Jackie Cook: On the "Investor Stewardship Movement"

Dec 13, 2021

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Intro.
(1:19) - Start of interview.
(2:03) - Jackie's "origin story". She grew up in South Africa where she studied psychology and later got her bachelor’s degree in economics and management from Oxford, where she studied as a Rhodes Scholar. Her focus on corporate governance research started in 1998 after taking a research fellowship position at the Center for Business Research at Cambridge University under Professor Simon Deakin, that included a series of reviews of the UK company law.
(5:10) - How she continued her corporate governance research from Cambridge to Seattle, where she joined the Corporate Library in 2001.
(6:29) - On why she started Fund Votes in 2007, that focused on a new disclosure that had been required by the SEC in 2003 for the first time, on mutual-fund and exchange-traded fund proxy voting data. Her personal interest veered towards the environmental and social issues, where she did some early work with AFLCME and AFL-CIO (labor groups focused on compensation and pay disparity), Ceres (focused on sustainability) and other advocacy groups like IEHN, CPA, and others. She focused on shareholder resolution campaigns using the mutual fund and ETF voting data to evaluate how asset managers were thinking about these longer term ESG matters.
(8:35) - On Fund Votes acquisition by Morningstar in 2018. "For a long time Fund Votes was more of a lifestyle company for me, but around 2012 when say-on-pay got mandated by Dodd Frank, the data became more relevant and I invested more time and resources to build the company."
(10:13) -Her current focus at Morningstar as Director, Stewardship, Product Strategy & Development, producing some thought leadership with proxy voting data. She worked a lot with Jon Hale, head of sustainability research for the Americas at Morningstar, to integrate the systems and IP that Fund Votes brought into the platform.
(12:33) - Her latest article on how Say-on-Pay has failed to rein in CEO compensation, and how it could be used to bind climate targets to executive pay. Say-on-pay is an "untapped source of strategic influence for investors". Two positives from say-on-pay: it created more engagement between companies and investors (shining a light on pay practices), and created "new real estate" in the proxy ballot "and that's valuable."
(22:17) - On the rising prominence of ESG in corporate governance. "The big shift has been to realize that the 'E' and the 'S' factors present systemic risks. On climate change, it was the ‘unburnable carbon’ report published by Carbon Tracker (2007) that first put the issue in the mainstream for investors. The Paris Climate Agreement (2015) solidified these systemic risk matters."
(26:05) - On the increasing influence and concentration of voting power in a few large asset managers.
(29:56) - On the Exxon Mobil Proxy Contest with Engine No.1. and other strategic voting campaigns. "On the Exxon vote, the key was the support of the pension funds. Asset owners move the dial ('they are the real opinion leaders on corporate governance proxy voting'). The asset managers take their cue from asset owners."
(31:49) - On the role of insiders and dual-class shares in proxy voting, and "hidden control preventing resolutions from passing". From her article: the 2021 Proxy Voting in 7 Charts. Examples include Larry Ellison (Oracle), Mark Zuckerberg (Meta), Warren Buffett (Berkshire Hathaway), Walmart, Alphabet, Tyson Foods, etc.
(36:46) - On the rise of the Investor Stewardship Movement. "How stewardship codes, ordinary investors, investor advocacy organizations and collaborative investor initiatives have become a much more powerful force in the market."
(40:43) - On the role of directors, ESG board committees, board composition and diversity.
(44:12) - What are the issues to look out for the next Proxy Season in 2022:
1. There will be a lot of pre-season engagements and perhaps a record proportion of withdrawals. Directors will be busy!
2. Corporate Lobbying will be under the spotlight.
3. Climate Target setting (de-carbonation pathways).
4. Racial equity audits and diversity generally.
5. Pay.
(46:46) - Her favorite books:
1. To Kill A Mockingbird by Harper Lee (1960)
2. The Beauty Myth by Naomi Wolf (1990)
3. Finding Meaning in the Second Half of Life by James Hollis (2005)
(47:39) - Her (informal) mentors:
1. Rommel Roberts, peace activist from South Africa.
2. Manton Hirst, professor at Rhodes University.
(48:47) - Quotes that she thinks of often, or lives her life by:
1. "Wat jou nie doodmaak nie, maak jou sterker" (what doesn't kill you makes you stronger, in Afrikaans)
2. "Perfect is the enemy of the good" (perfection is a self-indulgence)
(49:52) - An unusual habit that she loves: reading Afrikaans police thrillers (particularly by Deon Meyer).
(51:25) - The living person she most admires: Kumi Naidoo (a South African human rights and environmental activist).

Jackie Cook is Director, Stewardship, Product Strategy & Development in Sustainalytics’ Stewardship services team at Morningstar. Follow Jackie on Twitter: @FundVotes

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Music/Soundtrack (found via Free Music Archive): Seeing The Future by Dexter Britain is licensed under a Attribution-Noncommercial-Share Alike 3.0 United States License