WOKE WEDNESDAY: Director of the week is an Empty Chair at Starbucks, plus revisiting Boeing’s “skills” matrix (not on there: door plugs)

Live from a woke peat bog buried underneath a liberal New Hampshire-ite, it’s yet another Woke Wednesday edition of Business Pants. Joined as always by Analyst-Hole Matt Moscardi! In today’s cat dander called January 24, 2024!: the top 9 stories from our ESG news headline randomizer and a Boeing deepdive, part 4000!

Our show today is being sponsored by Free Float Analytics, the only ESG data platform to measure real board influence and diversity power gaps

DAMION1

1. How unions are fighting a boardroom battle at Starbucks

1. There is a famous story about Starbucks that is often cited during discussions of governance: at board meetings, there is an empty chair to represent the interests of the coffee giant’s employees.

2. The idea was proposed by its former chief executive Howard Schultz to show that the company’s baristas have a symbolic seat at the table.

3. But that token gesture is on the verge of becoming a reality. A group of trade unions is mounting a serious proxy fight that could put a trio of directors on Starbucks’ board to be a voice for its rank and file.

4. The challenger is not the brash, aggressive activist investor that typically wages these kinds of campaigns. It is a coalition of trade unions, the Strategic Organizing Center (SOC), seeking to address the “severe human capital mismanagement” it claims is hurting the company’s business.

5. For those reasons, the Starbucks boardroom battle is set to become one of the most closely watched on Wall Street.

6. “I do think this is the campaign we have been waiting for and worried about,” says one adviser to large public companies. “Single-issue activists advancing a social agenda.”

7. Maria Echaveste, a former adviser to Bill Clinton during his presidency, Joshua Gotbaum, previously an investment banker with civic experience, and lawyer Wilma Liebman, the former head of the National Labor Relations Board, will all appear on the white proxy card Starbucks sends to shareholders.

2. 'Outrageous' CEO pay targeted in new bill from Bernie Sanders, US Democrats

1. The union-backed proposal would also require Treasury Department guidelines to prevent companies from avoiding the tax by using contractors rather than employees, the senators said in a statement on Monday.

2. The bill could generate $150 billion in U.S. revenue over 10 years, while companies could avoid the tax hike by raising workers' pay and reducing CEO salaries, they added.

3. The measure would raise the tax rate on companies whose CEO-to-worker salary ratio was above 50 to 1, starting with a 0.5 percentage-point increase when the top executive earns 50 to 100 times more than the company's average worker, according to the proposed legislation.

1. Companies that pay their top executives more than 500 times what a typical worker makes would face a maximum tax penalty of 5 percentage points.

4. If the CEO did not receive the largest paycheck in the firm, the ratio would be based on the highest-paid employee, the senators said. CEO-to-worker pay data for privately held companies would also be made public, they added.

5. The bill would need 60 votes to clear the Senate, which Democrats narrowly control 51-49. It also likely faces an uphill battle in the Republican-controlled House of Representatives, which would also have to pass the measure in order to send it to Democratic U.S. President Joe Biden to sign into law.

3. ESG removed from UK Corporate Governance Code

1. The Financial Reporting Council (FRC) has removed all references to ESG in a new version of the UK Corporate Governance Code.

2. The UK Corporate Governance Code is part of UK company law and corporate governance framework. It applies to all Premium-listed companies on the London Stock Exchange.

3. The FRC also decided to drop many planned changes, including those relating to the role of audit committees on ESG and modifications to existing provisions around diversity, overboarding (when one person sits on too many boards, diminishing their ability to serve the organisations effectively) and committee chairs engaging with shareholders.

4. The FRC produced a draft document in 2023 which contained 14 references to ESG. However, there were no references to ESG in the finalised code, which will come into force in 2025.

5. Luke Hildyard, executive director of responsible business thinktank the High Pay Centre, said the changes suggest that the FRC has deprioritised promoting responsible business practice and accountability due to a backlash from some investors and corporate leaders.

4. Patriarchy wins again as Oscars snub ‘Barbie’ star Margot Robbie but nominate ‘Ken’

1. The 96th Academy Awards nominations announced Tuesday overlooked Margot Robbie, star of the 2023 summer blockbuster “Barbie,” who was widely expected to receive an Actress in a Leading Role nomination for her performance as the iconic fashion doll.

2. Instead, it was Ryan Gosling as Ken who picked up an Actor in a Supporting Role nomination for his performance as Ken, Barbie’s beleaguered would-be boyfriend.

3. The irony was thick, given that the film about the bright-pink doll world did its level best to exalt feminism and smash the patriarchy by mocking Ken and his Ken buddies as dumb, weak and generally inferior to their Barbie counterparts.

4. In another surprise, the Academy of Motion Picture Arts and Sciences failed to nominate Greta Gerwig as best director for “Barbie” 

5. JPMorgan’s Jamie Dimon talks DEI: ‘I’m a full-throated, red-blooded, patriotic, unwoke, capitalist CEO’

1. “I’m going to start by telling you that I’m a full-throated, red-blooded, patriotic, unwoke, capitalist CEO,” JPMorgan CEO Jamie Dimon said to laughter at an event hosted by the Female Quotient at the World Economic Forum last week. “I’m not woke anything,” he emphasized. 

2. Still, the bank, which this week recorded its most profitable year ever with $50 billion in net income—and is approaching a market value of $500 billion—isn’t retreating from its diversity efforts despite the “ridiculous ESG, DEI groups coming at us,” Dimon said. 

3. The CEO, who has steered the world’s most valuable bank for 18 years now, hearkened back to his earlier days with an anecdote. He recalled JPMorgan’s HR department bragging some years ago about the firm’s diversity progress, but fusing all underrepresented groups. (Think: women, Blacks, LGBTQ, Muslims.) He responded, “Don’t lump it together. Come back and show me the numbers by VPs, EDs [executive directors], MDs [managing directors], and hiring and retention.”

4. They did. Women? Excellent. Hispanic? Excellent. LGBT? Excellent. Asian American? Excellent. Black? Average. Worse still, the bank had been recruiting at Historically Black Colleges and Universities (HBCUs) for years. “I said, ‘That’s not JPMorgan. We don’t want to be average.’”

6. Dwayne Johnson joins TKO's board of directors

1. Dwayne "The Rock" Johnson was appointed to the TKO board of directors on Tuesday, as he appears ready to return to the ring to face off against the Undisputed WWE Universal Champion Roman Reigns.

1. He also entered into a Services Agreement in which he will receive $30M in stock

2. The board also appointed Brad Keywell: the founder of Uptake Technologies, Inc., an artificial intelligence software company that provides actionable insight to industrial operators

7. Southwest Airlines flight attendants vote to approve strike authorization

1. Southwest Airlines (LUV.N), opens new tab flight attendants voted to approve a strike against the carrier, the Transport Workers Union of America Local 556 union said on Tuesday.

2. Over 98% of the members voted in favor, marking the first time in the union's history that flight attendants authorized a strike against the company.

3. Southwest flight attendants have been demanding higher pay and a better work-life balance in their new contracts.

4. The announcement comes on the heels of the carrier and its pilots approving a new labor agreement, which will offer about a 50% pay raise over a five-year period.

8. Kimbal Musk says he took ayahuasca and 'felt the voice of God'

1. Kimbal Musk said he "felt the voice of God" after a near-death experience and later taking ayahuasca.

2. Elon Musk's younger brother broke his neck in a ski accident when he was 37.

3. Ayahuasca is a plant-based psychedelic drug commonly used for spiritual ceremonies.

9. Over 2,000 shell companies have directors aged 123 years or older, Moody’s found. The oldest known human lived to 122

1. Moody’s Analytics has found 21 million “red flags” associated with shell companies that could be used to enable financial crimes, from ancient directors to dubious addresses.

2. For instance, more than 2,200 companies have directors aged 123 years and above, despite the fact that the oldest known human lived to 122, said Richard Graham, a director at Moody’s Analytics, in research published Monday. One listed director — at 942 years old — would have been born in the 11th century.

3. There’s also thousands of examples of directors below the age of five, and 22,000 entities with a registered address at Egypt’s pyramids. Meanwhile, one individual held 5,751 roles at 2,883 different entities.

4. Atypical directorship is just one of seven key behaviors highlighted in the research, including mass registration, dormancy and circular ownership.

MATT1

United's CEO seemed to subtly threaten a move away from Boeing, saying the Max 9 grounding is 'the straw that broke the camel's back'

• "The Max 9 grounding is probably the straw that broke the camel's back for us," Scott Kirby said. "We're gonna build an alternative plan that just doesn't have the Max 10 in it."

• Kirby told CNBC he believes the best case for 737 Max 10 deliveries is still five years behind schedule.

United's CEO is so concerned about Boeing's latest disaster he's been venting to colleagues and lobbying Buttigieg, sources say

• The Transportation Department doesn’t have legal authority to dictate any changes to Boeing’s leadership, although it can take enforcement actions or other high-profile steps against the company.

Boeing and Seattle-area union delay start of contract negotiations

• Boeing (BA.N), opens new tab and its Seattle-area machinists union have delayed the opening of contract negotiations until early March as the company deals with the grounding of the 737 MAX 9.

• Both Boeing and its largest union — District 751 of the International Association of Machinists and Aerospace Workers —have been named as parties of an ongoing National Transportation Safety Board investigation into midair cabin panel blowout on an Alaska Airlines (ALK.N), opens new tab MAX 9 earlier this month.

Nose wheel falls off Boeing 757 passenger jet awaiting takeoff

• A nose wheel fell off a Delta Air Lines Boeing 757 passenger jet and rolled away as the plane lined up for takeoff over the weekend from Atlanta’s international airport in the US, according to the Federal Aviation Administration.

Who is in charge:

• The board that approved the Max 8 planes to compete with Airbus fast tracked them and killed hundreds of people…

• 8% were engineers at one point in their careers with degrees in engineering, while 42% had MBAs and 33% undergrad degrees in finance or related

• 42% were in finance or accounting, and 33% were ex government (designed to lobby the Pentagon and FAA)

• …but since then, the board has slowly added actual engineers… too late?

• 31% of current board has engineering background, 23% with masters in engineering

• But now 54% of the board has finance/accounting background - they ditched the government lobbying (down to 0%) and added finance and sales (now 15%)

• … but influence is the only thing that matters.

• 63% of board influence is accounting/finance, 22% engineering

• 55% of board influence got undergrad degrees in finance

• 36% of board influence is in marketing

• LOOK GOOD, DON’T WORRY ABOUT BUILDING