Feb 14 2025 46 mins
Introduction
LIVE from your ESG ESG ESG ESG DEI DEI DEI Climate Change Change Climate Change Global Warming ESG DEI, it’s a Business Pants Friday Show here at Valentine’s Day Studios, featuring AnalystHole Matt Moscardi. On today’s weekly wrap up: Corporate Abolitionists, The Gulf of Stupidity, The S in ISS stands for Shitty, and Denny’s Truth Bomb
Our show today is being sponsored by Free Float Analytics, the only platform measuring board power, connections, and performance for FREE.
Story of the Week (DR):
Goldman Sachs abandons DEI rule, saying it has ‘served its purpose’ MM
Richard Gnodde, CEO of Goldman Sachs International and a member of the bank’s Management Committee, told the BBC that the bank had scrapped its board diversity requirement because of legal developments — and the fact that it had achieved its function.
“That policy served as a catalyst to try and drive a change in behavior. What’s important here is that you have a diversity of views on that board, and if you look at these companies — they’ve all embraced diversity. I think it served its purpose.”
Billionaire Airbnb Co-Founder Is Said to Take Role in Musk’s Government Initiative
Joe Gebbia, the Airbnb co-founder, is a board member at Tesla.
Mr. Gebbia arrived at O.P.M.’s downtown Washington D.C. headquarters in a black S.U.V. with a three-man security detail
‘Sustainable’ Investors Flee References to Climate Change
The success of Republican attacks on ESG and Donald Trump’s re-election has everyone running for cover.
For more than a decade, investment chief of Green Alpha Investments Garvin Jabusch would show a chart of the planet’s rising temperatures when pitching investment ideas to clients, saying they could help save the planet and still make money: “I’ve given up on anyone ever caring about that”
Parnassus Investments, the biggest US sustainable-investing firm, has removed references on its website that its funds are “fossil-fuel free.”
Engine No. 1, the small activist firm that led the shakeup of ExxonMobil Corp.’s board in 2021, has removed wording on its web page that corporate performance is “greatly enhanced” by investing in workers, communities and the environment. The fund now says it invests in companies that are “powering innovation and driving the reindustrialization of the United States.”
Mr. Blowhard
Jamie Dimon is fed up with remote work
Last year’s proxy statement:
“We continued to deliver strong multi-year financial performance, invest in our future, strengthen our risk and control environment, and reinforce our culture and values, including our long-standing commitment to serve our customers, employees and communities, and conduct business in a responsible way to drive inclusive growth.”
Managed revenue of $162.4 billion — a record for the sixth consecutive year
Experienced growth across all of our market-leading lines of business
Record net income of $49.6 billion
Exceptional Performance: the Firm's sustained strong relative outperformance compared to its peers
JPMorgan CEO Dimon slams RTO pushback: ‘I don’t care how many people sign that f*cking petition’
Jamie Dimon Reportedly Says He’ll Cut Some ‘Stupid’ DEI Costs At JPMorgan Chase
JPMorgan CEO Jamie Dimon wants to cancel some DEI spending after the bank spent billions on racial equity: ‘I was never a firm believer in bias training’
In his remarks, Dimon reiterated the bank’s commitment to improving society and said the company’s approach to diverse employees and communities would stay the course. Yet, he reportedly added: “I saw how we were spending money on some of this stupid sh-t, and it really pissed me off,” Dimon said. “I’m just gonna cancel them. I don’t like wasted money in bureaucracy.”
There are two distinct elements to the determination of Jamie's pay plan: 50% is “the what” and 50% is “the how.” One of the three elements of “the how” is “Teamwork & Leadership,” which specifically includes “Creating an open, respectful, inclusive culture; Employer of choice for top talent from all backgrounds; Delivery on internal DEI initiatives.”
One of the company’s stated achievements in “Client/Customer/Stakeholder” was:
Advancing racial equity: By the end of 2023, we reported nearly $31 billion of progress toward our five-year $30 billion Racial Equity Commitment to help close the racial wealth gap and advance economic inclusion among historically underserved communities in the U.S., including Black, Hispanic and Latino customers and communities. The Firm is committed to continuing work beyond the five-year timeframe identified in our original commitment to complete the 18 individually identified sub-commitments.
“[P]ractices and progress on the Firm's DEI priorities as part of the year-end performance review.”
$36M last year: $145M for 6 NEOs
One of COO Daniel Pinto’s stated achievements: “Delivered key CIB DEI initiatives to drive a more inclusive work environment for employees”
Goodliest of the Week (MM/DR):
DR: Seattle Voters Say Yes to Corporate Tax Hike to Fund Social Housing
a ballot initiative to fund social housing through an "excess compensation" tax on city businesses paying salaries of over $1 million
68.32% of voters backed funding for social housing and 57.55% chose to fund it specifically with the proposed tax
Assholiest of the Week (MM):
‘Greenhushing’ Emerges as Anti-ESG Pressures Mount for Companies
STAND UP FOR YOURSELVES, YOU BABIES
Either it is the right thing to do for shareholders and stakeholders and you should say so, or it’s not and you’re a fraud
ISS
ISS Indefinitely Halts Consideration of Diversity Factors When Making Proxy Voting Recommendations
Let’s talk value of “diversity factors” - I’m talking strictly data here, not the justified moral outrage about having all white male boards. Let’s just talk about how investors are now paying ISS hundreds of thousands of dollars instead of Free Float in order to get LESS data - here are the “factors” you no longer consider for recommendations:
Gender diversity:
Women outpace men globally in sector knowledge for boards they’re on - women are more likely to have gone to an elite school or have an advanced degree AND have direct knowledge of the industry of the company they’re on the board of
Women have stronger networks - because so few break the glass ceiling of boards, they end up getting recycled, which means they know more board members or have friends in common
Women and men have exactly the same performance metrics as directors - by performance, I mean during their tenures, they oversee the exact same TSR and earnings performance percentiles versus industry peers
Men have the advantage in leadership and economic interest - as in, women are rarely made CEOs unless there’s a crisis and mommy has to clean up after the boys, and the boys almost always keep shares for themselves and don’t give any to the girls
Racial/ethnic diversity:
Black female directors at S&P 500 companies are the most knowledgeable of their industries
Black female directors at S&P 500 companies also have the strongest networks - they have been recycled more, and thus have more friends in high places
Asian male directors at S&P 500 companies have the highest performance rates on TSR and earnings
Overall, black male and female directors are the most “meriting” board positions at the S&P 500 companies
Shareholders who don’t use their rights DR
SEC Looks to Muzzle Shareholder Culture Warriors
Schedule 13G is filed by owners of stock who have more than 5% of shares - so basically, Blackrock, Vanguard, State Street, Fidelity - major investors
BUT, if the owner takes an ACTIVIST position (like Elliott amassing in BP right now), and that position is greater than 5%, they file a 13D, not G - D means they intend to influence or change management in a proxy fight (or through engagement)
13D has more reporting requirements because it’s an activist stake
Well, because investors have basically ignored their basic rights for so long and deferred to management, this happens: SEC Provides New Guidance on Schedule 13G Eligibility
The new guidance says:
Schedule 13G would be unavailable if a shareholder engages with the issuer’s management to specifically call for the sale of the issuer or a significant amount of the issuer’s assets, the restructuring of the issuer, or the election of director nominees other than the issuer’s nominees.
For example, Schedule 13G may be unavailable to a shareholder who:
recommends that the issuer remove its staggered board, switch to a majority voting standard in uncontested director elections, eliminate its poison pill plan, change its executive compensation practices, or undertake specific actions on a social, environmental, or political policy and, as a means of pressuring the issuer to adopt the recommendation, explicitly or implicitly conditions its support of one or more of the issuer’s director nominees at the next director election on the issuer’s adoption of its recommendation; or
discusses with management its voting policy on a particular topic and how the issuer fails to meet the shareholder’s expectations on such topic, and, to apply pressure on management, states or implies during any such discussions that it will not support one or more of the issuer’s director nominees at the next director election unless management makes changes to align with the shareholder’s expectations.
ENGAGEMENT DEATH BY BEAURACRACY THE MAJORS! This works out one of three ways:
the majors can no longer vote against any director for fear it appears to be “coercive”, and subjects them to 13D scrutiny, OR…
They axe entire engagement teams, stop engaging at all, abstain and only offer pass through voting
They buy Free Float data - imagine a world where you stop engagement or conversation about “key issues”, and vote instead against candidates that just failed to perform without telling them why. No engagement, just voting on the data!
But in the end, because you never actually used actual data on your director vote, the SEC is making it harder for you now. Congrats!
Headliniest of the Week
DR: Denny’s Says Consumers Fatigued by News, Economy, Inflation...Everything
MM: Double Deuce Announces Appointment of Paul A. Dumas as Chairman of the Board of Directors
We believe that his experience and knowledge of the mining sector, his wealth of contacts, and his expertise in growing a company and creating shareholder value will be incredibly beneficial to Double Deuce Exploration.
Knowledge, network, performance - three tags for merit!
Who Won the Week?
DR: Two winners
Joe Gebbia: for proving beyond the shadow of a doubt that he is NOT an independent board member at Tesla and that his life choices have led him to believe that he needs three security guards to protect him from a world that very likely hates him.
Richard Gnodde, a South African investment banker and CEO of Goldman Sachs International, in a mic-dropping moment for equality across the globe for declaring an end for the need of both the Civil Rights and Equal RIghts Movements
MM: Anyone not a cow veterinarian: H5N1 testing in cow veterinarians suggests bird flu is spreading silently
Predictions
DR: Jamie Dimon starts to remove tampons from women’s bathrooms at JPMorgan Chase because he says “I was never a firm believer in women’s hygiene products”
MM: