Friday feedback: Parsing the Danone drama
This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
“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.
Yesterday's Alaskan face-to-face between U.S. and Chinese officials was not the great signal of rapprochement that some were hoping for. Instead, it became an unusually public mud-slinging match, which started with U.S. Secretary of State Anthony Blinken saying China's repression, coercion and cyber-attacks "threaten the rules-based order that maintains global stability. That's why they're not merely internal matters, and why we feel an obligation to raise these issues here today." CNN
The European Medicines Agency said AstraZeneca's vaccine is "safe and effective" with its benefits far outweighing its risks—though there is still a small possibility that the jab could very, very occasionally cause blood clots. The positive guidance should lead to a swift resumption of the AstraZeneca rollout across most of Europe. Fortune
Nord Stream 2
Turns out the Biden administration is just as happy to sanction companies working on the Nord Stream 2 Russia-Germany gas pipeline as the Trump administration was. And this fact is proving politically useful at home: after the White House threatened the punishment yesterday, Nord Stream 2 über-hawk Ted Cruz withdrew his blockage of the confirmations for Biden's CIA director and deputy Secretary of State positions (William Burns and Brian McKeon respectively). Politico
The Biden administration will cancel the entire student debt of 72,000 borrowers who had already had partial loan forgiveness under the Trump administration. The new White House team says Trump-era restrictions on loan forgiveness made life unfairly difficult for borrowers whose school had closed suddenly or was proven to take part in illegal or deceptive practices. Fortune
AROUND THE WATER COOLER
Mark Zuckerberg thinks Facebook will be fine when Apple starts making it easier for iOS users to refuse to be tracked by marketers, because businesses might choose to sell goods directly through Facebook and Instagram. Zuck: "We may even be in a stronger position if Apple’s changes encourage more businesses to conduct more commerce on our platforms by making it harder for them to use their data in order to find the customers that would want to use their products outside of our platforms." (Counterpoint: many say Facebook is itself pretty terrible at ad-targeting.) CNBC
Facebook is planning a junior version of Instagram, much as it has a Messenger Kids product. The company says the "potential product" would be "a parent-controlled experience", but experts warn young users are "at increased risk of predation and bullying, and basically not equipped yet as children to deal with the risks of social media." Also, they say, these platforms are addictive. Sydney Morning Herald
As the debate over the U.S. minimum wage continues, Fortune's Brian O'Keefe and Nicolas Rapp examine the history of the federal minimum wage, global trends, state minimum wages, and the proportion of workers in various sectors who are at or below the minimum (no surprise: the restaurant sector would see the biggest impact from a lift.) Fortune
Rajiv Shah, president of the Rockefeller Foundation, argues in a piece for Fortune that rich nations (and the U.S. in particular) will live to regret it if they don’t help vaccinate the developing world. "The longer the world lets COVID-19 run free to infect and mutate," he writes, "the more likely the world will face…pervasive economic decline." (On the same topic, do read this in-depth post from the Peterson Institute for International Economics.) Fortune
This edition of CEO Daily was edited by David Meyer.