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Friday feedback: Parsing the Danone drama

March 19, 2021, 10:33 AM UTC

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Good morning.

It’s Friday, so some feedback. Lots of response to my commentary on stakeholder-capitalism-advocate Emmanuel Faber being pushed out as CEO of Danone. R.H. writes:

“Alan, In my 30 plus career as a Healthcare CEO I’ve heard it taught and lived-out best by the nuns in Healthcare who say, ‘NO MARGIN, NO MISSION!’”

S.R. questioned my take that Unilever’s Paul Polman, who won his battle against shareholder activists, proved that his stakeholder approach was better for shareholders in the long run:

“Always enjoy your newsletters, Alan, but I would counterargue that Polman’s stock price performance did very well AFTER activists intervened. Could he have cleverly conflated cause with effect?”

T.R. thinks the move toward stakeholder capitalism is inevitable, Faber notwithstanding: 

“Inside of 5 years, if a firm isn’t authentically engaged on climate change and the community activities most prevalently embraced by the customers and the society within which they sell, a percentage of Gen Z customers and to a lesser extent Millennials will take a portion of their spend to firms that do behave that way. At most firms that will be enough to turn success into mediocrity or failure.”

A.L. pointed me to the letter from the CtW investment group, which got some attention from the New York Times this week, arguing that the activist fund that led the charge against Faber needs to clean up its own act. In particular, the letter cited large discretionary bonuses to executives without pre-set performance criteria.

And finally, here’s a comment from A.K., with which I entirely agree:

“The movement toward stakeholder capitalism isn’t about individual heroes; it’s about systems change, and that requires accountable governance, not just words, to maintain stakeholder commitments no matter who the CEO or the board are. So, it’s really about what happens next.”

And speaking of compensation, a new survey from Pay Governance found that the percentage of companies that include ESG (environmental, social & governance) metrics as part of their executive compensation calculations is rising. It was 22% in 2020 and 29% in 2021. Another 21% said they still haven’t decided whether ESG metrics will be included in their incentive compensation this year.

More news below.

Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer.