even overseeing black rocks, voting behavior. And because other than a few situations like activists and merger, the voting behavior, may not really matter that much at the end. You don't cut her, is making it sound like it matters. A lot more than it does. Yes, I agree. So, all right, we should take a break. This is, this is taking a lot of, let's do that and return in a minute, to talk about the National Association of corporate directors in and what they, what they do here, hold their Primacy. Sure older Primacy is brought to you by free float and lyrics.com the only free database of corporate directors their influence and their performance. If you want to Stocker, retirement, plan go to free float. Analytics.com and look up which of your elected directors are performing well and which aren't use your vote in the alternative democracy and get your data at free. Float analytics.com. Now, back to the show, Welcome back to shareholder Primacy. I'm Ann Lipton here with Mike Levin and Mike. We are going to talk about the National Association of corporate directors nacd. So what is and ACD? What do they do? Nacd is a an association. It's a professional supposedly, a professional association. That ties together. People who serve on Boards of directors in North America but really in the United States and it's a it's a fairly substantial group. It's got, oh, like 24,000 individual members. It's their representative like almost 1800 US. Boards of directors. It's, you know, it's got its kind of a Washington type based organization. We've got a staff at dozens of people, memberships, are not cheap to join. You pay 1500 bucks a year roughly, if you want your board, there's about 10,000 dollars a year for a board. So this is a fairly A well-run and well-endowed kind of organization, it's got chapters all over the US. It's like 20 years of Chicago chapter. I've been to their meetings occasionally and they do a lot. And there's, you know, there's a national meeting that they have once a year, they do all sorts of research and they offer Education certification programs, they do surveys. They actually have a little Consulting unit, it makes some additional fees that way that they provide basically board education and they advised boards about maybe succession and so forth. They have prizes annual meeting. They hand out the most distinguished award in corporate governance or something like that. So anyway so it's like one of these organizations that kind of, you know, kind of ties directors together and presumes to kind of educate them and Say educational, how to be a good director. Okay? And and that just sort of stating at that way is a little odd. okay, because You know, if you're sort of three types of people on Boards of directors, there's insiders, you know the CEO, right? Um and you know they're doing it because, you know, they're kind of the company representative and we can talk about whether that makes sense or not. But that's that's for a different way. Then there's shareholders investors can serve on boards, you know, you know, portfolio managers and stuff. So for example, we're watching right now approxi contest, with Air Products, with a hedge fund called, mantle Ridge. And Paul Hall is the CEO of mantle Ridge. He is a candidate for the board of directors there. So, he'll serve on it. He doesn't really care about the nacd. I don't think because he's, you know, he's representing us. Yeah, right. But nonetheless. There are you know, the most of the 24,000 members are these, you know, independent directors there, you know, retired corporate Executives, former government public, servants academics. All these people that kind of want to be on boards and Directed directors. and if you're one of those types, you probably have joined the nacd through your board, you've paid the fee or South so it's and it's you know, the majority, you know well over 90 or 90, if I percent of directors are these independent directors, so the nacd I would guess kind of speaks for the You know, the the those those directors and kind of represents their views and it was those views that I was kind of curious about. Okay, something happened that I was kind of got interested in at some point. You recall, we were talking about glass Lewis at some point and as it turns out, glass Lewis is active in the nacd. They are sponsor of some of their work. We'll talk about their sponsorships and so forth a little bit and I wondered why would why would glass Lewis be interested in the NCAA? Is it turns out as we've talked about before glass Lewis serves companies? They have the Silicon Consulting business and so they are interested in cultivating directors. And so, I started looking into the nacd and wandering wonder what they kind of do. For directors, kind of specifically and and how much of their work focuses on. Representing, investor interests. And that's that's where I found some interesting stuff. Okay. So, um And you know, I started looking at some of the research they do and so forth in particular there was you know, one big research project that they did about a year or so ago. That was this day of these Blue Ribbon commissions and this one was on Dynamics and culture within the boardroom and they and they convene this whole commission. They had a bunch of meetings issued a big report and so I looked into kind of what that commission involved and so forth and you know how much I was wondering okay if they're going to focus on culture within the boardroom, how much are their findings related to really representing investor interest diligently? And how did they kind of incorporate investor views into what the boardroom should look like? And so that commission had like 24 representative, there was the head was the retired CEO of United Airlines, it was another CFO. That was a retired, corporate CFO. That was there. There were 16, corporate directors. A board consultant, comp consultant benefits, consultant attorney a professor and then all the NAC TV, president notably. There were no investors know what? No shareholders, no one. No fun managers nobody in among these governance leaders. And I found that kind of curious. And I kind of wondered, I wonder what else the NHC does d. Does that, doesn't it? Sort of has this is missing this investor, this investor perspective and you could read the report and so forth. And there's a lot about how words need to get along and how the culture needs to be, very well refined. And, and so forth, there was a little advice in that blue ribbon commissions report about how we're going to deal with problematic directors. I can guess by that, I've been one of those but directors who make a fuss and say, yeah, who tried to kind of, you know, Nursery go along with the crowd. But there was nothing in there about how, you know board culture should cultivate and provoke, promote a healthy relationship with your holder. So I started digging even further. Into there and I started wondering, okay, kind of generally. What at the nacd revolves around? Representing investors. And I would describe it as bless him, there's there's a lot of resources there. I counted like 1900 different resources and little search engine on their website. There is the handbooks and more reports and analyzes and articles and nephews and all sorts of stuff. And a lot of things there, that presumably a director would need, you know, if you're new to this, you know, maybe you go to the nacd Joint member join the organization and start to learn. How do we represent shareholders and there's like nothing there. nothing specific in any of these resources that says, here's how to represent your holder interests. And I found that. There was a you know guides for how to talk to investors a little bit, there was a couple of surveys but out in 1900 resources there was, you know, a small handful that had anything to do with representing investor interests. And that's kind of General Lee. I then thought a little bit about. Okay, what about the nacd guidance or resources has to do with activists? And there is some really good content there about how directors need to think about activists. And so some of them are like preparing the board for shareholder activism. Are you prepared for a shareholder activist campaign? A good one. Was who's afraid of the big bad wolf? Okay. There was there was you know and then I'd mention there's these chapters, the chapters have, you know, frequent kind of meetings and discussions about activists investors. okay, but all the content seemed to revolve around how to make life hard activists and more about, how can we accommodate concerns? How can we listen carefully, or how, you know, what are activists about? Okay, you know, I looked at some of the, some of the agendas for some of these chapter meetings and there's some stuff about activism, but it was all about how to make again, as I said, how to make life hard for those about how to consider, whether they have a point, right? Exactly. And maybe there's something something valuable that bringing to us so that that seemed to be kind of the thrust of this and I I found that more than merely interesting. I found it kind of troubling Okay. And none of this is surprising because, you know, the nacd is not really an advocacy organization. There's no kind of policy. That they're trying to push, They Don't Really Lobby for much in in Washington or in front of the SEC. I think they've given occasional Congressional testimony about things, but it's mostly, you know, this kind of educational organization. And then, if you look, you know what kind of education, you know, there's a lot of there's 48 different kind of partners that are listed on their website, Who provide significant support to the United States and their sponsors of chapter meetings, they I'm sure write a big check each year to the organization. It's all sorts of law, firms, and head hunters, and consultants, and all sorts of people who, all they want to do is get into the board of directors. Their interest is in trying to get bored acts access. You know, none of these folks are really trying to trying to promote, you know, healthy relationship with shareholders are trying to advise these, they're trying to Independent directors in their capacity is board members. So, so this is a platform for these folks to kind of push and agenda, which, you know, tends to make activist kind of look bad. Um, so it strikes me after looking at this, that the nacd is really mostly helping boards to kind of manage themselves and to kind of help, you know, promote Executives to, you know, more and better board directorships. And that's Not unimportant. But you know, if I'm a shareholder I'm really electing these directors to represent my interests and there's almost nothing there. That promotes that kind of education about, you know, how to interact better with shareholders and that gets trouble. And that's what bothers you should contact. Whoever won contacts and put it this way after this. And I wrote something about this after this. I'm not expecting any invitations chapter meeting is about activism, but that's okay. But the larger Point here is that I've long kind of thought about in protested that there's this kind of odd peculiar dysfunctional structure, that draws directors much closer to Executives, this kind of professionalization of independent directorship. So this is why you really so called profession of the top of this. Yeah, exactly links them much more closely to Exit, the executives that they're presumably hiring an overseeing and paying and supervising and maybe firing and and and pulls them away from representing. Shareholders. And, and the nacd is kind of emblematic of that. It's sort of creating this enormous organization and culture, that separates directors from from the shareholders that they represent, and that is a problem. The nacd is in fact, reinforcing these dysfunctions rather than trying to educate directors of how to how to represent shoulder interests better, right? Yeah. So, they're getting advice from managing difficult directors and I mean difficulty, could be anything from, you know, a sleep at the wheel. To actually try and induce positive changes. Exactly. Right. Right. So, I mean, I've long thought that, you know, the kind of education that the nacd purports to provide, you know, we could do in an hour or two, you know, I could, I could educate directors about fiduciary duties of of care and loyalty and a little bit about, you know, how to how to get along with each other. That should take an afternoon, that does not take an entire organization. And this whole Fashionable staff and so forth to to get these folks up to speed, what we really could use is some some solid education about, you know, how to, you know, how to portfolio managers kind of think, you know what are they looking for in company? Performance, you know how, you know, what are some of the some of the current issues that that investors are thinking about that would be a really valuable. Contribution, not necessarily, I guess, I guess this stuff. So anyway, so that was, that was my, my adventure, my wandering around the, the world of of the nacd. And it was, it was pretty interesting. So I think, I think we've had enough here between between this kind of dive and then talking about the American Airlines in their world plans. So I think we can, I think we can move a lot, right? Let's wrap up. Thanks Anne terrific. Talking again, this is shoulder Primacy hosted by and lifting. And me Mike Levin. I'm an independent activist investor and advisor to investors about their activist situation, and is the Michael Implement professor in business law, and Entrepreneurship at Tulane law school. And in affiliate of Tulane's Murphy Institute, you can find me Mike at the activist investor.com and Anna edu. Our podcast is produced distributed as always by free float media. Listening and we'll talk again soon.