WOKE WEDNESDAY: Good? ESG? News? Plus Bio-Techne's governance joke, groupthink measured at IBM, and a new show announcement

Live from a November-scented handsoap, it’s the ESG Industry’s ONLY weekly woke data podcast, featuring AnalystHole Matt Moscardi In today’s ESG headcold called November 1, 2023: Random ESG awesomeness, Director Appointments, Group Think, and a word from the great Paul Hodgson from ESGauge

Our show today is being sponsored by ESGauge, your ESG data solutions provider: Paul will jump on later to talk about “ESG metrics in incentive plans”

DAMION1

1. ‘A tipping point’ in equal pay: Automakers are scrapping tiered wages

1. Ford, General Motors and Stellantis are on their way to eliminating wage scales, joining more than a dozen companies that have taken similar steps since 2021.

2. The country’s largest automakers — Ford Motor Co., GM and Stellantis — are poised to become the latest U.S. corporations to do away with tiered wage arrangements, a system that splits the workforce into haves and have-nots by confining newer employees to lower wages.

3. All three auto giants have agreed to sweeping improvements in employee pay, including the elimination of unequal pay scales that made it difficult for new hires to catch up with longtime employees. While the deal still needs to be approved by union workers, it’s a big win for employees and indicative of a recent trend sweeping workplaces.

4. Since 2021, at least a dozen U.S. employers — in industries as varied as aerospace, education and manufacturing — have abolished tiered wages and benefits, according to an analysis by The Washington Post. Robust post-pandemic spending combined with widespread labor shortages have given workers a rare window to fight against decades of eroding pay gains and benefits.

5. The gains build on growing momentum. Earlier this year, UPS narrowly averted a strike by agreeing to equalize pay for its drivers. Lower-tier drivers were reclassified as regular drivers, lifting their starting hourly pay from $20.50 to $23.

6. The water treatment company Culligan, Boeing, Harley-Davidson and Caterpillar have also recently done away with tiered wage structures at the urging of workers’ unions.

2. Women on Boards Directive: Expected impact on Belgian listed companies

1. Current quota (since July 2011):

1. minimum one third of the members of the board of directors must be of different sex (one-tier system);

2. if the listed company has opted for a two-tier system with a supervisory board and a management board, minimum one third of the members of the supervisory board must be of different sex. No quota applies to the management board.

2. New quota: Listed companies must be subject to one of the following objectives:

1. members of the underrepresented sex hold at least 40% of non-executive director positions; or

2. members of the underrepresented sex hold at least 33% of all (executive and non-executive) director positions.

3. FFA: A sad female power gap

1. 39% body count/26% influence count

1. This is because the average man holds 12% of influence while average woman holds 7%

2. Gets even worse when you drill down

1. 70% of directors with 10% or more influence are men

2. 79% of directors with 15% or more influence are men

3. 89% of directors with 20% or more influence are men

3. Odey Asset Management to close after sexual assault allegations against founder

1. Odey Asset Management is to close five months after allegations of sexual assault and harassment against its founder, Crispin Odey, plunged one of London’s oldest hedge fund groups into crisis.

2. The firm, which the 64-year-old founded in 1991, announced on its website on Tuesday: “Odey Asset Management, including Brook Asset Management and Odey Wealth, will be closing. Fund managers and funds have moved to new asset managers.”

3. The firm has been engulfed in crisis since a Financial Times investigation in June reported claims from 13 women against Odey over alleged sexual misconduct carried out over decades.

1. Crispin Odey strenuously denied the first set of allegations, but last month admitted an incident of misconduct after the 20th woman to accuse him came forward 

4. The hedge fund mogul and Conservative party donor was widely considered one of the last mavericks of London’s hedge fund scene. Odey had a reputation for making outlandish bets on markets and mingling with society’s elite at hunting weekends or political heavyweights over lunch.

4. CEOs should tell more jokes on earnings calls – stocks tend to perform better when they do, study finds

1. CEOs can boost their company's share price by telling jokes, according to a paper published earlier this year.

2. "When managers use humor on an earnings call, stock market returns… are more positive," researchers said.

3. Just 12% of earnings calls feature any comedy at all, according to a paper published in the Review of Accounting Studies earlier this year.

4. Researchers used machine-learning tools to analyze a sample of just under 12,000 earnings calls and found that when execs show a sense of humor, it can give their company's share price an immediate boost.

5. Morgan Stanley Bonuses Raise Governance Question

1. Morgan Stanley’s decision to award $20 million special bonuses to its runners-up for CEO points to a governance risk, raising questions about their commitment to the company, according to Wells Fargo & Co. analyst Mike Mayo.

2. The Wall Street bank named Ted Pick its next CEO last week, saying his top competitors for the post, Andy Saperstein and Dan Simkowitz, would stay on, too. The plan includes share-based awards initially valued at $20 million apiece for all three executives, roughly equal to a year of their historic pay.

3. Mayo said that means the succession plan is “more reliant on comp than realized,” showing the bank is “paying top execs to stay, which to us at least raises a question about whether they are staying more due to comp than culture.”

4. The firm’s longtime CEO, James Gorman, had publicly vowed to defy a norm on Wall Street, in which big firms elevate a new boss only to set off a cascade of personnel changes as the incoming leader’s rivals depart. Bucking that trend, Morgan Stanley said last week that Saperstein and Simkowitz will remain at the company as co-presidents.

1. Gorman (20%) will serve as Executive Chairman

6. Support For S&P 500 "Say on Pay" Plans Increases for First Time in Five Proxy Seasons, According to Diligent

1. Investor support for S&P 500 "say on pay" proposals increased for the first time in five years, with CEO average realized pay declining by 68% to $25.6 million, compared to $79.9 million in 2021. This is according to the new Diligent Market Intelligence: Investor Stewardship 2023 report from Diligent.

2. According to the report, S&P 500 "say on pay" resolutions won 88.9% average support this season, up from 87.8% a season prior. This is in large part due to issuers addressing shareholder requests for more modest realized pay, alongside fewer one-time retention awards.

7. Shareholder vote at Bio-Techne Corporation

1. Only 35% support Say on Pay! (62% in 2022; 55% in 2021)

1. Can usually trace to a sad stock price

1. Currently 53$, down from $89 in July ($130 at the end of 2021)

2. CEO Charles Kummeth granted options worth up to $36M ($4M in 2022)

1. “These grants will vest, or not, based on Bio-Techne’s performance against the consolidated adjusted operating income and consolidated organic revenue goals for fiscal year 2025. For competitive reasons, these performance goals are not disclosed in advance”

3. “Despite a difficult economic macro-environment, our leadership, and our entire team, had another strong year in fiscal 2023. Nonetheless, as discussed in “Fiscal Year 2023 Earned Incentive” on page 43, Bio-Techne did not achieve organic revenue growth or operating margin thresholds on a Company-wide basis or within the Protein Sciences Segment. As a result, all but one of the NEOs did not receive an annual bonus”

4. “As previously disclosed, our CEO, Mr. Kummeth, has announced his intention to retire on June 30, 2024. As part of the retirement planning and succession discussions, the Board and the Compensation Committee discussed compensation structures that would encourage Mr. Kummeth to remain—and remain motivated—through the next two fiscal years and appropriately compensate him during that time.”

1. $16M per year was not enough?? 

2. 200,000 options

1. It’s actually 1.2 million options (no idea if this was an intentional typo or not but the 2023 proxy lists the correct amount)

5. Compensation committee

1. *Julie L. Bushman (93%)

1. Appoint chair in 2023, replacing Steer

2. 37-year career at 3M, retired as EVP 

1. CEO Charles Kummeth had a 24-year career at 3M  

2. Joseph Keegan (95%)  

3. Randolph C. Steer (82%)

1. Former Pay chair; on board since 1990

2. 19% influence; compared to 22% for CEO

4. Rupert Vessey (95%)

8. And finally a quiz: here’s the headline: Delta’s chief sustainability officer is on a mission to use less fuel

1. Is Delta’s CSO a man or a woman?

MATT1

Quick Director Appointment roundup

• This week, we saw some new directors get added:

• Root Inc appointed Donna Dorsey, a black women with diversity and human capital experience, to their board

• Adam Timm, Founder and CEO, has 80% influence and dual class shares, so no one cares!

• SEI Investments appointed Stephanie Miller to the board, she has 25 years experience in asset management including in liquidity, administration, and multi asset categories.

• Alfred West, Jr, Executive Chair and founder, has 83% influence, so no one cares!

• Altus Power appointed Tina Chan Reich to its board, adding her to the nominating and audit committees - Tina comes from AmEx with a 25 year track record in risk management

• Lars Norrell and Greg Felton, co-founders, own collectively 78% of the influence, so no one cares!

• Entain plc appointed Amanda Brown to its board, adding her to the comp committee off the bat

• IT MATTERS!  Entain is a socialist board - all the committees and directors have relatively equal weighted influence - and its one of few companies with a massive female positive power gap at +18% - and they just added another woman AND put her on the comp committee!  She’s currently unconnected to the board in any obvious way, though we’ll know more later, but honestly, love this management team so far.

Groupthink is alive

• A new study from OnDeck looked at which firms’ ex-employees become CEOs the most often using LinkedIn data - there’s no time frame on this, they seemed to have looked at current CEOs on LinkedIn and checked their prior experiences, here are the results

• McKinsey: 7.1%

• Bain: 6.7%

• BCG: 6.0%

• Kearney: 5.6%

• Oliver Wyman: 5.3%

• NFL: 4.8%

• Lazard: 4.7%

• EMI: 3.9%

• Goldman: 3.7%

• P&G: 3.5%

• = 51.3% of current Fortune 500 CEOs

• 10 FIRMS’ EX EMPLOYEES ARE CURRENTLY 50% OF FORTUNE 500 CEOS?? - GROUPTHINK ALERT

• Here’s some Free Float data that should frighten you, as if 7% of CEOs coming from McKinsey

• 62% of the largest 450 US companies (282 companies) have at least a pair of directors that went to the same school - 62%!

• There are 3,149 directors at the 282 companies with directors that went to the same schools

• The most incestuous school/director combinations at those 282 companies:

• Harvard Business: 132 directors (4.2%)

• Stanford: 66 directors (2.1%)

• Penn: 66 directors (2.1%)

• Harvard: 50 directors (1.6%)

• Cal: 48 directors (1.5%)

• Wharton (Penn): 40 directors (1.3%)

• Groupthink Company of the Week: IBM!

• Martha Pollack, Fred Wardell, Fred McNabb all went to Dartmouth

• McNabb and Pollack both got their undergrad degrees at Dartmouth at the same time 

• Pollack, McNabb and Alex Gorsky also all went to Wharton

• According to our data, 75% of the board is connected through other boards - and that doesn’t include Pollack who we can connect through school to McNabb

• Chair of the governance committee, who picks directors, is the most connected director on the board, Andy Liveris, who knows 31% of the current board

• 94% of the board have been CEOs before or currently

• 91% of the board influence is held by directors connected to one another on other boards

• Performance: 50% rotation players, basically batting .500 (exactly boringly average)

• Must be great to deliver average performance year in and year out but all know each other?

• IBM claims it’s 25% diverse and 15% gender diverse, which is pitiful, AND we could argue they are actually zero percent diverse