Transcript
Hey ah, my music is a lower, my headphones. I Could Turn It Up live. From an ESG scented Palm Pilot. Oh, ESG Industries only weakly work data podcast, featuring analyst whole Matt McArdle. well, we're covering old things. I'm covering a 2009. Proxy contest Bill. Ackman versus Target. I just felt like going old school. Really nothing says relevant. Like doing something from 20 years ago. I feel like fighting new ways to crop on Biloxi and today is ESG flavored contested proxy called January 10th to 2024 a bit more Bill Ackman bashing and the board that just keeps on giving charcoal to kids at Christmas. Wow, I like that. Yeah. Well, I will say, I'm making fun of you for how old you're going here, but but the fact is, I'm going back to 1999 boards so it's not exactly. Like we're both living in the 90s. Our show today is being sponsored by free flow analytics. The only ESG did a platform to measure real board influence, diversity power. That's right, while the crowd share this one out, like I want to make a warrant to the crowd today that because Matt has important meetings, this afternoon And I had to edit the time that I normally edit. Which means that there's a lot in here, so, brace yourself. So, if you're not a hater, a Bill Ackman or Boeing, maybe this is not the show for you, but you should still listen. This is always the show for you. I'm gonna share right into it. Yeah, let's let's not do a thing, right? We're gonna so there's only two segments and they're both seven hours long segments, good research though, let's talk about demolition Square, Capital Management, McMinn Blackman wrote that his New York base for Has built a reputation as a constructive long-term and helpful owner. Okay, liar Pershing is actually Incorporated in the Bailey book of Guernsey. Yes, that's correct. A tax Haven, a place where Pershing Square Face is a corporate tax rate of zero percent. A place that does not let me capital gains taxes, which means that the rich stay rich and don't have to accidentally fund, something completely obnoxious like a playground. What do I Do by the way? Guernsey also prioritizes corporate privacy. The tax Justice Network, Rings says the 10th, most secretive country in the world, which I guess is great for Bill acting. Because while he is super busy getting into other people's business and careers, it means that despite Persian being traded on the foot c100, he does not have to disclose how much money he actually makes. So, bill is the scrutinizer, always, and never the scrutinized know, you're not a scrutinize. Yeah, it's not like an employee. It's a, I should ask Ari the data Queen because she's really good at that New York Times spelling bee game. Let's talk about Bill. Ackman Shameless editing program. Oh, Pershing Square regularly publishes, an ESG statement on its website in March 2023. It it there was a diversity and inclusion paragraph in the main body and then an Exhibit C called diversity and inclusion guidelines. I love a good guideline. After Bill viciously targeted, three female college presidents, especially black woman, Claudine gay at Harvard. He shamelessly changed the names of these sections to diversity and culture, oh, and diversity and culture. God guidelines. That's right. You heard that Right? The dude is so petty and openly anti-black that he explicitly replaced the word inclusion with culture. Why? Because inclusion is part of his new favorite enemy. Yeah. What? What is inclusion, the bad thing. Here's why. Because inclusion implies the actual Act of hiring summative including Someone doesn't know, I think it implies nothing. No. So I think the diversity part is the hiring of somebody, I think the inclusion part is giving them power to do with it. However, you want to parse this. I would say everyone a person's from March to December after he fought Claudia and gay, he needed to get in there and edit this document. We have the way back machine. Thank you on the internet. Has the March 2323 document, so he needed to go in there. Here's what else you need to do, Matt. He didn't. He needed to delete five initiatives that were previously all a Pershing Square's effort to advance its commitment to diversity. Here's what he deleted specifically identify and I D and I best practice is supported by research, improve the level of diversity within the firm's leadership positions and committees. I saw that he changed it from improved the level of diversity to now fostered diversity. So he doesn't want to actually want to hire more. He just wants to start, I don't know, but he He he eliminated identify opportunities for the firm to engage with his broader communities to promote Equity, social justice and inclusion, right? Can't have that. He eliminated recognized diversity as a business objective, when evaluating firm Partnerships. And finally, he eliminated provide regular diversity and inclusion training to all employees. So all this because he got mad at the president of Harvard. But this, do you think he knew that this was all in the document? Do you think that like, this is one of those things where, like, he shooting from the hip on Twitter, he doesn't really care about, like, whatever stupid employee policies, existed, his firm because it doesn't really matter to him like he's going, maybe he didn't know in the first place and then when he saw them, he I'm saying he didn't, he probably did didn't pay close enough attention in the first place to the fact that any of that was in there. And then why is it bad? He goes on Twitter and he says and he says this is a near quote. He says the Dei is the route. Cause of anti-Semitism, doesn't he say that Harvard at Harvard, right? So it's the root cause of anti-Semitism, then someone who works at Pershing goes oh We wrote all that stuff with the e in it. Now we're going to get rid of with the eye. We oh is it the I I he hates it inclusion, there's an eye in there. We got to go back. We got to adjust the document to our new policy which is whatever Bill Ackman says on Twitter. Today, it's basically like having Trump as president again. Yes. Because and all this because he's angry at one black woman because you don't need to, you don't need to change this whole thing because of her, was it her? Because he wanted to make a donation to Harvard. The New York Times reported that he wanted to make some donation to Harvard and they fucked it up and it wasn't necessary. I don't think it was under her tenure. I think it was under the prior project tenure, but the claim was that she was only there because of its and then she gets the job because she's just a black woman. She's not that qualified except that she's exceptionally qualified. The fact that he doesn't tell us what it is to be or not to be qualified for anything. He also did this. He also made a point for the first time to Define diversity. So he said by diversity. We mean diversity of all kinds including diversity of personal experience of socioeconomic status, once background, political views of race blah blah blah so far. So suddenly now race is suddenly devalued its behind things like personal experience, and political views, and gender is not even a part of he's eliminated, gender. As a part of diversity at Pershing Square look, you know, like is it really diversity? 50% of the population has has a gender. I and I only say this because I'm saying it's not a coincidence attack it to Target, three, female president. I know it does seem like fairly, like, oddly coincidental that it's only female presidents, getting targeted. And in case you're interested, here's what it takes to sit on a Bill Ackman board. If you're a person of color, spoiler alert, it takes Lot. Oh yes, this is Taupe lavany. He is a director at Pershing Square. And I'm gonna go quickly over this because this is just an incredible list of qualifications. But I wanted to include it all because he is by far. One of the most qualified people for anything anywhere, including a Pershing Square. And I wanted to just tell you what it takes to be a black higher and to not be part of a Dei program, but just to be qualified again. He never Bill ochman. Never tells us what it means to be qualified, but all I am is excited that we have elevator music on the back. Here we go through. There we go. Top lawn e. I'm already tired thinking about it, co-founder and managing partner of Helios Investment Partners co-ceo and director of Helios, Firefox Partners principal in the San Francisco, London offices of tpg capital, mergers, and Acquisitions and corporate development analysts at the Walt Disney Company director of Helios towers and NBA Africa. A member of the Harvard Law, School Dean's Advisory board and the international Board of the end fund previously, director of several public companies, Vivo energy Equity Group Holdings, first city, Monument Bank, Millicent, International cellular, a member of the MIT corporation, which is mit's Board of Trustees serve as a board. Observer of the board of directors of J crew Burger King. He's on the MIT School of Engineering Dean's advisory Council. The overseas visiting Committee of the Harvard Business School. The MIT open course, were Advisory Board in the board of directors of the Emerging Markets property Equity. He also has a BS chemical engineering from MIT with a minor in economics and a JD from Harvard Law School and an MBA from Harvard Business School. Not to mention that he's fluent in Europa so that Everything. You have it takes to be a qualified black man. I would like to say, still ackman's world but there's an important part of that that gets glossed over because in the documentation from Pershing Square on the way back machine, when they are talking about I read their annual report from last year, they're 2022 or 2021 annual report. They talked at length about diversity and how important it is and in that discussion, that's where they announced. They added top lawani to the board. So they have a sensibly because he is d e, i and that's effectively how they position it in the annual report. Now, attacking a black woman, who's the head of Harvard? For the same thing that you just did, but you can't possibly go out and say that, that guy's not qualified know, you can look at the other Pershing Square director's. He is just by words alone, I like word call alone. You'll love that the fact that his bio Feet on the person. Square is my massive and just below him on the Pershing. Square website is another board member who basically ran like a restaurant, right? Like Matt, I've been looking at director bios, it feels like my whole life. I don't think I've ever seen anyone with a BS in chemical engineering at MIT with a minor in economics and a JD from Harvard and an MBA from there. Just like for fun. That's just the only complaint you could have against him is that he stayed on one road and Cambridge Massachusetts? He couldn't go that's that's enough to get him just qualified. I feel like third of all a brief story about one of the bills. Yeah, I know I like all this stuff so I just wanted to bash build a bit more there. A brief story about one of bills. Many failed proxy. Contests. Remember, it's okay to fail and Bill's world. No, it's not. I wanted to focus on target. First of all, Matt and an SCC filing Bill said I have always found it astonishing that in the most democratic nation in the world elections, for the boards of US. Public companies are generally uncontested in the political realm. I agree with him. We see analogous elections, only in the third world in a dictatorships. Okay, I don't disagree with them. So despite that he had five nominees to targets board, one of them was himself. Okay. Well, you know, whatever. Okay, all right. Sure, different dictator, but fine. It's also funny too because another one was Starbucks. First Boomerang CEO. Jim Donald only lasted three years at Starbucks and despite the fact that target support had the former CEO at Wells Fargo, he had a guy named Richard vague to take care of credit cards and credit at Target. Do you know if Target's board at the time targets board? According to people analytics, is one of has one of the highest diversity, power gaps, female power gaps, meaning positive positive, meaning that women in diverse cohorts. Actually have a tremendous amount of power on the target board, which is interesting. Given like how Target is Brian? Cornell is a diversity. Drove growth over the last decade, more or less. Was the target board equally as diverse when he did the proxy does nine. Yeah, it was, it was not most Fortune, 500 companies were not as diverse as they are now. But yes, it was actually pretty diverse. And, in fact, I'm glad you brought that up. I wasn't gonna mention it. Bill Ackman proposed five nominees, the Target Sport, all five white men. Yeah, I was like that does not reflect the board of Target at the time, I mean, but here. But this is this is what the, The Gaslight is, right? Like if you just judge based on actions, Is Target the Claudine gay of, that's Fortune 500 guys. Exactly why I focus on target? Matt, because I to my next section. Why Target in July 2007, when Bill Ackman began, buying the stock, the shares were trading in the 60s. They eventually peaked at 261 dollars. So, yeah, despite the fact that nice he failed Target management, without them Target was not a troubled company at the time, it was basically the only big box retailer that had figured out how to complete compete successfully against Walmart. It's 10 year Stark performance is better than Walmart's analysts all loved it, customers loved it, 80% of whom were women. So there was actually no reason for him. So what are we doing to Target Target? Sorry to say that, but I had to say I hate that. So he said that he did not Target. Target because of his one billion dollar investment that he wanted to get richer off. It's because he quote never never wanted to see Target. Be referred to as a once. Great company. Oh, So there's some like weird. What is this patriotic? Okay, let me go on with Target and I can wrap up here. He did have to. So this is at we're now at the annual meeting, and this is all from an article out of the New York Times in 2009, he quotes, he quotes JFK at his speech. I mean, annual meeting at Target. He says, we will pay any price bear, any burden me any hardship and at that point, he begins to cry. Begins this tear up a little bit. Oh, the performer of Bill Ackman, he then immediately started echoing, Martin Luther King Jr by saying, I am not kidding you. I have a dream that directors will be elected on character and competence. I have a dream that one day, the director nominating process will be transparent. I have a dream that are efforts. Here will be fruitful. I remind you of Martin Luther King's actual quote Matt. I have a dream That my four little children will one day live in a nation where they will, not be judged by the color of their skin, but by the content of their character. So he's referencing the character in the same thing during the exact same thing, and then he chokes up again, And then after the meeting, I like this final quote from Bill Ackman, he was asked by the media. If he planned to hold on to Target stock, something that he had vowed to do. In the days, leading up to the meeting, no matter what happened, the proxy contest. And he said, we plan to continue owning the stock. We think this is a great company, but we reserve the right to change our minds if other opportunities arise. That's the black man in a nutshell. I actually quoting JFK quoting. Martin Luther King crying at a Target annual meeting. I'm Full of bullshit, full of Bluster, I'm pretty sure that MLK meant he wished, his children could get board seats. And I, I also think what he meant was Target a board that is well known to be diverse with five white male directors. That's all works. And this is the guy 14 years later is getting out his red pen and Crossing out words like inclusion and doxxing Harvard students, and targeting and targeting females. That's my bill, I hope it's my last one, but I I don't. Reversely enjoy it, but I don't think enough people are going after this guy. I have no idea why. They're not know, look, it's the, the all of this is the what rankles you about it is the level of gaslighting. It's whenever he says, something is truth whenever he says, when when he attacks, you know, Harvard for anti-Semitism and then defends Elon Musk For Worse anti-Semitism when he says plagiarism, Is horrible, she should be cutting, gays should be fired, and then his wife is found plagiarizing, but it's that's light plagiarism and everybody does it. And now I'm gonna find out that everyone doesn't I'm gonna prove it to you. Like it's like this the way they manipulate the mechanism of the internet, right? Which academics can't do, which is the fact that he is able to sneak in and edit his website. And it only took us like searching around for an hour to find the original text. But that's not how academics operate. They everything is published. Everything is out there to be scrutinized. He is able to kind of change his intent changes language and and just just because he feels like oh you have to guess that this is part of the reason. Why Tracy, what's your name paladian who is a board member on Harvard. All so was a board member at Pershing Square, she resigned in December around the same time, they changed all the same that language about Dei, she works in social impact. That's her, that's her her life's work is in social impact and she's now finds herself sitting on Board with the man who's attacking a black female president. At the first at the University, she sits as a board member, she's a board member about Dei about the fact that Dei is the root cause quote of anti-Semitism at Harvard. And let's not forget where, my long story started with the fact that he Incorporated in the baileywick of Guernsey, which is a tax Haven, so he has no interest in giving back to anything. There's no Dei there. That's why he did it. No, nothing. All right. Let's do some real news. Yes. Thank you. He's got to be exhausted, are you? But I'm kind of fired up and fired up exhausted. Yeah. All right. This is a this is a this is a throwback. What is this? This is a throwback because right now we're gonna talk about Boeing what happened at Boeing. All right, so the short story is a the door of an airplane. While flying the airplane came off the airplane, okay? The found that the door plugs that hold their the door shut we're not properly installed or tight. Yeah. They're fastened or something like that and you told me on Monday show, did you that they were warned about the they were told not to fly over. There was a warning light about pressurization problems that kept going on and they said, they warned the the plane to fly over land and stead of water because they didn't know if the warning light was real, or if it was defective or something like that, but they grounded massive. Number of I think 8% of United flights have been grounded. Some massive Are delays everywhere. It's a nightmare while they inspect the planes, they found several of the one of the last reports I read was that several other planes were found to have the same loose door plugs loose door, plug loose door plugs. So there's some like, Gus in, you know, Tacoma is just not cranking the fucking thing, tithing gay in Cambridge. Well, I'm sure it's a diversity problem. But ackman's not involved yet, but I wanted to bring up. I want to bring this up in a very different way, which is to say, here's a hypothetical. If everyone on the board is happens to be your friend and business partner. Yeah. And there are they more likely to worry about the next Martini? They have together or a door plug for an airplane. I think it's a lot like us here in the office. We're constantly talking about, like, what are we serving our children for dinner later? What are we, how are we going to do lunch? That's right. It's a lot of we haven't mentioned a lot of plugs at all not one mention of door plugs. So here's your current Board, Robert Bradway 8% influence. Dave, Calhoun is the CEO of Boeing 22% influence Lin, good 10% influence, Larry, Kellner, 12% influence, Steve, Mullen comp 10% influence. It's a pretty big board. Ronald Williams 14% influences, the second highest and a lot of these directors are recently hired from the previous Scandal. Let's get there. It's pretty it's um their what they are is definitively mediocre right? They don't produce a lot of anything. In fact the top you know director for earnings bet 859 that's Robert Bradway the top for TSR bats 500, right? Like so that's the average Direction that's five and reversibly refresh. My knowledge about this board when the previous Scandal hit because two Airlines crashing killing. Yeah, 400 people. Board members did resign, but Cheryl didn't actually didn't actually vote out anybody right, there were no votes out. So just so, my point, being that the spike that it's still was a protected class of overseers, right? There was right it. Well, so yes, 100%. And here's how it gets to be, all right? The Boeing To decide to pick the newborn. Yes, they picked all the newborns numbers to build ackman's. Point is only good point was that these are not even contested elections. It bowing suggests, someone in investors. Just get the green rubber stamp out. So what the history of the Boeing board, we've done in the show many times, I'm not gonna go over the entire history. Right now, I'm gonna basically tell you a name Ken. Duberstein, in fact, if you're watching the live stream, this man behind me, that is can do. So, that's the patron, saint of our company, a free float, the connected Patron, dobberstein, leaves. The Reagan Administration starts dobberstein Group, which is lobbying organization. Their biggest client every year is The Business Roundtable from 1999 and in perpetuity dobberstein died to or three years ago now, but on the Boeing board was basically everyone from the Business Roundtable, all the CEOs from the business route and table, including their future CEO. Dave, Calhoun their other future CEO. Dennis muilenburg the These people knew each other and I can go through a list, a 20 year list of the Boeing board and describe how they all knew each other within two degrees. I said that's one of the oddest remedies that Boeing did was they hired from their own board. Yes, they took a guy who was steeped in this Dave Martinez the CEO because he's on the Boeing board from years and years ago at a moment where it would seem obvious that you you get some an external hire to kind of revamp the culture, you get anybody else, but I'm outside, right? Here's the thing. Yeah, we can link Boeing board members to Regulators. In fact, Elaine Chao, who was the ex US Secretary of Transportation? Who was overseeing Boeing on the max 8. Yeah, McConnell's wife, she was on the Wells Fargo board for years with the Xeo of General Mills, who was a duberstein client, duberstein actually was on the board with John Bryson, who left the board to become the secretary of Commerce? So these are all there are so many connections. It's absurd. In fact if it's a great place to either continue your career to Foster your career to make to make to make new networking context, is maybe not a great place to oversee the safety of Jet Airlines but it's a great place to get to know. Each other's overseeing Jet right lines that I will say this. If you're again if you're watching the live stream on my other shoulder here, this is a network map of the board members up to 2010. The board that made the decision to, to clear, the max 8 plane and I'm moving around the network map on here. But you can see, these are people that are connected, all of them are connected to one another. Then the max 8 planes fall out of the sky and this gets your question of refreshment. We bring in a new group of people, right? Except that the new group of people achill. Jory he's ex UTC, he worked with Greg Hayes for years years and years. And Greg Hayes on the Business Roundtable aubergine client. So, duberstein knew akhil jury already. He also knew Ellen Coleman. Who's a UTC board member who's on am Jens board with Robert Bradway still on the board today. Steve Marlin comf. He worked at Blackstone, he was a, he has a board member from Blackstone who worked with two other board members from bowing. So keeping it. Incestuous I can go through to This year. Yeah, Sabrina Susan Suez CEO, their first ever International board member and they do that. I think for national security reasons to read about like, you know, giving some Foreign agent access to, you know, sensitive information. In it took me 20 minutes to figure this out. She sits on the board of ITT Inc, with the man named Nick Fernandez, who's the director of Duke Energy with Lynn good, who's on the Boeing board? I mean, it's literally and again, Everyone and again shareholders have nothing negative to say about this. I presume the last proxy, April 2023, the worst vote on the last proxy 91% for Ronald Williams, that was the worst. The bet the top three tied at 96%, msci's governance score 6.7 out of 10 76% dial globally. During the top 25% globally. For governance, sustainalytics in their quote-unquote risk ratings. I don't even know what they mean. But they said medium risk and they had strong governance management. They had a stronger structure and average management quality. It's what most other ESG data. Providers research companies are not able to unearth. Is this type of network, I'm just saying, literally no one cares. It's not like, well, do they not care? Do they not? Like you know, Shameless plug here, do they not have access to what we're trying to look at? Well, even when we show them, they're not sure what to do with it half. The time. All I'm saying is that The, the board could have proved airplane doors that were secured with butt plugs instead of door plugs, and investors would still elect the directors at a 90% plus rate that is, if you want to know what's going on at Boeing. If you, if you're like confused, like, how does this keep happening at Boeing? We've had multiple crashes. They can't seem to secure a door, there's all sorts of problems. Like, how does this keep happening? The CEO knows everyone on the board for decades. Look, they all 100% know each other. There are no checks, there are no balance. Going might be the perfect example of why I ran and rape about that CEO should absolutely not serve on their board of directors. There's absolutely no need and Calhoun might be the prime example of this, right? Because you not only he used his relationships on the board to become CEO, but then he just adds cronies and friends to that. Jimmy is the worst part. Like the expectation would be, what is the Function of the board. The function died or oversight is to provide oversight is a story. It is a represent an investor and keep management accountable but if the board is either a all management. Yeah. Or and they have all the power or B all friends. What is the accountability? As you point out, the amount of money they're making is enough for them to shut up in the first place. And that is what the last thing that I pulled on this Larry. Kellner, who's the chair of the board? The lead independent director who's been there for 12 years. He's very leading, right? And it's worth pointing out that in jurisdictions like the United Kingdom. For instance, you you are you can't even be call yourself independent. If you've been on the board for yeah, which is no longer. They're 100% right about Larry, Kellner has consistently gotten like relatively to everybody else. Bad votes from investors, never voted out, but consistently bad vote. He was the CEO of Continental Airlines in case you need a refresher. That was the airline that failed miserably and went into bankruptcy. Oh God. I said about them in a while. Yeah because they got bought by United. In fact he has connections to all these board members as well Larry Kellner last year, reported in the proxy made six. hundred thousand dollars to be a board member how so high because he's the chair of the board and they gave him a massive retainer and It's inconceivable. Yeah that somebody who shows up for 12 meetings a year whose mediocre at their job can get 600,000 dollars a year for it and the constant. Okay from investors in fact, Larry kellner's career on boards, he's in multiple board positions, career on boards 333 earnings 323 TSR, he the average directors are 400 to 600. That is just pure average. He is a below average director who's making twice as much as the next board member on a board with fucking shit keeps falling off the plane. What are we doing? Yeah, so this is my plea. Oh, somebody and I'm going to, I'm going to, I'm going to play us out on this day. I feel like I should take off my top hat for this. Somebody somebody please. Buy free flow, analytics data. Look at the Boeing board and vote against every single one of them. You are not going to be bold who's gonna be? You can fight if you can't do it with this company. If your existence if it's not honestly. Yeah we already proved you couldn't do with Norfolk Southern and nobody directly like like lit on fire from from that, right? Don't you want to have some pride when you go home to your we just your husband or your wife or your or your roommate that you actually made a decision world today and I changed something. I changed a thing. I actually did a thing. That's all we got. That's hazelnuts. I am your animals so I'm scared. We are free float. Come back tomorrow. We've got a proxy countdown. Oh my God. Doing beckton Dixon, right? Yeah, back to Dickinson Dickinson. That'll be fun for somebody and I'm Friday. We've got our weekly wrap up until then good. Bye.