Do Well and Do Good

Rockefeller Family Resolution Gains Support of 40% of Exxon Shareholders

Just a few weeks ago I blogged about the Rockefeller family taking on the management of Exxon Mobil, the company their iconic patriarch founded. I pointed out that it was heartening to see shareholders taking an active role in the companies they have a stake in. As might have been expected, however, the Rockefeller family sponsored resolutions did not pass and investors rejected the proposals, even the one that was seen by most experts as having the greatest chance of actually passing: the splitting up of the Chairman and CEO roles at the company, both of which are currently occupied by Rex Tillerson.

Most headlines I saw related to this focused only on the negative here, pointing out that in an era of record oil profits most shareholders seemed pretty happy not to rock the boat. I don’t think that captures the really interesting part of this story. Nearly 40% of the vote went against Tillerson by supporting the measure to split the position in two.  Plus, ISS (Institutional Shareholder Services), the third party independent party that makes recommendations to institutions on how to vote on shareholder resolutions, also recommended that the position be split. And all this happened despite record oil profits.

The truth is that many, if not most, shareholder resolutions don’t get anywhere near 40% of the vote, so in some sense this was a real success. If you are Rex Tillerson it can’t feel great that 40% of your company wants you to give up some power. Plus, there's always next year and one has to wonder how Exxon and Tillerson will fair if oil prices recede and with them company profits while other companies begin to capture the value from the new energy sources.

I currently do not own a position in XOM as of the date of this writing – this may or may not change in the future. Under no circumstances should any of the comments stated above be viewed as a recommendation to buy, sell or hold any security.  A decision to invest or not invest in any particular security should be made in the context of the financial situation of the individual or entity involved and, as such, this communication should not be construed as a recommended action.Please see conditions of use for important legal disclosures and information relevant to this post

"Don't Be Evil" Really Does Pay

Google's now somewhat famous and informal company slogan "Don't be evil" can be more than just an expression of corporate values. At least that was my main take away from a recent Wall Street Journal article about a study that seeks to determine if companies that are perceived as 'ethical' can command price premiums for various products.

What was most interesting to me about the findings was that consumers actually penalize 'bad' companies more than they reward the 'good' ones. For example, when asked how much they would pay for a pound of coffee, consumers who were told they were buying from an ethical company were willing to pay $9.71, compared to the $8.31 regular consumers who had no information were willing to dole out. That adds up to a 14% premium. But consumers who said they were buying company from an unethical company said they would only pay $5.89. That's a whopping 40% drop in the price.

Still, it is clear that we are just at the beginning of understanding the complexities behind how ethics affect consumer purchase behavior. How does this look across various industries or types of products? How do different types of ethical or unethical behavior affect this? What is the risk of ethical activities being perceived as insufficient and doing more damage than good? While there are many more interesting questions that could be asked here, I applaud the efforts at generating hard data that for-profit businesses can begin to use to justify, expand, and become more strategic about their ethical activities.

Movies for Change: Pangea Day

Just as the market's ability to improve and solve social problems is being explored more than ever before, so too is the power of media and the arts being re-sharpened in this direction. Enter Pangea Day, an event that took place this past Saturday in multiple locations across the world in the style of Al Gore's LiveEarth but focused entirely on telling stories about the things people from drastically different places have in common: things like hope, love, and dreams, among others. The event was the result of filmmaker's Jehane Noujaim's (most known for documentaries Control Room and Startup.com) wish at the ever-influential TED Conference in 2006.

I've been following news about this for a while now through the well-crafted website but must admit that I was initially skeptical about the initiative since documentaries have been around for a long time and seemed like they were doing a fine job of telling all sorts of stories about people and cultures from around the world. Having watched the 1-hour highlight movie from the event on the website, I can see that my skepticism was completely misplaced. Bringing all these stories together in one place with a strong point of view and message makes all the difference. Plus, the fact that many of these movies were made by real people in their own communities lent a sincerity and power that isn't always there in even the best of documentaries. I found even a small movie from India shot entirely on a cell phone that showed a pair of dancing fingers on a table mesmerizing. While some moments like the first Pangea day 'laugh together' moment seemed a little hokey, one cant help but appreciate the effort at moving past the kind of self-conscious irony that often keeps us from seeking or pursuing real change. I'm looking to see what happens next year.