YouSaid · the spoken record

Robert Jackson

lines on the record: 120
first: 2019-11-15
most recent: 2019-11-15
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“But just so you know, that was proposed 30 years ago in a very famous article by one of my colleagues. And that's an idea. Where is that idea in the corporate governance debate right now?”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Look, I think those Not only that, but these boards tend to be senior people who want to do the right thing. They also don't have a lot of resources. They don't have their own analytical team. They don't have the ability to take a CEO's plan and say, well, look, those assumptions make sense. Does that purchase make sense? It's very hard They dial in by phone and they say yes. And look, I've been in those meetings. It's a difficult thing for a director to do. But one thing we're doing right now in corporate America is we're asking a lot of those boards and we're not giving them a lot of tools to do that work. And that's going to end badly. And we can yell at the boards all day long. But until we give them the tools to do that work, we shouldn't expect a different result.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“And that director will never serve on a public company board again. And knows it. So, what we're really asking people are to be angels, not men. And it's just an unrealistic thing to ask them. These are people who are very senior, who think of themselves as collegial, thoughtful counsel, that they can work it out. And the idea that they would do something like that, it's just not something that's realistic.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Could and they act accordingly. Have you ever seen an instance where a board says we're going to walk, like they could make a public stink? They could call me and say, Kara, we have told him he has to step down and he won't and he's firing us.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“That's right, but there's going to be a meeting next year where you have to be reelected, and I don't like your chances. And here's the thing: none of this ever happens because everybody understands before the fact that it could and they act accordingly.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“In theory, when people have dual class, they can do what? If the board suddenly gets a conscience and says, this is the CEO is not acceptable. And it's hard to get to that. A firing is hard to get to.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Yes. Right. What if Scott and I talk about this? What if, say, one or two, they tend to leave quietly in the middle of the night and say nothing, the ones that have left, who I, from what I understand, are more disputious and disagreeable with the CEO. They'd have to say we're going to fire you, and then the CEO fires them, right? That could have happened in the case of Adam Newman, for example”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Let's just be clear. They're public company directors, they're fiduciaries to the shareholders. But the person who elects them by majority hammerlock control is the CEO they oversee. So just to be clear, they do have some authority, but it's limited by the fact that the person who's who they're supposed to be overseeing chooses them.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“It wasn't just that, it was also decision making in terms of what to buy and what not to buy. It looked like one of the things it gets to is the entity that is actually supposed to do its job is the board. Is the actual board, which is supposed to say you want to buy a surf wave company? No, we're not buying a surf wave company. No, no, very nice. Buy it yourself with your own cash if you like to surf so much. Or if they hear rumblings, which they never do of problems, you know, behavioral problems or anything else like an Uber or they step in. But they tend not to step in anymore. They tend to be, one, because the people appoint them and they're in their debt. Or two, they have no power because the boards, I mean, let me just get, it might correct the board of Facebook has no power.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. And so, you know, look, when I made my sort of pitch on dual class, BlackRock and the Council of Institutional Investors petitioned the stock exchanges to develop a limit. And that firm, those firms came out against it because they'd much rather be able to tell their clients they can do whatever they'd like. And I think we're going to live to regret this because we work as one example of how the market is not comfortable with intergenerational control of widely important public companies.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Exactly, and the reason is straightforward. It's hard even to blame them. They are talking their book, they want to make money.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“So, Carol, let's just be clear everybody wants to get paid. And as a rule in my job, I try not to get mad at people for following their financial incentives. Sure. Bankers want the mandate. They'll tell you what you need. Look, I've been that guy. They'll tell you what you need to hear to get the mandate. So I don't think if we leave corporate accountability up to investment bankers, I think we're going to regret it. But that's a one side. You ask about the lawyers. The lawyers in Silicon Valley, there's been virtually no leadership from those firms about what the right thing to do here is.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“All those disclosures, I'm not going to have disclosures. I'm going to fix that problem before we get there, or else we're not going public. Like the things that you would disclose. So the disclosures, I think, shocked people, like a lot of the stuff. The second thing he says is I don't know what meeting they were in. When I just was meeting with bankers, I'm like, what are you telling me that isn't true about myself? What am I doing wrong? And why won't you tell me? Like, why won't you tell me about what's going on? And I said, we should just do direct listing, but even then you don't have time for self-reflection. You have nobody in the room telling you your problems, essentially. You seem like a negative force. And I think anytime you say anything negative to deck people, they feel victimized or they feel like we're brilliant. What are you at questioning us? And so it's what's really interesting is what happens one in the room with the bankers who, well, that's obvious. They want to get paid, right? And they'll do anything. What happens with the lawyers? They want to get paid. They're a little more cranky, I suspect. And then the general public doesn't see.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Who would have had that? It's interesting because I just interviewed Brian Cesky of Airbnb. They're going to go public. They've announced it. He's a much more responsible figure compared to a lot of Wall Street. And two of the things he said I thought were interesting is one,”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, where the rubbers finally met the road, where the market has had enough with governance structures that don't make sense, with registration statements that don't make sense, and has finally begun to push back. Now here's my question for you, Kara. Sure. Why did it take that? Why wasn't there a stock exchange standard or a lawyer or an advisor or a board member saying to that CEO, look, you have perpetual control throughout your grandchildren. You have limited accountability. The company's financial, I mean, why wasn't that conversation had before”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“It is fascinating. And I think what's happening is the tech industry is on a collision course with 30, 40-year-old corporate governance debates. And I think we work as one example. Maybe the first major example of the five.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Of corporate accountability. All right. So when you have the dual class structure, I want to get into WeWork if you can talk about it a little bit, but what happened there from your perspective? Because you did have this situation of a god like Z. I call him Ouijas. Talk a little bit about what happened there.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“I was a corporate lawyer. It's not an easy board meeting. I've been there to say to a CEO, I understand this is what you want to do, but you shouldn't. And here's why. But we need more institutions prepared to do that. Carol, I'll tell you, when I was on Wall Street, the stock exchanges played a significant role in corporate governance. They required director independence, et cetera. But since I left the street, they went private. They are now private profit-making entities. And it turns out telling CEOs no is not that profitable.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“And talking about the idea of why it's important to hold what happens in Silicon Valley at least, and it's because these are founders. I always think about that a lot. Most CEOs are professional CEOs. They didn't found the company. The founder died a long time ago, and there's some plaques somewhere. But in this case, they're almost religious in the way they run these companies. I always think of them as religious figures, and they are treated that way. They're treated like gods. They're treated like special characters. And it's like Thomas Edison would be treated or anybody else.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Well, right, plus the, I think they still innovate, but the cost of dual class outweigh those benefits because now you have costs that you can't hold a CEO accountable. And investors see that and price it into the stock accordingly.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“To pay for it exactly, and we needed time. And I get that. Question is how much time? And the argument for forever is very weak.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. Like, I'll give you an example. To me, the most argument for this kind of thing is Google when they pursued Android. Actually, the CEOs of the management of Google put out a securities filing where they said dual class allowed us to do this. It took years to come up with the platform, to explain it to developers.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“So I released a study last year where I showed that in the first five to seven years after a public offering, companies with dual class tend to outperform the rest of the market. And the reason why it makes sense to me, if you're a young company that's still making big innovations.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Look, more generally, do I understand why a newly public founder wants five years to try and make their vision a reality before they're subject to a vote? I do. And the data provides some support for that.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“And they want the stock, exactly. My answer to that is how are you supposed to price forever? Like, I don't know how old Mark Zuckerberg, to take an example. I don't know how old his kids are, but how are investors supposed to know if they make a good CEO? The idea that you can price that at the IPO stage strikes me as fanciful. And I got to tell you, I've been, I gave this speech over a year ago. I haven't heard a good defense for perpetual dual class stock. Dual class more generally, we can talk about that.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“For anything And what's so, again, for a few years, does that make sense? Maybe in some cases. But not only can you not firemark Zuckerberg, you can't fire his kids or his kids' kids. And a lot of people who are for this, here's their best argument car. They say, look, when the company comes public, investors know the deal. They know that this is the story.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“So when the company comes public, they've got two classes of shares. One, the managers get. Each share gets 10 votes, 100 votes. The rest, the common investors get, public investors get. And they get one vote. And the math works out such that you can't win an election against the people with the higher votes.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Right. I always say this. One of the things I think people don't understand the word dual class sometimes mean they're not stupid, but it's not an easy concept. But I always say you cannot fire Mark Zuckerberg. He's unfireable by the board. There's no power. The board has no power. He has all the power. And people are like, what? Like, what? What do you mean? Everyone can be fired. I'm like, he can't actually be fired. I'm not sure what he could do. I mean, Donald Trump can get fired faster than one of these CEOs.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“I can't, not in Tech. You're not wrong. A lot of the examples we're both thinking of turns out are men. So for me, look, then the cost of that become real, which are that there's no accountability. So it bothers me in the data, but it bothers me for another reason. We're talking about the biggest companies that have the most influence on the American people. And they can hand down control, power those companies generation to generation. Now we have a word for that. It's royalty. And I thought we had a war about that 300 years ago and the good guys won. Increased to the degree we're letting dual class continue to perpetuate over time, generation to generation. We're creating a class of royalty that controls our national dialogue.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Exactly right. I think the data show that that value tends to go away after a while. Why? Because the company's more mature. They're no longer innovating in the same kind of way. So they don't need that kind of room. And now the costs of it, which is that the CEO can do whatever she wants. Now those costs...”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Mm-hmm. And this is because, let's make this argument, because they get, they don't have to worry about short term interests, they can do what they want. They don't have to worry about shareholder problems. It's the same lack of accountability that they don't have to do. That's the opposite of it. But it's the ability to not worry about as they grow a company, say if you Facebook has one, Google has one, so that they can do, pursue things that help the company versus, and it's typically a new company.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“You see, a lot of the dual class structures we have now, as you point out, not only gives the current founder control, but their kids and their kids kids, this kind of perpetual dual class stock, I'll tell you, it troubles me for two reasons. First of all, the data show that the value of dual class goes away after a short period of time. So it's valuable in the first five, seven, ten years.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“This has been a real focus for me because one of the things I found when I dug into the data on this, dual class stock has a justification, which is that a visionary founder needs time to make their vision real. And we just talked about how activists and others can really put pressure on short-term pressure on a CEO. So there's some value to dual class. The question is, how long should it be before the CEO is held accountable? And I made an argument in a speech last year where I said, not forever.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Nothing new, but it's through this dual class structure that's been in place that tech has used pretty much uniformly, except for a few exceptions around. So talk a little bit about this, Commissioner Jackson, where we are with dual class stock.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“There's criticism of it. And not only the Council of Institutional Investors came forward, I mean, a number of folks are really frustrated. So the key now is to push them forward because they're going to, to the degree that they finalize a rule like what we proposed, I'm really worried that balance of power will be tipped for a long time.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and how could they be? I mean, how could you be four of a rule that limits investors' ability to check CEOs? I don't know how a big investor can be for that.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“I hope so. Also, the comment file, we're required by law to review the comments that we get to respond to them. And I'd like to think that if investors come forward, trillions of dollars”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Well, no, it's been proposed So I said in my descent, I said, look, the best news today is that it's a proposal. So people want to come forward and tell us what's wrong with this or how to calibrate it. That now's the time. And who knows how long it'll take before it goes final. But I've said to every investor out there, now's the time to come in and share your view with the SC.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“So they have a good argument Their best argument is management left alone tends to add value. And they have a point. I'm not going to say that every CEO should be subject to a shareholder proposal. Of course not. The question is, should we have a level playing field between investors and the CEO, or do we want to tilt it in a way? Because we think in general CEOs are good. And that's not my view. My view is CEOs are humans, not angels, and they'll pursue the interests that they're given. If you give them too much room to build empires, to spend money in a way that doesn't make sense, to not disclose what they're doing to investors, that's exactly what they'll do. And that's why I'm worried.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“We were debating that in the 90s and the early 2000s, and it was thought to be a balance. Investors add value, so do managers. We're going to balance between these two. What's happened lately is that the view of my colleagues tends to be let's just side with managers in that debate. And I'll be honest with you, my own view, this is something I'd advocate a lot about. One reason why is that CEOs are very, very powerful in terms of their ability to send a message in Washington. And the irony of that is that the organizations they use to do that are funded by shareholder money. Chamber of Commerce, the Business Roundtable, their money comes from public company investors and is now being used to advocate to limit the power of public company investors.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Sure. So, one thing that frustrates Right. I've been studying this for a long time. This is, everyone treats it as brand new. This is an old debate started in the 1980s between a guy I used to work for, Marty Lipton, and hedge funds. The debate there was, what's the right balance between management who want to manage the company for the long term and hedge funds who want to intervene and make a short-term profit?”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“We'll talk about that a little bit because I do want to get to the dual class shareholders. It drives me nuts than dual class shareholders. But talk a little bit about that concept of pro-management versus pro-CEO”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“They liked activists because activists tend to add value. Something's happened here where we've moved away from whatever pro-business used to be to just pro-management. And I think that's a big mistake.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“I think that's fair, but I have to tell you, this one is strange to me because pro business, what didn't always mean pro-CEO. Like the guys I worked with on Wall Street were not pro CEO. They were pro investor, pro value.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. And so there are real problems with activists who are sort of talking their book publicly and then, you know, taking a financial position that's not disclosed. I'm happy to engage with those problems. But what these rule changes would do is just tilt the playing field away from activists and towards the EOs. And I don't know why that'd be a good thing. And I'll tell you something else that's frustrating about it. I feel like there's a clear path forward that would really address the problem, like with a scalpel. But instead, we kind of just raise them across the board, sledgehammer style. And unfortunately, that's why I couldn't join my colleagues with these rules.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“In that case, to people who don't know, you make trouble, you call a reporter, you find something out. Sometimes it's right, sometimes it's just creates it. In this environment, social media environment, it can get quicker traction rather quickly.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. But I think you're right. Look, activists can play a socially constructive role, but they're like anybody else. They have costs. Their goal is to make money and they're going to do what they can to maximize the money they can make. If that means improving the firm, that's what they'll do. If there's another way in and out of the company that's shorter term, they'll do that too. What's so frustrating for me is we should be thinking about things that encourage activists to add value. Let me give you an example. If you're worried about short termism and activists, We should have rules that encourage activists to hold their shares for longer periods of time Make it a little harder to get a quick bump out of the stock price and exit your position. But our rules don't do that.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“I think that's absolutely right. The reason they don't has a little bit to do with the dual class share structure many tech companies, which we'll get to in a minute.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“Right, right, which is the point. So talk about that, the rise of the gadfly is especially in the internet age and these Dan Lobes of the world and the others has become, they have new tools to drive CEOs crazy. They typically make a side deal off to the side. That's what usually happens in my experience. But their role has changed, the idea of an activist shareholder. I mean, they had a terrible reputation for a while, and then a better one, and then again a terrible one. Can you talk a little bit about that? Because I think increasingly they're going to be attacking tech companies, I think.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT
“So, if you're this SEC, the way to go about this is to separate the proposals into what's useful and what's not. And then develop a rule that addresses what's not. Instead, what we did was we just raised them across the board. So, in my descent, I point out that important things like proxy access that would let investors run their own proxy fight or share retention plans that make the CEO keep skin in the game Those would get bounced. By this proposal. I don't know why anybody would want to bounce those unless what you're trying to do is help CEOs.”
2019-11-15 · Decoder with Nilay Patel · Recode Decode: SEC Commissioner Robert Jackson · IDENTIFIED FROM THE TRANSCRIPT