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From LeverNews.com — Lever Time is the flagship podcast from the investigative news outlet The Lever. Hosted by award-winning journalist, Oscar-nominated writer, and Bernie Sanders' 2020 speechwriter David Sirota, Lever Time features exclusive reporting from The Lever’s newsroom, high-profile guest interviews, and expert analysis from the sharpest minds in media and politics.
[00:00:00] and welcome to lever time. I am producer Frank capello filling in for David Sorota.
Frank Cappello: today's episode, we'll be speaking with an organization that is transforming corporate governance from the inside out through the practice of shareholder advocacy. Now if you hear that term and think, why would shareholders need their own advocates, don't worry, that's not what we're talking about. Shareholder advocacy leverages the power of stock ownership in publicly traded companies to promote environmental, social, and governance change from within.
For today's interview, we'll be speaking with a couple of folks from the non profit organization As You Sow, one of the leading shareholder advocates. For our paid subscribers, make sure to check out the bonus episodes we're dropping into our Lever Premium Podcasts, feed. Next Monday, we'll be publishing our interview with journalist Cole Stangler about his new book, Paris is Not Dead, Surviving Hypergentrification in the [00:01:00] City of Light.
Cole lives in France, and his new book explores how gentrification has been affecting the cultural makeup of Paris. and how the city's public housing policies have actually helped maintain the city's diverse working class character. you want regular access to our premium content, head over to lever news. com and click the subscribe button in the top, right, to become a supporting subscriber.
This gives you access to the lever premium podcasts, feed exclusive live events, and Even more in depth reporting, and you will be directly supporting the investigative journalism that we do here at The Lever.
Alright. We're going to get right into our interview today about shareholder advocacy.
Now, if you know anything about corporations, you know that corporations are not often incentivized to make decisions that primarily benefit its employees, its customers, or society at large. Most of the time, the things that are prioritized are profits, And the shareholders who those profits flow to.
Quite often for a corporation, ethical decisions are pitted against increased returns. That's where shareholder advocates come in. Shareholder advocates use their ownership in a publicly traded [00:02:00] company to influence company decision making, whether it's pushing for transparency, addressing ethical concerns, advocating for sustainable practices, or curtailing CEO pay, shareholders have the ability to shape the companies in which they own stock.
And this doesn't apply to just individual investors, but also organizations that use these mechanisms to enact change.
For today's interview, the Lever's news editor, Lucy Dean Stockton, was joined by researcher, Rosanna Landis Weaver, Andrew Behar, CEO of the nonprofit shareholder advocacy organization, As You Sow. Rosanna and Andrew dig into the nuts and bolts of shareholder advocacy.
How it works, and how the strategy has won material changes within giant companies such as Starbucks. They also discuss as you see those annual list of the 100 most overpaid CEOs and how, surprise surprise, some Republican led house members are attempting to undermine their work.
I'm Lucy Dean Stockton, an editor at The Lover, and I'm now joined by Rosanna Landis Weaver and Andrew [00:03:00] Behar from As You Sew. Thank you both so much for being here today. I want to start our conversation with an introduction to shareholder advocacy, because it's a concept that I think most people don't know a lot about.
Lucy Dean Stockton: especially for an audience like ours, they might hear the term and think, why would I want people to be advocating for shareholders? That's not what this is. Would you mind both explaining, just starting off with what is shareholder advocacy?
Andrew Behar: Sure, I can start. It's actually a very simple concept. board of directors of every public company reports the shareholders. That's it. Basically, the board of directors has oversight of the company, of the executives. They determine strategy and they incentivize those executives, particularly the CEO, to execute the strategy.
But ultimately, the board reports to the shareholders. So, when the shareholders see a company that may be engaging in some risky behavior, may be, uh, putting themselves at some sort of a risk, then [00:04:00] shareholders write what's called a shareholder resolution. It's filed with the company six months before the annual meeting, and it starts a conversation with the company, but ultimately all the shareholders get to vote on it at the annual meeting.
So, It might be about, uh, companies might have to do with climate change. The company should have a climate transition plan. It may have to do with that we're overpaying our CEO, and that Rosanne will speak to in a moment. It may be that the company doesn't have a racial justice policy or a diversity policy and that, we all know that companies with greater diversity tend to outperform financially.
So, all these different issues, uh, You know, are, are brought to the attention of all the shareholders who get to vote. So shareholder advocacy is just shareholders doing their duty and their right to address the board and address material issues at the company.
Lucy Dean Stockton: And can I ask in order to become a shareholder, can anyone do it? Um, or does someone need to purchase enough shares of a publicly treated [00:05:00] company to have influence as a shareholder to make these kinds of changes that your organization advocates for?
Andrew Behar: If you own shares of a company worth at least 2, 000 for three years, you can file a resolution. you own them for two years, it's 15, 000, and if you own them for one year, it's 25, 000. So there are certain thresholds.
Lucy Dean Stockton: more stock that you have, the sooner you can advocate for changes.
Andrew Behar: again, if you own 25, 000 worth of Apple for one year, you could file a shareholder resolution after that year. If you own 15, 000 of Apple at the end of two years, you could file if you own 2, 000 worth of Apple three years or infinite, uh, you can, you're qualified to, to file a resolution.
Rosanna Landis Weaver: it's one reason why shareholder activism, there are individuals who do it by themselves, but they are pretty rare. the, the financial ownership threshold. Is 1 piece, but there's also just the logistical and [00:06:00] understanding all the nuances and all the components of filing a resolution when it's facing a challenge at the SEC.
So we work with a lot of shareholders because we've got that process down. and. A lot of shareholder activism is done by institutional investors as well. Often the, the kinds of advocacy that I, that we are talking about, sort of the environmental advocacy, the social justice issues, those sorts of things are often done by, um, socially responsible investment funds. For example,
Lucy Dean Stockton: Could you tell me a little bit more about what this approach looks like in action? So maybe one or two examples of how the work you're doing with As You Sew has made an impact in the way a corporation is governed.
Andrew Behar: Sure, so, um, an example would be we, we're very concerned with ocean plastics. The ocean is being just overwhelmed with plastics. And so we've been talking to a lot of fast food restaurants about this. One of them was Starbucks. Uh, their cups were not, recyclable, and they had no [00:07:00] recycling in their stores, so we said this is a risk to our brand that our brand is associated with, uh, well the green straws, you know, they're images of sea turtles dying, you know, choking on green Starbucks straws.
It's not good for the brand. So as shareholders we say this is a material risk that the brand association with this decimation of this, these ecosystems are going to be negative to us. So we said, but here's a solution. We can stop using these green straws. We can, um, we can start to recycle. and so, Starbucks, we talked to them about it.
They were not willing to do it immediately, so we filed a resolution. the shareholders, a lot of them got behind it, said, yeah, this is a great idea, let's do this. The company listened after we got a large vote, and they put recycling into Starbucks. So if you ever see a recycling bin in a Starbucks. I think it's very simple.
Now, the next level of it is... wasn't us, but somebody else put a tracker on a cup [00:08:00] and put it in the recycling and it ended So the company got called out as being, like, uh, you know, saying one thing and doing another. But what that led to at that point, we had been talking to the company about removing all styrofoam from all their stores around the world.
And they needed a good story, they needed a good, uh, bump for their brand. So they said, okay, we'll get rid of styrofoam. So we took that to Dunkin we took that to McDonald's. And. Got all the shareholders to agree. And basically what happened is 3 billion styrofoam cups are not being produced this year. Or any year.
Because these three companies have all said, no more styrofoam. So, can see how it kind of escalates. It really started as, hey, this is harmful to our brand. But ends up with actual changes in the real world.
Lucy Dean Stockton: And these shareholder resolutions, you have to, I mean, you have to make them palatable to the company. Right, that's also part of being a shareholder, is that like you're interested in I'm, I'm just curious how, how do you [00:09:00] say
Andrew Behar: Well, here's the thing, I mean,
Lucy Dean Stockton: on an ethical level, we also have to make this profitable?
Andrew Behar: Well, as you saw, we never say to a company, do the right thing. We bring them data. We show them that, well, for instance, next week on the 29th of November, we're coming out with a report that looks at, at the diversity in the workforce of 1600 companies over five years. We, we analyzed 6, 000 reports, 1.
5 million data points. And what we can see is a statistically significant correlation that greater diversity leads to outperformance on eight key financial metrics. So we sit down with a company and we say, look, if you had a more diverse workforce, you can see that you would be making more money. Better returns on investment over 10 years, better returns on equity, all these different things.
So, we come in and we make a business case and say this is why, as shareholders, we want you to outperform, you to be more competitive. And that way the company, when they look at it, it's really, it's really a [00:10:00] no brainer that this is a better way to run the business. Now sometimes it gets a little more contentious.
I'll let Rosanna talk about some of these things.
Rosanna Landis Weaver: well, 1 of the things I was just going to say is, you know, you said, make it palatable to the company. That is not at all what we're doing, but we do have to make it palatable to other investors. We want other investors to support our proposals. And so 1 of the ways we do that is, In my mind, thinking about the long term versus the short term, you know, there might be an immediate, boost with some bad actions, but in the long term, we believe that will manage companies that are appropriately considering.
All the stakeholders and all the potential risks are the best management. Ultimately, that does produce a higher stock price, over time.
Andrew Behar: Yeah. One of the things that Rosanna's has just finished the 10th year of the a hundred most overpaid CEO of the s and p 500, is that the most overpaid CEOs, the [00:11:00] companies that pay overpay, their CEOs the most actually do the poorest financially. But why don't you speak to that
Rosanna Landis Weaver: Sure. And and this is 1 of the things that we actually didn't didn't start out with that goal. The goal was to look at who was overpaid and how funds voted. It was a, it was started after Dodd Frank after the financial collapse. There was a lot of legislation, a lot of new things happened.
And one of them was shareholders for the first time. In the US got to vote on CEO pay. And so when that came out, there was a lot of lack of clarity about what to vote against or why to vote against or whether to vote against. And that was the first year or two we saw very, very, very high risk support just because people didn't know what else to do.
Um, and so that's been getting refined and shareholders have become. Much better at evaluating CEO pay packages and voting against the excessive ones. But anyway, we did this report 3 years and honestly, it was [00:12:00] just, hey, we've got 3 years of data now. Why do you guys want to look and see how the 1st group we did performed?
And, and it underperformed and that, I mean, that was not necessarily something we were expecting to find, but it has held up consistently
Lucy Dean Stockton: which is a big part of why you, in part, titled the report, Are Fan Managers Asleep at the
Rosanna Landis Weaver: exactly. Yes.
Lucy Dean Stockton: those companies with the most paid CEOs have lower returns.
Rosanna Landis Weaver: That's what we found.
Lucy Dean Stockton: you also say, I mean, in this list, um, from the annual 100 Most Overpaid CEOs list, it uses different metrics of a company than highest paid CEOs?
Could you tell me a little bit about how That's different.
Rosanna Landis Weaver: Sure, we've worked on that, uh, over a number of years and, and our methodology has evolved somewhat, but some things have stayed consistent. The, the biggest thing, and all investors are on board with this is that the pay should be linked to performance. You [00:13:00] shouldn't have extraordinary pay when performance is bad.
And that's just a basic truism. And again, all investors support that generally.
We also look at, the 1st year. We had like 37. I don't know. Remember 40 metrics. We had a ton of metrics. We discovered that a lot of them. Shareholders had some awareness of and shareholders voted against the companies that we thought were the worst. And so now we look at shareholder votes. we look at how the company's other shareholders feel about pay.
So that is also a part of the evaluation. And then the final component we look at is, is median to CEO worker pay ratio. we, we believe that a ratio that's too excessive is a red flag.
companies always say, our most important assets are our employees and yet there are companies where it would take 1000 employees working to make what the CEO makes in 1 year. [00:14:00] And so those, those things don't add up and, and we do push back against that a little bit.
Lucy Dean Stockton: And you said it's somewhat of a truism that most shareholders accept that executive compensation is tied to performance. But isn't there also this criticism that it is that these pay packages are tied to performance because it encourages other sorts of like predatory wealth extraction, like stock buybacks, special dividends.
Could you speak a little bit about that?
Rosanna Landis Weaver: Sure. And, and, and I think what we would say and where a lot of, let's say, pension fund investors, labor union fund investors and stuff would say. We believe it's over a long term. Um, those wealth extraction things buybacks and so forth tend to be very short
term boosts.
Lucy Dean Stockton: maybe we should even explain them for the audience. It's often when, um... when companies buy back their own stock to temporarily boost the stock
Rosanna Landis Weaver: Right. And, and there are all sorts of things. There are all sorts of problematic, uh, pay practices and I could talk [00:15:00] about them for hours. Um, but again, getting back to the kernel where other investors agree Is that they don't think CEO should be extraordinarily well paid when the company is suffering. And so again, some investors see that over a very, very short term time scale. We would agree with investors who see it over a longer time scale. I mean, there's a long, uh, tortured history of CEO pay, but for a while, tax laws were such that they sort of capped salary at 1 million, but it made an exception if you had a performance based bonus and so companies were putting a lot of money in those performance based bonuses for the tax advantage of it. And then you were seeing companies that were just struggling and giving these huge bonuses out. You know, as they about close the door and so shareholders started advocating for a closer link to pain [00:16:00] performance.
A bonus should not be an entitlement, right? A bonus is something you get not for showing up for work every day. It's when things are going well. And and so we've gotten. More buy in on that, it's, it's a tricky thing. Nobody's saying it's not a complicated thing. Anytime you're trying to incentivize a human to do the thing you think is best and consider what other factors are motivating them and what all is involved.
It's, it's a complex. Components.
Lucy Dean Stockton: Do any particular examples from the report stand out to either of you that you have on the top of your head as particularly egregious behavior that showed up in this list?
Rosanna Landis Weaver: so, uh, Zaslav, I think that's how you say his name. The Warner Brother Discovery guy is one of the only people who's been on the list every year. and just extraordinary pay, um, millions and millions and millions. and one of the reasons he's able to get away with it is because of insider ownership of the shares, particularly when it was a discovery.
Shareholders didn't have as much [00:17:00] ability to, to plug into that.
And basically, we did find, as I, as I said, that companies with the most overpaid CEOs had lower returns to shareholders than the average S& P 500 company. So the typical S& P 500 company made about 8. 5 percent per year annualized from February 2015 to September 2023.
The most. 100 overpaid CEOs was behind that. It was at 7.9%. The worst 25% was 6%. So again, as a group, over a decade, the overpaid CEOs underperformed
it's very interesting because this is one of the things that I take away and again, it's not the kind of thing that tends to get press attention. talk, we talk a lot, as we should, about the, the really outrageously overpaid CEOs. We've been doing this report for ten years, and one of the things that we found is that, A lot of the same people show up again and [00:18:00] again and again. That also means that there are close to 300 companies that. We're never on our list in any of the past 10 years. So there are CEOs that are paid a much closer to reasonable amount.
And the thing is, it doesn't get any noise. Other CEOs don't even want that to be the news because when CEOs, you know, if you, if you talk about the figure from discovery, then everybody else could be like, well, compared to him I didn't make anything. But in fact, compared to.
The median pay for CEOs across this will be 500, you know, or, even in any given industries is what they should look at. So I think that's something investors really need to be aware of.
And again, I do think the base level CEO pay for even the lowest pay to the S& P 500 is massively inflated compared to pay on on many levels. Right? But it is not as bad as the folks at the top and the folks at the [00:19:00] top like to use the argument that everyone's doing it.
We have to do it. We have to. I mean, it's reading, SEC statement today where somebody's salary was increased by 300, 000 a year. And so, you know, that's. A chunk of change and, but we have to do it to remain competitive. Well, actually, you don't. There are plenty of CEOs who do their work for more reasonable pay
Lucy Dean Stockton: I think we're right there with you. I am actually also quite curious. I think CEO pay, um, really came into the spotlight, I would say a few months ago with the UAW strike. Sean Fain had really great messaging around how much the executives at GM, Stellantis, and Ford were making. I think, I think Mary Barra, um, was making 29 million, which was 362 times what our company's median employee made.
And it, she had also rec received a 34 percent increase over the last four years. What I'm curious about [00:20:00] is that as we've seen these increased labor actions in different sectors of the economy, from, from autoworkers, Starbucks baristas, also writers and actors in Hollywood, what would your response be to someone who says, like, maybe shareholder advocates can tinker around the edges of the company, but the only way to transform a company is through direct action from organized labor.
How does shared governance and the labor movement, how do you feel like they,
Rosanna Landis Weaver: Well, and the, the other one that I think that you missed You know, there's labor, there's Cheryl advocacy. The other 1 is taxation. We, we, as a country changed our taxation rates on the wealthy. So incredibly much and that inflated pay on several levels. so there's that piece. are many levers, right? There's the lever of federal laws that could include taxation, but other things too. There's the lever of unions. Advocating directly, which I, I used to be at the teamsters. I'm a big believer [00:21:00] in that. and there's a, the level of shareholder, um, piece.
And I think the thing that I, there's a high level of agreement on most of this stuff, right? I have, I have never gone someplace and said, you know, my job is to help address overpaid CEOs and have somebody say to me, ah, they're not overpaid. Right? I mean, everybody, the union workers, the shareholders, the customers, the employees.
All sort of unite on this issue and and I think it's appropriate. They all address it in different ways.
Lucy Dean Stockton: And do you think that, um, I'm thinking about one other strategy is that many unions are now advocating for more shared corporate governance. They want workers on the board. they want their own pay tied to stock performance. can you tell me a little bit more about this strategy if you know about it?
Rosanna Landis Weaver: Sure. So the the workers on the board piece, that's that's a part of corporate governance in Europe. Um, I'm thinking I think it's Germany that you have [00:22:00] to have an employee on the board and and people over time have talked about it different ways. 1 of the questions with workers on the board is how Powerful they would really be. but the other, I mean, is there's just a tremendous resistance to it, uh, from corporations. And and so I don't know if that's 1 that will will happen. It could. It could be part of an agreement at some point and it would be great. Um, employee stock ownership plans, I think are a great thing. And there are places that have, they're called ESOPs, Employee Stock Ownership Plans, where, you know, employees get some stock, um, and there are employees that benefited, you know, very well from that. And I think that is very useful.
In cases where the employees Thanks. have a choice and also have some ability to change it. I know one of the things that happened with Enron is that a lot of employees who owned Enron stock were wiped out, and it wasn't their fault. They were not the people. The people that caused the problem were the ones at the very, very top.
[00:23:00] And if you had all your retirement stock in Enron, you were... And trouble. So, that's sort of the, the risk analysis, but yes, giving, giving some stock options or giving some payment in stock, I think is, is generally a great practice.
Lucy Dean Stockton: We are very curious about how Congress is trying to undermine the work of shareholder advocates. I was, we were researching that on August 1st, as you so received a letter from the Republican led House Judiciary Committee arguing that your organization is potentially violating U.
S. antitrust law by entering into agreements to decarbonize corporate assets and reduce emissions to net zero, with potentially harmful effects on Americans freedom and economic well being. we read that The committee sent similar letters to other shareholder advocacy groups, and on November 1st, um, just a few weeks ago, as you so received a subpoena from the Judiciary Committee demanding documents related to the organization's climate advocacy work.
Could you tell us what it is that that the committee is potentially accusing shareholder [00:24:00] advocates of,
Andrew Behar: Essentially, and the other groups that got the letters, just so you understand, CalPERS, the country's largest pension fund, the world's largest proxy voting service, Black Rock, Vanguard, and State Street, the three largest asset managers, well as other groups like, uh, a non profit group called Ceres, uh, Arjuna, Capital, Trillium, Engine number one.
So a group of different asset managers and hedge funds. So, essentially what they're saying is that shareholders should not, meet together. So if you own shares of Apple and I own shares of Apple, us having a conversation saying, know, I think the company's doing some risky things, they would consider that to be colluding. We disagree. We think that that's actually Well within our rights to have conversations among shareholders to try to help these companies to improve and try to help these companies to reduce material risk. Uh, we also think that if the [00:25:00] conversation happens to be about climate change, that asking a company to decarbonize actually enhances the freedom of all Americans.
It's, uh, we just think their fundamental assumptions are incorrect and that Shareholders have the right to, um, to meet together, to have conversations together that this is not collusion in any way. That, uh, and we're a non profit also, so antitrust would really be very difficult to say how that applies to us.
Um, so we think that they're just trying to essentially chill the way shareholders work together. you know, frankly, the way Sherald's worked together is actually an incredibly efficient, set of activities that a whole community undertakes. So remember, there's all the faith based groups as well.
So there's a group called the Interfaith Center for Corporate Responsibility that, where the Unitarians and the Catholics and the Jews and the, you know, Protestants, all, every, every different religious group, they all get together to [00:26:00] talk about their, What's in their pension funds and how to align their investing with their values.
There's all the socially responsible investing companies that Rosanna talked about earlier. Trillium happens to have gotten the letter. But other groups, there's Calvert, there's Green Century. There's a whole, whole world of practice around sustainably. And so, what they're trying to do is say, you know, we, we're not allowed to get together and um, And have conversations to improve companies.
It's, um, you know, honestly, I think it's really anti business. And it's, uh, it violates the, you know, the nature and the, really the intent of a lot of the SEC rules to, uh, say that the boards report to us and that we need to do our job as well.
Lucy Dean Stockton: considering the shareholder support for ESG resolutions dropped this year, why do you think there are still so many Republicans who treat ESG like it's destroying the economy?
hmm.
Andrew Behar: shareholders voices have [00:27:00] become more and more important to companies, uh, you know, over, over the last, you know, 5 10 years. Uh, you see that a lot of the resolutions have been getting, you know, really high votes and the companies have actually been shifting their policies and practices to become more productive, to become, you know, better companies, to serve all stakeholders.
I think the real shift happened in 2019. The Business Roundtable put out what's called the New Purpose of a Corporation, where they said that the ideas of Milton Friedman, that corporations exist just to serve shareholders, actually isn't true, that they actually need to serve their own employees, their customers, the communities where they operate, their supply chains, and their shareholders.
And then if you do all of these, your shareholders will actually benefit the most. And so 181 companies. Uh, including J. P. Morgan, Exxon, they all signed this pledge. The World Economic Forum also endorsed it. They actually called it the new, the fourth industrial age. They compared the transition to the scale of the [00:28:00] industrial revolution.
so this is a, a way of doing business. The markets had basically shifted to say that when you incorporate these ideas around workers rights, to attract the best and the brightest. Racial justice, you're going to have a better team internally. Diversity, um, climate change, you're going to avoid risk.
all these different things, if you bring them in, if you assess risk, and address risk, you're going to run a better company. It's a better management team. that's all that shareholder advocacy is really about, is to, is to promote, reduction of material risk for all stakeholders. um, They gave a 1.
6 billion dollars to a fellow named Leonard Leo, who people know mostly from the Federalist Society, and he started this anti ESG crusade. And I, I use the word crusade because, it's just a handful of people that are very well paid to try to thwart the intent and the actions [00:29:00] of the shareholders who have an absolute right to do that.
What, what we're doing. And so they're trying to intervene in a political way. They have politicized the process. are just pure business folk. We just want the companies to, to perform better. And there's been this politicization of it. initially they came out with a lot of rhetoric around this that has really gone silent.
About a year and a half ago, it was daily that we were having to defend that the S& ESG stood for Satan. just ridiculous. It's, you know, serious. I mean, the Utah Star Ledger had to put out a, you know, like an editorial saying, Satan not involved in sustainable investing. I mean, it wasn't the onion. This was real stuff.
And, so, in any case, they have politicized it. They passed legislation in some of the red states. The, um, the Red State Attorney Generals tried to [00:30:00] intervene. They wrote, 21 Red State Attorney Generals wrote a letter to Black Rock Vanguard State Street together own about 20 percent of every company.
They mentioned as you so times in that letter saying if you voted for an as you so resolution, you may be breaching your fiduciary duty. letter had absolutely no legal basis and has now been completely, uh, you know, just all the legal analysis said this is. Was, was really kind of ridiculous. But the asset managers, they said, oh, maybe there's some risk.
So they backed off a little bit. so when you look at the average vote last year, you also have to remember, they also, Leonard Leo and his pals, filed about a hundred anti ESG resolutions. So resolutions that said they were a racial justice resolution, but actually said that, um, white men were being discriminated against.
These got an average of 2 percent vote. So that brought down the average across everything. So, again, these guys are clever and they're trying to disrupt, the actual owners of the [00:31:00] companies from having their rightful voice. So, um, so we'll see where it goes with Congress. Um, they seem to be, they want to be gathering to, what seems like, is to write laws to try to silence shareholder voices.
And we will see how, um, And we'll see what the next steps are.
Lucy Dean Stockton: Yeah, I mean, it does seem like it's had a very material effect. It seems just 8 out of, just 8 out of 335 proxy proposals tied to ESG issues gained majority support this year compared with three dozen in the previous two years.
Andrew Behar: Right, but again, these non binding resolutions. So just that. you get a 30 percent vote at a company and you go and have a conversation with them versus getting a 40 percent vote, the differential is not, it's not that major because again, they're non binding. Now getting above 50 percent means that you could be running a no confidence campaign if the board is not responsive.
But generally when you get a majority vote, the board gets responsive because they don't want to have a no confidence vote. So [00:32:00] again, remember these are non binding and so a lot of the press, they don't quite understand that and they say, Oh, the resolution failed or the resolution passed. There is no pass or fail in this world.
These, again, are binding
resolutions.
Rosanna Landis Weaver: The only failed resolution is one that wasn't filed.
Andrew Behar: know, we've had our biggest wins with 6 percent votes. Because all we care about is will the company actually take action and change their policies and practices over the long term. So, single digit votes, those are very highly effective because it's a good idea.
We, we deal with ideas, and when we bring a good idea to a company, with a good management team, they go, Great idea! Let's go do it. that's generally what happens. We, engaged 210 companies last year. 99 said, Great idea, let's go do it. didn't, so we filed resolutions. Once we did that, 51 said, Great idea, let's go do it.
And so, about 70 percent of the companies we engaged took action. The 30 [00:33:00] percent that went to a vote are all anybody pays attention to. And of those, we had, you know, quite a few high 30 percent votes, 40 percent votes. And most of the companies where we got a vote are, are now in negotiations with us about taking action.
So, it's, uh, it's, it's really part of the process. It's just, it's really part of the process.
Lucy Dean Stockton: Okay. It works.
Andrew Behar: Great.
Lucy Dean Stockton: happy to hear that.
And, um, for our listeners who might want to, uh, take action at places where they're invested, um, could you give a roadmap for something that they're interested in? How would, how would they move forward?
Rosanna Landis Weaver: On CEO pay, the most important thing, and this is, you're going to be hearing a lot of this in 2024 because it applies everywhere, but voting matters and more and more shareholders need to vote. And if you don't own your shares directly, you should see if your 401k can invest in a fund that has good voting practices. We have something on our [00:34:00] website that helps people do that. And we're trying to make sure that there are more options for 401ks, you know, so you can advocate to get your 401k to offer choices. And 1 of the choices is something that that takes a strong stance that that, you know, thinks that CEO pay is too high and votes against high CEO pay that supports climate change transition plans and and acknowledges the very, very real risks we all face.
That, that is one piece. If you're just curious yourself, like, if you're just like, I wonder how much my boss has paid. you can always go to www. sec. gov. The statement, the thing you want to look for is the proxy statement, which is called a DEF 14A. And then you want to look at the summary compensation table.
And again, this is most of us are not paid 6 different ways, but they have 6 columns of different kinds of pay they get and as well as the total, And looking at also the pay ratio.
So if you look and find out what the [00:35:00] median employee is, I have made some changes in my, in my, Okay. Consumer habits, having read some of these proxy statements. Costco is, is the example I use and my kids get tired of me talking about Costco, but Costco has both reasonable CEO pay and a much, not much, but a higher than average pay for that sector, and I'm like, well, then why, why would I go to dollar general if I can go to Costco and know that I'm supporting an institution that, you know, helps.
Lucy Dean Stockton: It is. at least slightly your values. voting, voting on your resolutions and voting with your wallet.
Rosanna Landis Weaver: Yes. Yeah. Voting on your resolutions, voting on choosing where to invest all kinds. You have all kinds of choices. Everything's a choice, right?
Lucy Dean Stockton: No, I think that's actually very empowering. Um, I think all the time we're disempowered by a system that is so complex and so opaque, that it can feel difficult to enact change. [00:36:00] Um, and I think learning about things like shareholder advocacy is actually, it gives people a lot more agency than they might feel otherwise. So
thank
Rosanna Landis Weaver: Thank you,
Lucy Dean Stockton: Rosanna Landis Weaver is a lead researcher and Andrew Behar is the CEO of As You Sow, a nonprofit organization that promotes environmental and social corporate responsibility through shareholder advocacy. Rosanna and Andrew, thank you again for joining us.
Rosanna Landis Weaver: Such a pleasure. Thank you.
That's it for today's show. As a reminder, our paid subscribers who get LeverTime Premium keep an eye out for next Monday's bonus episode. Our conversation with journalist and author Cole Stangler about his new book, Paris Is Not Dead, Surviving Hypergentrification in the City of Light.
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Make sure to check out our other podcasts, The Audit and Movies Versus Capitalism. And of course, check out all of the incredible reporting our team is doing over at levernews. com. Until next time, I'm Frank Capello, rock the boat. The Lever Time podcast is a production of the Lever and the Lever Podcast Network.
It's hosted by David Sirota. Our producer is me, Frank Capello, with help from Lever producer, Jared Jackangmayor.