WOKE WEDNESDAY: ThredUP's dual class Long-Term stocks, Ohio bans discussion of climate change, Credit Suisse joins the UBS board, plus CME group's 23 person board

Live from right about here, it’s the ESG Industry’s ONLY weekly woke data podcast, featuring BS-Man Matt Moscardi. In today’s Effortless Spaghetti Gas called May 10, 2023: random ESG headlines, proxy vote observations, and an incredibly nerdy ESG deep dive.

Our show today is being sponsored by ESGauge, your ESG data solutions provider 

DAMION1

Random ESG Headlines

1. ThredUP Dual Lists on Long-Term Stock Exchange, Bolstering ESG Commitment

1. thredUP, the largest online resale platform for apparel, shoes, and accessories, today announced that it has dual listed its Class A common stock on the Long-Term Stock Exchange (LTSE)

2. thredUP is the first consumer company to list on the LTSE, committing to the higher standards of the exchange. They are one of two companies listed on the platform, alongside Asana (NYSE, LTSE: ASAN).

3. LTSE's principles-based listing standards require listed companies to detail and publish policies on their website that offer stakeholders insight into how a company builds its business for the long term. By listing on LTSE, thredUP is affirming its strategic alignment with long-term shareholders, employees, customers, and communities within a public market designed to promote sustainability, resilience, and long-term value creation.

4. "It is time for decisive action. Companies have punted too many promises to their stakeholders on the environment, social causes and who they are building for," said James Reinhart, founder and CEO of thredUP. "By dual listing on LTSE, we are codifying the critical relationship between thredUP and our long-term stakeholders and ensuring our success is their success."

5. thredUP and LTSE are pioneering the next generation of capitalism where traditional measures of financial performance and generating long-term sustainable value are integrated. The dual listing demonstrates how thredUP is reframing capitalism through an impact lens, which is a key tenet of thredUP's business strategy and core to thredUP's mission to inspire a new generation of consumers to think secondhand first.

6. ThredUP is dual class!

1. Class A get one vote per share

2. Class B get 10 votes per share

3. 6 directors own 49.8% of outstandings shares yet control 90.5% of vote

1. Includes the co-founders CEO and COO

2. And chairs of Pay committee and Nomination committee

3. And board chair

4. BS: women are 50% of the board but hold only 21% of influence

7. So is Asana:

1. co-founded by Facebook alums Dustin Moskovitz and Justin Rosenstein, who control 89% of voting power

2. Dustin and fellow dropout zuck co-founded Facebook

3. BS: women 33%/8%

2. Anti-ESG Woke Wars update

1. Maine Legislature dismisses anti-ESG bill

1. Maine state lawmakers late last week rejected a bill that would have restricted ESG considerations in public pensions plans.

2. That legislation, “An Act to Protect the Retirement of State Employees and Teachers by Establishing Standards for Fiduciary Responsibility,” sought to prohibit “decision-making with regard to investments in the retirement system based on certain non-pecuniary factors such as environmental, social, corporate governance, ideological or political factors.”

2. Ohio bill would ban colleges from discussing diversity, climate change

1. An Ohio bill would force public colleges to steer clear of “controversial” topics, listing climate change and diversity as examples.

2. In addition to public colleges, Senate Bill 83 would also apply to any private colleges that accept public money.

3. SB 83 would also prevent colleges from requiring diversity training and from offering concepts like Critical Race Theory.

4. Diversity isn’t all the bill tackles. It also requires colleges to sever any ties with the Chinese government or Chinese schools.

3. Italian oil firm Eni faces lawsuit alleging early knowledge of climate crisis

1. Exclusive: Company accused of ‘lobbying and greenwashing’ for more fossil fuels despite knowing of risks

2. The Italian oil major Eni is facing the country’s first climate lawsuit, with environmental groups alleging the company used “lobbying and greenwashing” to push for more fossil fuels despite having known about the risks its product posed since 1970.

3. Greenpeace Italy and the Italian advocacy group ReCommon aim to build on a similar case targeting the Anglo-Dutch oil major Royal Dutch Shell in the Netherlands to force Eni to slash its carbon emissions by 45% by 2030.

4. Credit Suisse CEO to join UBS board

1. UBS announced Ulrich Körner will become a member of the board following the completion of the deal, which is expected to take place in the next few weeks.

2. The $3.25 billion deal sought to prevent the downfall of Credit Suisse and calm investors’ concerns following the collapse of the Silicon Valley Bank in the US.

3. In his new role, Körner will be responsible for ensuring Credit Suisse’s operational continuity and supporting the integration process between the two banks.Following his appointment, all existing Credit Suisse executive board members will report to Körner.

5. Norfolk Southern Annual Meeting a Test of Investor Response to East Palestine Crisis: AGM May 11

Proxy Observations

1. Fortune 250 shareholder votes

1. National Center for Public Policy Research (9 votes)

1. General Electric, Apple, Bristol-Myers Squibb, Eli Lilly, PepsiCo, Kellogg, Goldman Sachs, UPS, IBM

2. Climate Risk (2), Civil Rights Audit (4), Socio-Economic Systemic Risks, Human Rights (2)

3. Average vote FOR: 2.8%; 7 are in the bottom 10

4. (last year 13 at same 2.8%!)

2. Sisters & Brothers (7 votes )

1. Walgreens Boots Alliance, Lockheed Martin, Gilead Sciences, General Dynamics, Citigroup, Wells Fargo, Boeing

2. Public Health, Human Rights (3), Health Care, Climate Risk, Lobbying

3. Average vote FOR: 24%

3. WINNERS (5 so far)

1. Simple Majority Vote (2); Special Meetings - Reduce Ownership Req. to 10%; Assessment of Worker Rights Commitments; Annual Report on Prevention of Workplace Harassment & Discrimination

2. Wells Fargo (2); Applied Materials; Marathon Petroleum; Starbucks

4. Management Winners (Say on PAy, etc.): ZERO

1. Over 40% voted NO on Say on Pay at American Express and Jefferies Financial

MATT1

Q: 

5 classes of shares, but really just two:

• Class B - CME membership (split into B1, B2, B3, B4)

• Class A - every other idiot

6 “Class B directors” must be elected from sitting membership of CME exchange

• B1 gets 3 (438 holders)

• B2 gets 2 (564 holders)

• B3 gets 1 (944 holders)

• B4 votes on them as part of the group (413 holders)

17 Class A directors

8 committees

6 meetings, 2 special meetings for the year

• Guess total cost of 23 directors: $6,563,497

• Guess how many brown people you can find in Chicago area to join a board the size of an elementary school class: 2

• Highest influence number: 15% (CEO, Terrence Duffy)

Tried to get rid of B class, B holders voted it down (obviously) in 2014. In 2018, they offered them $10m split between them to get rid of them.  Also: not approved.  In 2021, the board amended the bylaws so the nominating committee could select ALL the members (prior there were THREE SEPARATE NOMINATING COMMITTEES).

Class B did NOT like this - for the last two years, they just don’t show up to vote!  The charter says a quorum must be met for Class B, otherwise the existing directors just keep their seats until the next year.  

Here are the directors everyone I’m sure hates now:

• William Hobert (B1)

• 2% influence

• 5 year tenure

• Clearing House Committee

• Patrick Mulchrone (B1)

• 2% influence

• 3 year tenure

• Finance Committee

• Robert Tierney (B1)

• 4% influence

• 3 year tenure

• Clearing House, NOMINATING COMMITTEE?

• Michael Dennis (B2)

• 2% influence

• 3 year tenure

• Clearing House, Finance

• Patrick Maloney (B2)

• 2% influence

• 3 year tenure

• Risk

• Elizabeth Cook (B3)

• 7% influence, 3rd highest

• 8 year tenure

• Audit, COMPENSATION

• TOTAL B SHARE INFLUENCE: 19%

If you reduce the size of the board for A class, you increase the influence of B share holders - they HAD TO CREATE a 23 person board to drown out the B share holders who won’t give up the class.

CME blames lack of diversity on B holders:

The membership of CME is less diverse, and it’s a smaller pool of candidates to choose from.  By our count, the pool could be as high as 27,000 people - most of whom are just traders and mid level, so not board ready.