WSJ’s Top 250 directors, plus Exxon’s vote, Elliott’s win, and Tesla’s new director

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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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WSJ’s Top 250 directors, plus Exxon’s vote, Elliott’s win, and Tesla’s new director

PROXY COUNTDOWN

50 minutes 9 seconds

5 months ago

WSJ’s Top 250 directors, plus Exxon’s vote, Elliott’s win, and Tesla’s new director

Trade Wire - BUY/SELL Top Stories: Chipotle Chief Strategy Officer and former CFO Jack Hartung is joining the board of Tesla, where he will be greeted by his son-in-law–a non-executive, salaried employee of Tesla since 2016–and Elon’s brother Kimbal, who served on Chipotle board from 2013 to 2019. Here’s a good one at small cap company Luminar Technologies, following a Code of Business Conduct and Ethics inquiry by the Audit Committee of the Board of Directors, CEO and Chair Austin Russell and director Jun Hong Heng immediately resigned. However, the former CEO will remain on the Board and be available to the incoming CEO on transition and technology matters. As a companion piece to the 2025 “down to two women on the board but nobody seems to care” theory, there are several companies now that are appointing male directors despite having only two women on the board, as an example: Nutanix is comfortable with only two women as they replace retiring David Humphrey with Eric Brandt. With Eric, they now have two board members who were executives at Broadcom, a second director who also has experience being CFO, and a guy that already serves on four other publicly-traded companies so he understands how to schedule board meetings. Likewise at Qorvo, Peter Feld joins a board with only two women. Peter represents the second director at Qorvo with experience at Marvell Technology And at Live Nation Entertainment Trump administration toady Richard Grenell joins a 2-women Board; just this morning the new Live nation Entertainment director tweeted: “Left wing violence is out of control from Palm Springs, CA to Washington, DC. Leaders on the Left must speak up now. We all must focus on this growing Left wing violence problem.” Grenell is miraculously the acting president of the Kennedy Center for the Performing Arts despite no background in anything resembling “the Arts.” Two influential directors are stepping down from their respective boards: O’Reilly Automotive is losing Larry O’Reilly, consistent with the Board’s mandatory retirement age policy. Luckily for shareholders they have a spare O’Reilly in the trunk: that’s Larry’s brother David O’Reilly. And at Paychex, founder, former CEO/Chair, and board member since the Carter Administration Thomas Golisano and his 63% influence is stepping down. That’s a lot of power up for grabs. Finally, in executive pay news: Bath & Body Works has a new CEO, Daniel Heaf, who will replace Gina Boswell. The total bill to shareholders is more than $17M: a golden hello of $5M and a golden parachute of $12M And at Omnicom Group, Chair and CEO John Wren is giving up his $1M annual salary in order to get a massive pile of 4M options without performance-based conditions. This means that if the company can get back to its share price from only 6 months ago the CEO will have managed to make $120M. PROXY CAGE MATCH Phillips 66 and activist investor Elliott Investment Management each won two seats at the company’s annual meeting this week, capping one of the biggest proxy cage matches of the year and following months of increasingly bitter finger-pointing between the two sides. The vote is significant because no activist at an S&P 500 company had successfully won a board seat in at least 15 years without support of one of the big three index funds—BlackRock, Vanguard, and State Street, While Elliott’s campaign was backed by prominent proxy advisory firms ISS, Glass Lewis, and Egan-Jones, Phillips 66’s top three passive investors all sided with the company. The two Elliott nominees elected were Sigmund “Sig” Cornelius, who recently retired as the president of Freeport LNG, and Michael Heim, an operating partner with Stonepeak who also was a founder and president of the Targa Resources midstream pipeline giant. On the Phillips 66 candidate slate, Robert Pease was reelected, and Harbour Energy COO Nigel Hearne was added to the board. Victoria's Secret adopted a "poison pill" plan to block a potential takeover by Brett Blundy’s firm, BBRC International, unless all shareholders are fairly compensated. Starting May 29, shareholders will get rights that activate if anyone acquires 15% or more of the company, allowing them to buy shares at a discount and dilute BBRC’s stake, which is currently about 13%. After resolving past antitrust filing violations, BBRC is now allowed to increase its stake to 49.99%. VOTE RESULTS TABLE Here are the highlights from 100 large-cap annual meetings over the past week: Only 41 total SHPs: and from only 34 companies, meaning 66 meetings had zero SHPs. In fact, 51 of 100 meetings had nothing happening: zero shareholder proposals and zero shareholder dissent. Only 6 wins overall: Say on Pay Otis Worldwide: 61% NO Simon Property Group: 53% NO Simple Majority vote Choice Hotels International: 97% YES Alexandria Real Estate Equities: 84% YES Celanese: 64% YES Skyworks Solutions: 98% YES 13 “moral” victories (over 30%): Say on Pay O-I Glass: 34% NO Las Vegas Sands: 38% NO Akamai Technologies: Stock Incentive Plan 41% NO AIG: 35% NO BlackRock: 33% NO CVS Health: 41% NO Shareholder approval on excessive golden parachutes Vertex Pharmaceuticals: 37% YES Simple Majority vote Medspace Holdings: 31% NO Shareholders ability to call a special meeting Xylem: 46% YES Act by written consent CVS Health: 43% YES Independent board chair Colgate-Palmolive: 30% YES Cummins: 41% YES political contributions Otis Worldwide: 40% YES The shareholder disconnects: Otis Worldwide: 61% NO on Pay; lowest director 93% YES/98% average YES Alexandria Real Estate Equities: 27% NO on Pay; lowest director 91% YES Las Vegas Sands: 38% NO on Pay; 6 of 9 directors between 10% and 18% NO BlackRock: 33% NO on Pay; lowest 2 directors 92% and 96% Motorola Solutions: 20% NO on Pay; lowest director 92% YES CVS Health: 41% NO on Pay; lowest director 91% YES (97% average YES) The directors (over 20%): only 17 higher than 20%, 2 over 30%, and 1 over 40% (about 900 directors: 2% over 20%) WEX: James (Jim) Neary 31% NO; Melissa Smith 33% NO; Jack VanWoerkom 41% NO Enphase Energy: Thurman John Rodgers 61% NO (classified board) Haverty Furniture: 42% NO G. Thomas Hough Universal Health Services: Maria Singer (49% NO; Class B & D) Teleflex: All directors between 28% and 36% NO; (Say on Pay 27% NO) Simon Property Group: Glyn F. Aeppel (37% NO); Larry C. Glasscock (30% NO); Gary M. Rodkin (27% NO); Peggy Fang Roe (27% NO); (Say on Pay 53% NO) AIG: Diana M. Murphy 21% NO; Linda Mills 26% NO; James (Jimmy) Dunne III (~20% NO); (35% NO on Pay) Molson Coors Beverage: Roger G. Eaton 21% NO First Solar: Paul H. Stebbins 21% NO APi Group: Carrie A. Wheeler 28% NO Teradata: Michael P. Gianoni 26% NO The oddities: Auditor dissent?! Elevance Health: 12% NO American Water Works: 12% NO First Solar: 13% NO Align Technology: 10% NO The bullshit: The Domino’s Pizza competing proposals dirty trick: where the board proposes a version of the shareholder's proposal that is slightly more onerous: in this case, 25% vs. 15% of shareholders having the the ability to call a special meeting: Align Technology: Management (65% YES) versus SHP John Chevveden (17% YES) Akamai Technologies: 10% call a special meeting (51% YES/58,453,104) vs. 25% call a special meeting (52% YES/59,520,777) THE BIG VOTE PICKS MATT The Wall Street Journal released a report on the Top 250 Board Directors The 250 most influential and effective corporate directors who are set to serve on an S&P 500 board throughout 2025. There is no definition of what is either influential OR effective There is a methodology that focuses on a point system for individual attributes (like committees and roles), company performance, and a bonus for sitting on a lot of big boards The methodology includes what seems like a random point system - the maximum number of points a director could hypothetically get is 23.25… because… it’s a number… But the important things to note is there are no real consequences in the list to underperforming, they value being a lead “independent” director or chair, they don’t care if the company is being sued, and they really like directors who are professional directors on lots of boards So I compared the top 100 in their list to our data, this is what it looks like - and this is why we need to use analytics on directors At a minimum, we should agree what a winning director is - can we agree that a winning director should pay the CEOs the least possible for the fewest controversies and highest sustainable returns? Isn’t that the goal? Here’s the top 100: Some standouts: #1 is Ed Philip of United Airlines - weird number 1? I mean, 2 boards in our database, one totalitarian Canadian company and UAL where he has 8 years of tenure? Chair at the totalitarian company, nom chair at both… it’s such a nothingburger pick I have no idea what to say about it? Bats .600 overall, below average TSR but average everything else? It’s the most average choice ever In fact, if I filter US large cap directors by those with: >.500 TSR, earnings >2 boards No totalitarian boards I end up with a whopping 144 directors before I get to the first from the top 100, Kevin Kennedy, who ranks #7 The point system is a liability for investors - John Koraleski (#26) got ALL of his points just from sitting on committees, and only debits for performance In fact, 29 of the top 100 UNDERPERFORMED for company performance! For Monica Lozano, despite getting the performance of Apple, 59% of her 28th place score was simply sitting on a lot of boards despite underperforming on the “company” component Our data on the top 100: Dictator friendly 27 of the top 100 sit on boards that are Totalitarian - including TOP DIRECTOR Ed Philip on the BRP board in Canada For 6 of them, it’s their ONLY current board - immediate grounds for disqualification? Highly influential, but not the highest Average max influence is a whopping 13% with a min average of 8% Single most influential board member of the top 100 is Tom Salice on Mettler-Toledo, ranked 64th Long tenured 21 of them are more than 11 years, the “sweet spot” according to the methodology - and not independent in the UK Not much emphasis on smarts, resume, or diversity 15% have advanced degrees Only 11% went to elite schools 35% have been CEOs somewhere The list is 74% white and 50% white men - while large cap US companies are only 40% white men Highly networked bunch of “leaders” 51% have core industry knowledge at a board where they sit 82% have leadership experience (CEO, chair, LID) 72% are highly networked to their boards 2% have a direct economic stake in a company where they sit Only 17% of the top 100 outperform on both earnings and TSR Only 44% have paper “merit” - so more than half of the top 100 arguably don’t merit at least one board slot they have on paper Mostly manufacturing and finance As a group - 54% have a background in manufacturing or machinery, 39% have finance backgrounds A whopping 2 have a background in engineering and technology - the top directors don’t actually have any knowledge of the oncoming onslaught of an AI future? Super connected Feature in 3,828 loops back to their own boards - that’s nearly 40 loops per person There are a stellar 558 connections between these board members and their boards through the Partnership for New York City, and 513 through the Business Roundtable Without core outcomes… high TSR, low controversies Average of the top 100: 0.509 TSR, 0.427 controversies But you can vote on some of them THIS WEEK: Chevron - 4 directors in the top 100 Debra Reed-Klages Marillyn Hewson Wanda Austin Wick Moorman Exxon Joe Hooley Lowe’s Marvin Ellison Merck - 2 directors in the top 100 Tom Glocer Pamela Craig Allstate - a whopping SIX directors from the top 100 Donald Brown Andrea Redmond Monica Turner Kermit Crawford Maria Morris Perry Traquina Top 100 targets: Of them, Donald Brown, Andrea Redmond, and Kermit Crawford failed to deliver more than .400 in TSR Debra Reed-Klages is the most connected to her board at Chevron - 42% of the board she loops back to Wanda Austin has the most powerful network, also at Chevron Joe Hooley at Exxon is the only one to have sued his own investors (despite having been one at State Street)... speaking of Exxon But let’s talk about Exxon quickly… No SHPs mean you have to vote on directors instead Jeff Ubben - underperforms on TSR, earnings, and carbon He got the role on the board as an activist - and despite many board slots, he’s batting .371 on carbon, .250 on TSR, and .301 on earnings, the worst overall on the board Ubben was called an “ESG proponent” when news broke he was joining the board, which was done in part to dilute influence from Engine No 1 directors Ubben has no clear track record of being an ESG proponent in the data - maybe he talks about it? - but 4 years later, Exxon is on the REVERSE course - suing shareholders, rolling back targets He’s arguably a carbon vote Larry Kellner - underperforms… everywhere Kellner of Boeing fame is also the worst performing director up for a vote this week for credit rating drops - 26 times across all boards he’s been on in the last 7 years, Kellner’s companies saw their credit rating at SP drop Joe Hooley Get the f out with suing shareholders as an ex shareholder

PROXY COUNTDOWN