Adding directors right after the AGM, plus Hoag stays, pay for bottom quartile, and attendance bites again

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PROXY COUNTDOWN

Free Float Media, Inc.

60 episodes

3 weeks ago

The silent female retreat The not-so-secret power of the lead independent director An aggressive activist atmosphere is heating up A college professor in a bow tie gets voted out And on the Big Vote, Matt talks Surveys Trade Wire - BUY/SELL Top Stories: proxy countdown_trade wire_2025 - Google Sheets Tracking Noteworthy 8-Ks since September 24th: DIrector comings and goings: Men added: 22 Men subtracted: 7 Women added: 6 Women subtracted: 5 Down to 2F: Fannie Mae: Karin Kimbrough resigned Down to 1F: F&M BANK: Daphyne S. Thomas retired Rocket Companies, Inc. (RKT): Jennifer Gilbert resigned; appointing Mr. Jay Bray to serve as a Class II director and Mr. Tagar Olson to serve as a Class I director Pitney Bowes: Milena Alberti-Perez resigned (Julie Schoenfeld resigned in July) Stupidities/Oddities: IDEXX LABORATORIES INC /DE (IDXX) elected Karen Peacock Ms. Peacock will stand for election by stockholders as a Class I Director at the Company’s 2027 IonQ, Inc. (IONQ, IONQ-WT) appointed John W. Raymond General Raymond was appointed as a Class I director whose term will expire at the Company’s 2028 Annual Meeting of Stockholders Rocket Companies, Inc. (RKT) appointing Mr. Jay Bray to serve as a Class II director until 2028 Mr. Tagar Olson to serve as a Class I director until 2027 F&M BANK CORP: Daphyne S. Thomas: Upon reaching the mandatory retirement age, Ms. Thomas became an honorary director and will continue to function as such until she tenders her resignation to the board or until the board requests that she tender her resignation. Under Section 2.11 of the Bylaws, an honorary director may attend board meetings but is not entitled to vote. NEOs Disney: Sonia L. Coleman, the Company’s Senior Executive Vice President and Chief Human Resources Officer, changed title was to Senior Executive Vice President and Chief People Officer increased Ms. Coleman’s annual base salary to $1,000,000; increased her target annual bonus opportunity to 175% of her base salary; and increased her target long-term equity incentive annual award value to 375% of her base salary CEOs COMCAST CORP: Michael J. Cavanagh will be appointed Co-CEO along with current CEO and Chair Brian Roberts, the son of Comcast founder Ralph Roberts VERIZON COMMUNICATIONS: lead director Daniel H. Schulman succeeding Hans E. Vestberg Money Norfolk Southern: One-time cash retention to all NEOs Mark R. George—$4,000,000; Jason A. Zampi—$2,250,000; John F. Orr—$3,000,000; Claude E. Elkins—$2,000,000; and Anil Bhatt—$2,000,000 Pepsi CFO Golden Hello: $9M Strategy Inc: increase to the annual cap for the security program maintained for Michael J. Saylor, Executive Chairman/former CEO/co-founder, under which the Company covers certain security-related costs. Previously, the annual cap for this program was $1,400,000; effective in calendar year 2025, the cap will be increased to $2,000,000 Dell Technologies: one-time performance-based stock option award to COO Jeffrey Clarke valued at $132.4M CSX CORP: appointed Stephen Angel as CEO; $10.1M golden hello PROXY CAGE MATCH Activist investors launched a record number of new campaigns in Q3, with 61 new campaigns, up sharply from 36 a year earlier. Barclays’ new data show that activism is accelerating globally, with a 90% quarter-on-quarter increase in the U.S. Year-to-date figures indicate nearly 191 campaigns targeting 178 companies, with activists securing 98 board seats and driving approximately 25 CEO departures thus far Japanese game company GungHo Online Entertainment, has rejected a proposal from activist investors to dismiss its longtime CEO Kazuki Morishita The proposal was put forward by Strategic Capital, a Tokyo-based investment fund which controls over 11% of GungHo’s voting rights. During an extraordinary shareholders’ meeting held at its request on September 24, the activist pushed for: 1) the requirements for ousting an executive to be relaxed 2) for Morishita to be fired from his position as CEO. While the first proposal was accepted, the attempt to remove Morishita failed, not gaining enough votes from majority shareholders. Irenic Capital Management, which owns about 2% of Workiva, wants board and governance changes: Specifically, the hedge fund is urging the company to collapse its dual-class share structure, make all board members stand for election every year and add two newcomers, including Irenic executive Krishna Korupolu, to the board. The hedge fund also expressed considerable concern about the company's governance, noting that five of its seven directors have served on the board since 2014. Acadia Healthcare has appointed Todd Young as CFO, amid growing pressure from activist investors Khrom Capital and Engine Capital — which together own more than 8% of the company VOTE RESULTS TABLE Freedom Holding Corp. (FRHC) 0 SHP classified; Philippe Vogeleer 99.2% FEDEX CORP (FDX) 1 SHP: independent board chairman 43% yes 97% yes; Smith 10% NO 37% NO pay PAUL S. WALSH (CHAIR) 94% Silvia Davila 97% Susan Patricia Griffith 98% Amy B. Lane 99.5% Susan C. Schwab 96% GENERAL MILLS INC (GIS) 2 SHP Regenerative Agriculture Practices Within Supply Chain 27% YES Separate the Board Chair and CEO Roles 36% YES avg 97% YES RPM INTERNATIONAL (RPM) 0 SHP 99.7% YES Craig Morford; 9/12 up for election as company in process of declassification CARPENTER TECHNOLOGY CORP (CRS) 0 SHP Classified at John Wiley & Sons: 54% said NO to Governance Committee Chair Brian Hemphill The Board, upon recommendation of the Governance Committee, determined not to accept Mr. Hemphill’s resignation: “The Board concluded that the voting outcome reflected proxy advisory firm recommendations unrelated to Mr. Hemphill's individual performance or contributions. The Board determined that Mr. Hemphill's continued service is in the best interests of the Company and its shareholders” THE BIG VOTE PICKS DAMION Upcoming Meetings September 29- AGM Date Company SHPs # Notes 10/13 MillerKnoll Inc 0 Classified: 3 dirs 10/14 Procter & Gamble 1 As You Sow: Plastic Packaging 23% 10/16 Medtronic 0 Irish 10/16 CACI International 0 no Say on Pay; 3 directors Matt SURVEY SEASON Executives PwC Board Effectiveness Survey - August 2025 All NEOs, ~500 of them Biggest representation in tech/media (23%) Mostly mid (35%) and large (26%) companies Directors PwC Annual Corporate Directors Survey - October 2025 More than 600 directors surveyed Mostly mid cap (33%) and large cap (37%) Mostly men (65%) - and no question about race/ethnicity Mostly longer tenured (6+ years, 56%) Asset Owners Morningstar’s Voice of the Asset Owner Survey 2025 - October 2025 500 asset owners, 19tn in assets Mostly EU and APAC, 20% US Mostly 1-100bn in assets SURVEYS SAY… How important is voting out a director? Executives: 93% of executives say at least one director should be replaced, 78% say 2 or more Directors: 55% think AT LEAST ONE should be replaced, and 7% of directors - nearly 1 in 10 - think MORE THAN TWO directors Investors: 35% said they voted - IN EITHER DIRECTION - at all To put that in perspective, investor voter turnout is roughly equivalent to voter turnout in Syria (37%) Are boards any good? Executives: 35% of executives rate their boards as “excellent” or “good” IT executives think their boards are the WORST - only 21% think they’re effective at all, and 40% think they’re straight up “Poor” Directors: 68% of board Boards think they have an effective assessment process Investors: only 35% of investors said board composition was material AT ALL, much less worrying about how effective those boards were Are we culling directors that suck? Executives: 50% of executives feel confident a board will remove an underperformer Directors: 34% of directors think the chair/lead director is “very effective” in dealing with underperforming directors - the lowest of the options Investors: Only 35% even VOTE, and the average vote for a director is 96% in favor - 0.2% of directors annually are voted out Why aren’t we cutting directors exactly?? Executives: 57% said “Board leadership is unwilling to have difficult conversations with underperforming directors”, while 48% say “Individual director assessments are not performed” This checks out - only 27% of directors said as part of the assessment process, they did individual assessments ACTION ITEM: USE DATA TO DO INDIVIDUAL ASSESSMENTS Directors: The main reason why they haven’t been replaced is “personal relationships with board members” Investors: Only 35% even VOTE, but 52% do vote on shareholder resolutions - maybe if there was a shareholder resolution that said “do a report on individual director assessments, focusing on old, long tenured, underperforming directors”, they might actually approve a report on it since they won’t vote against a human? What makes a sucky director? Executives: advanced age, overboarding, long tenure, and unprepared for meetings When asked what a coaching a board chair should give underperforming directors: 36% say “not actively participating in discussions”, and 33% say dominating discussions Directors: “does not meaningfully contribute to discussions” and “long tenure” Investors: only 14% of asset owners find it “very useful” to do stewardship, which includes voting proxies, and 16% said they “don’t know” if it’s useful - the only time we see votes against consistently is for attendance and overboarding (like SUPER overboarding) What’s the most important issue? Executives: Executives are asking boards to spend more time… on ESG? 50%, the highest overall ask. What keeps them up at night is talent management (18%) Directors: 34% said they plan on adding “industry expertise” - which suggests 1 in 3 boardrooms might have none? Investors: Business ethics remains number 1, and is the TOP RANKED material issue of every issue they asked - 68% of asset owners agreed What do boards need? Executives: 37% said more education Directors: 45% said more education Investors: Not asked because they don’t care Other fun survey tidbits… Only 15% of executives think the board has sufficient gender/racial/ethnic diversity, while… 25% of directors thought they could improve the board by seeking “more diverse viewpoints” Boards think - at a 94% plus rate - their interactions with management were very or somewhat effective, including “developing relationship with management outside of the boardroom” So what do you do with this, investors? Executives WANT YOU TO VOTE OUT DIRECTORS Directors ALSO WANT YOU TO VOTE THEM OUT ACTION: VOTE OUT DIRECTORS - find underperformers, long-tenured or over-aged directors and swap them - only directors care about “collegiality”, executives don’t care because they need diverse viewpoints ACTION: Stop obsessing over shareholder proposals - they don’t matter nearly as much as you think they do investors Directors themselves seem like they don’t have enough expertise on the industry where they’re a director, and investors are worried directors are in it for themselves (ethics) while executives need them to think about exogenous risk (ESG) ACTION: It’s time to marry skills of directors to companies, looking for the exogenous long term risks facing an industry - use data to find them! ACTION: Don’t ask about AI skills on the board, they have to manage ALL exogenous risks over the long term, AI among them - when you myopically focus on just one, you miss the next wave of risk

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Adding directors right after the AGM, plus Hoag stays, pay for bottom quartile, and attendance bites again

PROXY COUNTDOWN

4 months ago

Adding directors right after the AGM, plus Hoag stays, pay for bottom quartile, and attendance bites again

Trade Wire - BUY/SELL Top Stories: Netflix Rejects Jay Hoag’s Resignation, saying “Mr. Hoag’s continued service as a member of the Board is in the best interests of the Company and its stockholders” despite the glaring flaw in its logic that 79% of stockholders said NO. In new hires: DTE Energy announced that COO Joi Harris would be the new CEO, succeeding Jerry Norcia, who will become executive chair. Joi is a double ceiling breaker: becoming the first black woman in the role. UDR’s new CFO is David Bragg, who lasted only 16 months as CFO at Roots Management Group from March 2024 to June 2025. The new interim CEO at Hormel Foods is former CEO Jeffrey Ettinger. For 15 months of service to provide cover for poor succession planning he will get a salary of $1.2M, a target short-term award equal to $2M, a one-time equity grant of $7.2M, and 10 full weeks of paid vacation. The new CFO at Pure Storage, Tarek Robbiati, who lasted as CEO of RingCentral for only 5 months and has not held a full-time executive position since 2023, will get about $30M in equity awards, more than third of which will vest simply over time without performance-based conditions. Starbucks appointed two uber-networked directors to its Board of Directors: Dambisa Moyo is on the boards of Chevron Corporation and Condé Nast and previously served on the boards of SABMiller, Barclays Bank, 3M, and Seagate Technologies. Marissa Mayer previously served as CEO and director at Yahoo!. Mayer currently serves on the boards of Walmart, AT&T, and Hilton Hotels & Resorts. She also served on the board of Nextdoor. In ‘circumventing the alternative democracy’ news: Netflix appointed Airbnb CFO Elinor Mertz to its board a mere 16 days after its annual meeting. Democracy avoided. Similarly, PayPal appointed Deirdre Stanley to its board 19 days after its annual meeting. Also waiting 19 days was MicroStrategy, who snuck Peter L. Briger, Jr. onto the board and gave him a golden hello equity award valued at $2M. On top of that he is also due to receive about $500,000 in annual director compensation. Peter joins a board with only one woman so let’s hope he’s comfortable in a men’s locker room. In ‘here’s some more money for hanging around’ news: Somnigroup International has renewed the contract of CEO and Chair Scott L. Thompson. As a result, he gets a $10M cash transaction bonus for the company's acquisition of Mattress Firm and 1.2M stock options valued currently at about $22M. Flex CEO Revathi Advaithi gets a one-time supplemental equity award valued at $25M if the Company’s relative total shareholder return (“rTSR”) over a three-year period is below the 25th percentile, $50M if the Company’s relative total shareholder return over a three-year period is below the median, and $62.5M if the Company’s relative total shareholder return over a three-year period is at or above the median. Howmet Aerospace has renewed the contract of its CEO and Chair, John C. Plant, as such, John will get a special retention award of restricted stock units valued at $45M. Starbucks named executive officers are getting a surprise July 4th “Back to Starbucks” bonus for staying at their jobs. The equity award is worth $6M if an operating expense reduction is met and up to $12M for the achievement of the easiest set of goals known to humankind: (i) the rollout of the Company’s Green Apron Service program, (ii) coffeehouse uplifts, (iii) new food and beverage platforms, and (iv) a reimagined Starbucks Rewards program. And finally, in a tribute to simpler times, here’s the announcement: “On May 20, 2025, at the Contractor Connection RESTORE Conference, Larry C. Thomas, global president of Platform Solutions of Crawford & Company announced his plans to retire from the Company effective at the end of the year. Mr. Thomas has been with the Company since 1983.” Retiring at a conference; seems so old-fashioned PROXY CAGE MATCH ISS Recommends “Withhold” votes on long tenured Brookdale Senior Living directors Lee Wielansky, Chair of the Investment Committee, and Victoria Freed, Chair of the Nominating and Governance Committee: “Given the tenure and positions of Wielansky and Freed, they are arguably the most culpable among incumbent directors for the current state of affairs.” 2024 vote: Wielansky (99.6% YES) and Freed (98.8% YES) ISS Supports Compelling Case for Change to AstroNova Board of Directors ISS finds “change at the Board level is warranted to improve independence and oversight” 2024 vote: 97% YES for entire board last year ISS advised investors to vote against the re-election of Shari Redstone to the Paramount Global board, citing concerns over the company's governance and executive pay structure. They also recommended a vote against directors Barbara Byrne, Linda Griego, and Susan Schuman. 2024 vote: Against: 2.4%; Abstain: 12.1% Texas Enacts New Law to Regulate Proxy Advisory Firms SB 2337 aims to limit proxy advice based on "nonfinancial" factors such as ESG and DEI and requires proxy advisors to provide a "specific financial analysis" for any recommendation in opposition to management's position. And lastly, Lamb Weston reached a settlement with Jana Partners allowing the activist investor to add six new directors: four Jana candidates and two other mutually agreed-upon directors. The Jana candidates include Timothy McLevish, a former Lamb Weston executive chairman and Jana's portfolio manager Scott Ostfeld. The other additions are: Bradley Alford, a former Nestle USA CEO who will become chairman; food industry executive and Continental Grain adviser Ruth Kimmelshue; and the two new mutually agreed on directors are Lawrence Kurzius and Paul Maass, who both have food industry experience as top executives. VOTE RESULTS TABLE Here are the highlights from 33 large-cap annual meetings over the past 2 weeks: 16 total SHPs: but from only 9 companies, meaning 24 meetings had zero SHPs Only 2 “wins” overall: Vertiv Holdings: Joseph van Dokkum 46% NO Jacob Kotzubei 54% NO Viridian Therapeutics 51% NO increase equity plan by 8M shares 7 “moral” victories (over 30%): EBAY call a special meeting 49% YES Equity Incentive Award Plan 45% NO BJ's Wholesale Club GHG emissions reduction 30% YES: Trillium ESG First SHP since its 2018 IPO DELTA AIR LINES Act by written consent 42% YES COSTAR GROUP transparency in political spending 33% YES 46% NO Pay ANSYS Act by Written Consent 41% YES The shareholder disconnects: COSTAR GROUP: Musslewhite 4% NO (lowest NO); 46% NO Pay IonQ: classified; 19% NO Singh; 36% NO on Pay; no Pay Committee members up for vote The shareholder connects? DELTA AIR LINES: Act by written consent 42% YES ANSYS: Act by Written Consent 41% YES The directors : 5 over 20% Losers Core & Main: Gipson 35% NO (classified) Okta: Epstein 29% NO (classified) Viridian Therapeutics: Gheuens 23% NO (classified) BIOGEN: Dorsa 22% NO; Rowinsky 22% NO Freire 17% NO; Hawkins 17% NO; Langer 17% NO; Mantas 19% NO; Sherwin 17% NO COMCAST: Baltimore, Jr. 21% NO; Bacon 25% NO Bell 15% NO; Honickman 16% NO VEEVA SYSTEMS: Carges 20% NO; Ritter 38% NO; Wallach 40% NO Vertiv Holdings Joseph van Dokkum 46% NO chairman of the Nominating Committee: 1 woman; 9 men Jacob Kotzubei 54% NO Mr. Kotzubei attended 50% of the aggregate meetings of the Board of Directors and was not able to attend the balance due to last minute emergencies and other extenuating circumstances CrowdStrike Holdings: Cary J. Davis 34% NO; Laura J. Schumacher 38% NO (classified) Winners Robinhood Markets: John Hegeman 99.94% YES Dell Technologies: David Grain 99.93% YES The oddities: Smallcap: Red Cat Holdings: 4 out of 5 directors about 57% NO; Thompson 2% NO CEO Jeffrey Thompson controls 14% of voting power Mastercard: racial equity audit report 11% YES: SEIU MasterTrust affirmative action risks 0.4% YES: National Center for Public Policy Research COMCAST: CEO pay ratio factor 4% YES; independent chair 27% YES KROGER: discarded cigarette pollution 9% YES: Sister of St. Francis of Philadelphia third-party mandated framework on U.S. farmers 15% YES: Domini Impact Equity Fund safeguarding the privacy of consumer health data 14% YES: Rhia Ventures NVIDIA: eliminate holding period requirement to call a special meeting 7% YES: John Chevedden new director election resignation governance policy 18% YES: The New York City Carpenters Pension Fund modify existing reporting on workforce data 18% YES: Trillium ESG Global Equity Fund THE BIG VOTE PICKS MATT MATT: The Plus30s Damion steadily pulling directors added to boards right after AGMs Why it matters: Most vesting, turns out, isn’t 1 year, it’s “directly prior to the annual meeting” and pro rata from start date Directors get nearly full salary PLUS fully vested stock before ever getting a vote Directors are added often as part of board expansion without vote - investors are voting entirely on incumbent slates The owners don’t choose their representatives, the representatives choose themselves The average director tenure for a large cap company is about 7 years - that means nearly 14% of the average tenure is over before investors weigh in I got to asking how often this happens - and are there patterns Methodology: Get AGM dates in the last 5 years Get director start dates in the last 5 years Find all non-executive directors that started 30 days or less after the AGM How many directors have a year of no accountability? Find the nom chair at the time of the election Are there nomination chairs that do this repeatedly? Results Totals: Average days for director adds (plus/minus the AGM) is 90 90 days before or after the AGM on average, directors get added 292 directors added within 30 days post AGM in 5 years 79 times, directors were added INSIDE A WEEK of the AGM 227 companies added those directors The companies with multiple directors in a single year are often merger agreements 29 companies added directors ONE DAY after the AGM Worst of the worst: Rockwell Automation Only US company to do this three years in a row - 2022, 2023, 2024 - classified board In 2022, Robert Soderbery added after board expansion ONE DAY after AGM Not in proxy, no mention of expansion Kalmanson chair of nom committee, Holloman, Kean, and Payne on it In 2023, Phillip Holloman retired the day of the AGM, the replacement director Alice Jolla was added ONE DAY after the AGM Holloman on the proxy, no mention of retirement Jolla not in the proxy Kalmanson nom chair, Gipson, Holloman, Keane on committee In 2024, Rockwell expanded the board AGAIN adding Tim Knavish ONE DAY after the AGM It was not discussed in the proxy, nor was Knavish up for vote Bill Gipson nom chair with Jolla, Parfet Common directors: Parfet was lead “independent” chair at 15 year tenure Keane on the board for 12 years, on and off nom committee Moret CEO for 7 years - but this seems like the Parfet show Pattern 1: classified boards 48% of the boards are classified - so directors already have limited accountability, and that’s 40% more than companies who HAVEN’T done this So about HALF of the director adds won’t see a vote for nearly TWO years or more rather than one Pattern 2: board expansion Board expansion right after the AGM is unusually common among these companies Pattern 3: network power The boards that do this tend to be highly networked and powerful boards - 16% more network power on average than non Plus30s Pattern 4: LESS insiders on the board By 15% on average - which seems surprising unless you think of these being “board run” companies, not management run? It gels with seeing more Socialist boards (boards run by the committees rather than management) Directors Two directors stand out as having this done TWICE at two different companies in the last five years Jodi Taylor Mister Car Wash, Inc - added 7 days after AGM JM Sucker - added 1 day after AGM Jorge Titinger Formfactor Inc - added 24 days after AGM Ichor Holdings - added 20 days after AGM

PROXY COUNTDOWN