June 7, 2024

People Count With Max Dulberger, Director of Corporate Governance and Engagement at Segal Marco Advisors

Dan Berlingeri:  

Hey there. Welcome to People Count, a DiversIQ podcast where we talk about workforce diversity and human capital management from a data lens. DiversIQ is the leading provider of human capital and DEI data for the largest publicly traded companies in the world. We provide the most comprehensive dataset focused on DEI, human capital, and other social factors affecting the materiality of company culture, employee retention, and inclusion. I’m Dan Berlinger, and today I am joined by Max Dulberger, Director of Corporate Governance and Engagement at Segal Marco Advisors. How’s it going, Max? How are you today?

 

Max Dulberger:  

I’m great. It’s great to be here, Dan.

 

Dan Berlingeri:  

Yeah, good to have you. How are you doing on a Friday? How are you feeling? How’s your week been?

 

Max Dulberger:  

It’s been busy times. You know, in our space, a lot of companies’ annual shareholder meetings and such happened this week. So lots to digest, and lots to process, but yeah, things are good.

 

Dan Berlingeri:  

Awesome. For our listeners who don’t know you, who might be few at this point, you seem to know quite a bit of people in our space. Would you give us a little background on you and your experience?

 

Max Dulberger:  

Yeah, for sure. So, yeah, I’ve been in this space for about nine years now. Prior to being at Segal Marco Advisors, I’ve been with Segal Marco for about a year and a half. But prior, I was at the Illinois State Treasurer’s Office where I essentially led and helped develop the ESG investment program for the office, and that was a very educational and meaningful experience as the office did not really have any kind of ESG investment program at the time. There was not a focus on proxy voting, there weren’t corporate engagement activities on material ESG risks facing companies in our portfolio. We weren’t a member of various different groups and initiatives that help investors do this work. So it was really kind of going from zero to 100 and trying to onboard best practices for investment stewardship to enhance the investment objectives of the office. I was there for eight years, and then about a year and a half ago, moved over to Segal Marco Advisors, which is an investment consultant. We have a corporate governance and proxy voting practice, which I’m a part of. We work with over 160 plans, voting their proxies on their behalf. They basically delegate us with authority to vote their proxies, and then we also do a lot of corporate engagement work with a number of clients, really looking at companies in their portfolio that are facing some kind of material environmental, social, or governance risk, and trying to then engage those companies in a collaborative spirit to find some best practices and some solutions that help those companies be more successful, which obviously benefits them and investors. So, that’s my quick story. Happy to unpack any details as desired.

 

Dan Berlingeri:  

Love it. What got you into this work? What brought you to it?

 

Max Dulberger:  

My background has really always been in the public sector. My whole career prior to moving to Segal Marco was working for government institutions in Wisconsin and Illinois. When I had the opportunity to work at the state treasurer’s office, I came in with Treasurer Michael Frericks at the time, came in with his administration, and really we saw that there was a lack of focus on ESG investment risks and opportunities, and a lot of the practices that counterparts and peers had adopted across the country and across the globe were not in place at the Treasury. So I was really tasked to do that work, which I feel like was a nice natural fit for me, given more of my policy background and such, and also my communication background. But it really was a learning experience, kind of learning on the job, about the investment space and the finance space in particular. I’ve always had an interest, but I was always more policy-oriented, you could say, with my career. But this had the opportunity to kind of merge policy and finance, which has been, in my opinion, a very fascinating realm to be in. That’s the quick story, but I’m sure there are twists and turns along the way that we could get further into.

 

Dan Berlingeri:  

Yeah. For our listeners, curious if you had any major surprises through your career in discovering this space or for better or worse, anything that caught you off guard or that you didn’t expect?

 

Max Dulberger:  

Well, you know, it’s interesting. Proxy voting, which is a little bit of a niche area, something a lot of folks don’t think about or know about. But I think that was very eye-opening to discover at the Illinois State Treasurer’s Office, that basically we were seeding all our proxy voting rights and authorities to investment managers, which is the normal practice. Folks kind of hire managers for various purposes, and oftentimes those managers will vote on the various different proposals that come up at companies’ annual meetings. For me, it was just interesting, I think for the whole office, it was very interesting to see, hey, we have the ability to vote on board elections, to vote on shareholder proposals that deal with a lot of important topics like executive compensation, how a company is handling climate risk exposure, how it’s managing its workforce, its human capital. We really saw that as an eye-opening opportunity for the office to be essentially a more engaged and more responsible institutional investor, delivering better returns and better investment management to our beneficiaries, to the folks that rely on us. So I would say proxy voting has been an eye-opening area, and now obviously I’m very heavily involved in proxy voting. I think a lot of people, just normal folks, when I talk to friends and family, if they own any investments, they’ll say, do you get the emails that say you can vote through these annual meetings? Pay attention to those because there’s some very interesting items that come up, very impactful. But I just think a lot of folks don’t think about it or don’t have the time. But it really is an interesting area. So that’s one that comes to mind.

 

Dan Berlingeri:  

Nice. Are there any, that’s interesting that you kind of hit that literacy gap when it comes to people who don’t fully know the finance space and the kind of power that they have as a shareholder. Are there any challenges that you’re running into from your seat, either on the advising side or just throughout your career more recently that you feel like have been trending in your space from your perspective?

 

Max Dulberger:  

Yeah, I mean, it’s a fascinating time to be in this space because I think previously, maybe say five years ago and beyond, there was not a lot of widespread mainstream focus on investment stewardship practices like proxy voting and corporate engagement and the integration of ESG factors into investment analysis. But I think it’s picked up a lot in recent years. Now there’s a lot of attention from policymakers, from academics, and various other different kinds of stakeholders on this space, which all in all I think is a very healthy thing for people to be thoughtfully considering what this work is, how it contributes to investment objectives, and ultimately make this better. I will say that with all that increased focus has come some noise and some misinformation, and some folks that are maybe hijacking some of this for political purposes and such. So that obviously presents a challenge. I still think it’s a fascinating challenge, and all in all, I do think this whole debate is gonna make this work better and more refined. But you do have to do more education and maybe some more, I don’t know, sharper communications to explain this work. Whereas before there was maybe just a little less misinformation in this space, essentially. So, like I said, ultimately, I’m optimistic about this. I don’t think this work is going away. I think it’s proven its worth to investors and various other groups and such. But there’s some noise, confusion, and questions in the space, and I’m sure you’re familiar as well, Dan, that folks have to deal with. There’s been also, you could say, an attack or a lot of criticism on diversity, equity, and inclusion efforts recently, past couple of years in particular. It’s heightened, and again, like, some DiversIQ I’m sure confronts this. There maybe is more disinformation, confusion, and certain questions that then have to be, or myths that have to be debunked and such. So that’s a challenge. But I do think it is an interesting challenge and it’s good to have these conversations.

 

Dan Berlingeri:  

Yeah, for sure. I mean, I agree. I mean, everyone’s been feeling this strain, this pain. I think it’s hard to avoid in this space that can oftentimes be highly personal. You know, workers’ voice, workers’ rights, DEI, these are all things that aren’t just our investments. These are human lives, right? The quality of human lives at work that we’re examining and investigating. So it’s a difficult space and it’s hard for it to not turn into a political conversation. I think, you know, what you were saying about, you got me really thinking here. I think the, you know, some of these challenges you’re encountering, I think some of the space around the demand for better quality data, there is a consolidation effect that I feel like we’re experiencing because of the strain and friction and the challenge against, you know, call it anti-woke, call it anti-ESG, whatever you want to. There’s so much more pressure to clarify data, to measure impact, to point to things that are stronger, tangible signals of things like healthy company culture, more racial inclusivity, culture inclusivity, equitability within a company, to measure things like retention, to measure things like that are very bottom-line items that really help the performance of a company. I mean, workers are a company’s greatest asset, and they’re also,

 

 in a lot of cases, their most expensive asset. So I think it sounds like, from my perspective, being someone who’s a little adjacent to finance, the work that you’re doing, it sounds like it has so much to do with positioning companies, communicating to companies, and advocating for greater information, more information to advise on, to manage, to have greater empowerment of the shareholders themselves, right, to have a say in the governance and the direction of that company itself. Is there anything you feel you are around that, that you’re hoping for in the future to see around shareholder empowerment and advocacy?

 

Max Dulberger:  

Yeah. Well, I think your point about data is a big one, because if investors and academics and policymakers don’t have data to study the effect of retention or turnover or to study the effect of workplace demographics or various other different measures, then there’s a disadvantage that everyone is facing, essentially. Investors are facing, academics, and practitioners that are studying this, and without the data, you can’t understand as effectively the value or the financial impact of these factors. So I think we investors, you know, we’re often calling just for transparency and reporting or disclosure so that we can get more information to be able to study the issue better and be a more informed, better investor. I also think from kind of an academic point of view that having the data available will allow us to study and understand these issues in a more comprehensive manner. There’s been a lot of calls for companies to disclose on various things on the human capital front, such as turnover rates, the number of workers they have broken down by full-time, part-time, and contingent labor, workplace demographics, the makeup of workers, the cost of a workforce, and to get standardized, consistent data from companies across jurisdictions. So then you have comparable data that investors can use to make better decisions, and also that academics and folks who study the space can use to really identify what factors correlate to enhanced financial performance. Regulators obviously have a big role to play in this as well, folks like the SEC in the United States, in terms of identifying what information is important to investors and how they can help establish some basic rules for disclosure that protect investors. Also, when companies are putting out information, the old adage of, what gets measured gets managed, definitely comes in. Because when companies are collecting, putting this data out there, it gives them the opportunity to more actively manage this area of their business. If there are issues, or if there are opportunities, they can capitalize on those opportunities. Investors have a role in pushing for more data. Regulators have a role, and companies see the value of measuring and reporting out on these areas.

 

Dan Berlingeri:  

Yeah. Data is such a difficult conversation when it comes to corporate disclosure because oftentimes we talk about present and stale data. Oftentimes the disclosed information, even though incomplete, in addition to being incomplete, it is maybe six months old, could be a year old by the time it’s released. So it’s really on behalf of corporations, it then becomes this admittance of the history of management. It becomes this accountability piece of like, this is how we’ve been managing, this is what we’ve dealt with, like, this is our marker of performance, our KPIs, and how well we’ve done. If we don’t look back on that, we can’t measure it moving forward. We can’t avoid repeating history again, for the negative. So yeah, I think that is interesting. The data piece here is really interesting, and I do hope for the future as well, that regulations do press forward with ISSB, with CSDR, whatever it may be, will help increase the standards here in the States. 

 

Max Dulberger:  

Yeah, I think there are a lot of advantages to it. I don’t think a lot of the data requests are overly onerous, right? I think folks also need to be reasonable and not push companies to have to collect or report data that’s gonna be a major burden. When we are thinking about advocating on these topics, we’re trying to be reasonable and advocate for things that are important to investors and can be collected and disclosed, without a huge cost for companies.

 

Dan Berlingeri:  

One last question for you. Present state, a lot of this data is not normalized, it is piecemeal. What does Segal Marco do to try to create a more full picture? Are there any ways in which you’re working to try to fill in some of these gaps or to go beyond what is available?

 

Max Dulberger:  

Yeah, I do think we, like others, rely on various different data sources and providers and different organizations that aggregate data and can make it more comparable for investors. That’s something that creates efficiencies. You often need folks to analyze that data and look at things astutely, so that you’re not just fully relying on a rating or a score. You want to consider the context, peers, and contrasting information. You want to see what companies put out regarding, say, there’s a rating on their climate board governance or a rating relating to the quality of their DEI disclosure. Segal Marco can help with that because there’s a lot of information and sometimes there is information overload. Folks don’t know how to navigate the terrain necessarily. Our team’s been doing this for a long time, and our proxy voting group’s been doing this since 1989. Folks develop experience and best practices to create efficiencies for folks looking to do this work, and that’s what we do. We work with a lot of multi-employer plans, public plans, to help them with this work and create efficiencies, enable them to be better investors, and help them navigate the data terrain and the network of different investor organizations in a more efficient way. There are some great providers out there, DiversIQ on the diversity data, for example. There’s definitely a reliance on providers, but you also need folks behind the wheel to help sort through all this stuff. That’s what we try to do.

 

Dan Berlingeri:  

Love it. Max, we’re reaching the end of our time. Sometimes we do this on the podcast, we’ll say, have you seen anything interesting, funny, or odd this last week? Whether in disclosures, in a general meeting, or in a proxy proposal? Anything that comes to mind?

 

Max Dulberger:  

Funny or odd? I’d say the thing that captured my attention, probably the most, and it did for a lot of folks in this space, was Exxon had its annual shareholder meeting this week. There’s a lot of attention on it, I think for good reason. I don’t know if funny or odd would be the adjectives I would use, but it was very interesting to see what is a debate among certain corporations that are distraught with the asks of various different shareholders and shareholder groups, and are going to the point of being fairly hostile and aggressive, launching lawsuits against their own shareholders. Even when the shareholders have basically backed topics, said we won’t submit this proposal. For me, this week, that was a very interesting inflection point, and I think we’re all kind of still figuring out what this means. But for me, that stood out as something interesting for our space, and I think in the end, trying to think how we can all be better off and working together, how we can invest in companies that are stronger and how investors, if they do have concerns, they can raise those concerns through established, longstanding processes and have companies essentially have a more collaborative spirit. Maybe that’s an interesting takeaway, is that there’s a hostility, an adversarial quality that I don’t know if that is necessarily beneficial for our space. We want to be collaborative. We want to work with companies to put them in the best place possible to be long-term solid performers. I just want to see our space continue to have that spirit. Investors and companies have a mutual interest in the long-term success of companies. So it’s an interesting time to see things get ratcheted up a little bit. I’d be curious for your thoughts as well, Dan. I don’t know if we have time, but that was a noteworthy experience this week.

 

Dan Berlingeri:  

Wow, yeah, for sure. We’ve collaborated with Arjuna, we know what’s going on there, and you’re right. Hostile is the word for it. It’s frustrating, perplexing, and it’s not in everyone’s best interest. I think that’s been baffling this last week. I don’t think anything recently, I think I’ve been hearing trends, especially from yesterday’s trial results around Trump’s trial. People in the ESG space specifically highlighting the theme of your actions, actions do have consequences in this economy. That’s something that we’re also trying to pioneer in the space of responsible investing, that companies’ actions have responsibilities or their actions have consequences. Particularly their hostile ones. That’s not a threat. It’s just something to be considered. I think that’s why there’s governance for a reason, and when their shareholders can’t speak loud enough, there are governance mechanisms in place to make sure that the company’s best interests are kept in mind, and there are the proper checks and balances in place. It’s a strange time we live in, Max. It’s a strange time.

 

Max Dulberger:  

Yeah, I would agree. I think it’s very interesting. I think that’s well said. In my mind, a big takeaway is just the adversarial nature of this is an interesting thing for us to reflect on. In the end, we and our clients want companies to be successful and we want to help where we can to make them successful. If there are shortfalls, we’ll try to point those out in a constructive manner. We hope we continue that more positive engagement with companies so we can be working together here. I was gonna mention your fantastic opinion and such, but I think keeping that focus on constructive dialogue suits us all.

 

Dan Berlingeri:  

That’s great. Max, I really look forward to seeing what work continues to come out of Segal Marco and the work that you’re doing with so many great folks out there. You’re definitely a very trusted voice in this market, in this space

 

, and we could really use some guidance at this point in time. Thank you for your time. Thanks for tuning in. If you liked this for our listeners, if you did enjoy today’s episode, and if you’d like this content, there’s plenty more to check out at DiversIQ.com. That is D-I-V-E-R-S-I-Q.com. We have blog articles, white papers, webinars, and topics like this. If you join our newsletter at DiversIQ.com/newsletter, we’ll send you all those things directly to you once a week. Thanks so much for your time. Max, do you have any other sign-off or final thoughts for us?

 

Max Dulberger:  

Just thank you, Dan, thank you for the work you do. Thank you for this dialogue today. It’s fun. So, I’ll end on that note. Thanks again.

 

Dan Berlingeri:  

Alright. Have a good weekend and enjoy the rest of your week. Take care. Bye-bye.