Transcript
This is proxy countdown. Welcome to the Big Show for the week of October 6th 2025 alongside my tag team partner, Matt McCarty. I'm Damien rawlas on today's countdown. 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 boat. Matte, talk surveys. Let's start with our trade wire. Here are all the note where the 8K since September 24th, and remember, This show generally covers the 600 largest market caps in the United States. So I'm looking at to directors that come and go that leave boards and and are added to board with this statistic. They added 22 men. But seven left, seven men left, they added only six women, but five left. so basically a wash just about the same amount of women are added and going, but but plus 15 in men added There has been this thing that we've been counting since last proxy season, I called this down to 2f down to two women. Remember the threshold used to be three women on the board was kind of where you wanted to be. That was a good starting place. Now, we're actually getting into down to one F. So at Fannie, Mae, they're down to two women, Karen Kim, bro, resigned. But how about these companies at F&M Bank defeat Thomas retire, they're down to one female director at Rocket companies, Jennifer Gilbert resigned and in fact, they added two men, but they are sick until one woman and it Pitney Bowes This is the second woman who was step down since July, this is melena Alberta Perez and they're down to one female director. This is getting nuts. Getting crazy getting tired. Yeah. Let's move over to some of the stupidities that I found mostly it's these classified boards. So they're like idexx Laboratories, they like to Karen peacock, she's not up for election until 2027. That's that must be nice at Inc. They appointed General John Raymond, the general is not up for election until 2028. And it rocket companies. They got two dude. Jay Bray and Tigger Olsen. Bray is up for election, 2028 Olsen and 2027. So, there you go. Nice long. What do you do for those years that you don't have to actually work before you get a vote? Will your thumbs. That's what they say. It's in the back of the room and just drink the coffee. Quietly about this at fnm bank. I don't think I have seen this one. So defiant Thomas is stepping down because she reached the mandatory retirement age. But she's becoming an honorary director. I don't think I've heard this term not a Meredith and honorary director. She will continue to function as such until she tenders her resignation to the board or until the board requests that she tend to her resignation and as an honorary director, she may attend board meetings but is not entitled to vote. That is an Emeritus Direct. That's right. But she's an honorary director, I don't like that at all. Not only that and like she they basically saying she Cared. But the board can request that she resign, which being fired that's and she can, she can say anything she wants, she can hurry new director. She can she can really pound the table with her Iron Fist. So I mean yeah she can't vote but she can she can sway any vote that comes up the nice part about this gig is or the sad part is that she was forced to retire at the mandatory retirement age. What percentage of directors actually just avoid the mandatory retirement age at all, they just they just get waived in for another year or two until the board decides she was forced to retire. That's kind of how about this weird one. A Disney. Sonia Coleman, she was the Chief Human Resources officer. Now she's the chief people officer. That change your title. What do you think that does that meaningful? It Disney. It's not forget. It's Disney. People are mad at Disney Chief. Human resource officer to cheat, people officer any insight. I can't figure that one out. Is she still an Executive Vice President? Yes. And she's getting even a bit of a raise. I just don't really get it. Maybe she's got. Maybe Human Resources only involved humans and now she has to deal with AI and robots but people just people like AI people. Yeah, I people like you know or maybe corporations that's a stretch. That's very confusing. CEO is your little new, the big news on CEOs. Comcast Michael Kavanaugh, will be appointed Co CEO, Along with the current CEO, who was now the coast CEO and he's the chair Brian Roberts. He's also the son of the calm. Cast founder. Ralph Roberts. Yeah. So Brian Roberts owns, the Dual class shares. Well, Michael Kavanaugh owns the nun class chairs, right? That's I believe. That's correct. I'm on, I'm on Comcast web page today. Looking at Brian Roberts, very lengthy, bio including all the awards. He's won and how much people love him nowhere. Does it mention his dad in that bio? Do you think that's fair? I think he pulled himself up by his bootstraps when he was handed Comcast. I just think you should mention your dad. I people should know how he got the job at Verizon. Another lead independent director this time, it's Daniel Schulman who used to be at PayPal. He is becoming, he's jumping right from lead director. To the role of CEO at Verizon replacing Hans vestberg, a man that on this show you had a lot to say about his, his underwhelming performance at the board up Black Rock. And I think it Verizon so yeah, hands, best burger out at Verizon a lead directors, who they call Independent is now suddenly the CEO without any training period, he's just jumping right? From elidor role to the CEO role about that. Look, I think we covered on this show. Not that long ago that lead independent director is the is a quiet Insider, right? Yes he did. A whole review of lead independent directors and found that the on average. I think they're 10 years, 14 years. I mean, you're talking about, Effectively insiders. I don't think there's another way to put it, they're just insiders. Yeah, because in that scenario, typically, it's because the role of CEO and chair has been combined. So really is the number two. It's the number two, right? Right below the CEO. They also tend to be on the board for too long years with that. CEO combination is true too. And if in fact, might be the best pick for someone to succeed, someone to see you. All right. Easy. It's pretty easy. Yeah. You just look at the guy next to you and say, do you want the role? Yeah. All right. Let's go over to money. We're looking at all the money from 8. K's over the last two weeks, we'll start with Norfolk. Southern a one-time cash retention to all named executive officers, they're all getting at least two million dollars up to 4 million dollars for CEO Mark George, you know, a lot of just cash just cash, just a big briefcase Of cash just no equity. Somebody who carries the briefcase of cash. I remember that didn't, you know, they're just still just doing their chips. It's cash. The other big one of the week. We had a few like gold and hellos the new CFO a Pepsi the new CEO at CSX. But this one this one really stands out at Dell Technologies. A one-time. They always say one time. I'd actually like to look back at all these companies. I don't believe it's one time. I think some of these are like four, this is the fourth time but a one-time Performance Based stock option award to CEO. That's not even the CEO CEO, Jeffrey, Clark valued at 132 million dollars. How about that? Well, the one time part is, this is the one time they've given him 132 million next year, they'll give them 134 million. And remember, these are the people most of the compensation committee who are tasked to write PayPal policies that go in the proxy statements every year. So they couldn't figure out how to make this, how to make his pay work as part of the actual PayPal. So they actually had to make up something and, and add it on with Scotch tape. And so they're not really doing their jobs. That's my perspective. They're not doing, they're not doing their jobs. Well, No. Well, clearly not, right. Yeah. Okay, that's it. For the for the news, the trade wire. Let's move over to our proxy cage matches. There's a few boring things going on. First of all, there's a lot of news about how activists investors have launched a record number of new campaigns. So we're up to 60 new campaigns in the third quarter. This is up from 36 last year. A year-to-date. A nearly 191 campaigns targeting 178 companies with activists securing 98 board seats, driving approximately 25 CEO departures. So I'm okay with all this but again, my big beef. Why do we have to wait for the activist investors to come along for you to listen why? I mean clearly there's a view that a lot of people are underperforming and we're waiting for an activist and tell us which ones, and I'm not crapping on the activists, they're doing their job, they're they're looking at the data, they're looking at governance failures. They're, they're asking for board changer why aren't the regular investors doing this as well? It's a fabulous question. We're going to get to it in the surveys. A little bit Japanese game company. Gung-ho. On line entertainment. This is this is an interesting one, this is obviously has something to do with Japanese government. Something we don't cover here. A lot has rejected. A proposal from activist investors to dismiss its longtime CEO because you cheetah So, during an extraordinary shareholders meeting held a couple weeks ago, the activist the activist push for two things, one for the requirements, for ousting an executive to be relaxed. I wish we had these in the United States and for more shita to be fired from his position as CEO now. The first proposal was accepted, but the attempt to remove the CEO fail, but I just wish we had this fun stuff in the United States. This is fantastic. I mean, it's direct removal of the executive. That's that seems fun. A couple other kind of proxy contest. And not really, we haven't gotten the proxy contest phase yet. Going on at workiva and Acadia Healthcare, but nothing. Nothing, huge going on. So, let's jump over to our vote results table. We don't have a lot of meetings coming in. From big companies. I thought I saw five last week, FedEx. FedEx actually had a shareholder proposal. Asking for an independent board chair 43%. Yes that's good. That's pretty good. That's a lot. Should be a win. I hope they make that happen. It should be more than 50%. I'm not sure what the other 57% were thinking why they didn't need that. How about this 37% of investors? At FedEx said, no on page, again a significant vote. Let me guess. Yeah, you know what the next thing is? Yeah, not a single pay member got less than 90%. Listen to this compensation. Committee chair, there are five members chair Paul, Walsh, 94% support for other members Sylvia Davila. 97% support Susan Griffith, 98% support, Susan Schwab we know the name Susan Schwab, 96% support, Amy Lane 99.5 percent support. You know, this is, but this is actually feels like one of those tricky, things that these large Mega cat companies will do, which is the man is the chair. Let's talk with women. And if you vote against pay Members, you're voting against the diversity on the board and you have an immediate conflict of interest with yourself where because you want some level of viewpoint diversity on the board. I don't like it. If you gonna hate pay, you gotta hate somebody. You gotta hate one. Yes, it's somebody's fault, General Mills, the only other company to have any shareholder proposals. Really nothing to say about director vote, something about FedEx, General Mills. Again, I don't know. Shareholders are just feeling a bit more excited. This fall, but both of them did pretty well overall. Separate the board chair and see Heroes got 36%. That's that's a win in my book and regenerative agriculture practices within supply chain. You'd think that would do poorly 27%. Yes. How's that possible? So maybe they're just just voting. Yes for every shareholder proposal that actually gets through the no action process and yes say yes and yeah average 97% support for all directors. Oh, Okay, and finally, I gotta cover this one. Brian Hemphill. Is a director at John, Wiley and Sons. He is an accomplished individual. He is a not only, is he the only black man on the board there, but that's not the accomplishment. Well, I guess it is in some, in some respects, for some boards. Yeah, Brian is the president of Old Dominion University only its A, that's a big deal. He got the bigger Deals. They got voted off The Board of John Williams since 54% of the investor said, no, this is the guy they hate, not the guy, not the people who were the Architects behind the pay at FedEx that they vote again, but Brian Hemphill. Now, here's what the bore. How the board responded. The board. This is their, this is from the filing. The board concluded. That the voting outcome reflected proxy. Advisory firm recommendations unrelated to Mr. Hemphill's individual performance or contributions that we know is true. So they rejected his resignation the board determined that Mr. Hemphills continued service is the best interest of the company and shareholders. Now, I'm a little torn here. Cheryl said, no. So I I think Hempel should leave, but I do agree with the board that what a terrible guy to Target, I don't understand it. You speculated that the reason why they voted against him He's the, he's the, he's the chair of the governor's committee. But, but that doesn't, that doesn't say why he should leave, he's only been on the board for three years, so it's not 10 years. he has he listed in his bio on his current out side, directorships are a things but, This is where it's unfair because this is not required disclosure many of these directors, sit on every board in their neighborhood included like the board of like you know, the the Dunkin' Donuts Foundation like so. So Hand pills sits on things like Sunbelt conference Preston Hollow Community Capital but only one thing that that is actually supposed to matter, which is another Corporation that's well. Well, I don't even know is greater Norfolk Corporation know. So, none of these are actually publicly traded Corporation, so this is so no. He traded other publicly traded boards. He sits on a number of community boards, okay? But I think that ISS and gloss Lewis considered these to actually matter. I think what they did was count, the count is closed. Just I don't think that they were looking for public boards. I think they just counted boards, I've never seen. They have a rule. I've never said is no more than like eight is seven boards overall or something. Like It boards like this. I'm Prophet boards but this would be like me listing that I'm on the PTO and ISS saying, that's way too much for you to do but but they're not required to do this exclusion. Do we even know that all the directors equally, and fairly disclosed, where they know we know for sure they don't because we have a database of non-profit affiliations. And we know for sure that they don't list, most of those affiliations, we pulled them direct from IRS filings. That was the only way to get that data. So we know for sure that that these are not readily disclosed, we speculate that it is an overboarding vote against. That's was the proxy advisor recommendation, which you are correct. The reason to be torn here is It looks like the recommendation from proxy advisor was vote against him because he's overboard and it looks like investors listened to that recommendation and the same way they listened to the j-hope recommendation and Netflix and voted against him on the Netflix board. Both boards rejected that because Hogue was about attendance and this is about over the next. I don't agree with Netflix, this one I actually which have to do with actual performance of the director. Now, in Hogs case, there was an there was a performance reason to vote him out. When you look at his performance on other boards on Netflix boards. Yeah. And he had been voted out in the past and this is the second time he's been voted out. He is super long tenured. Yes, in there since the IPO of Netflix like he is basically an Insider in this case. Despite the fact that 54%, I I think if investors vote you out you have to leave. No matter what the reason is, that's the point of that democracy, but also, there is no good reason here. In fact, we did the math and we found that 0.2% of directors, give it up annually. S&P, 500 directors, about 12% of them are black. That means the probability that the the spin, the wheel ISS glass Lewis, you know, Wheel of Fortune points to a black man to be voted out, is one in 4600. That's the chances because they're almost never voted out ever. You have actually the almost the exact same probability of getting struck by lightning as this happening in particular. In this case, you know, I kind of have to side with widely. I got you kinda have to side with them. Well, it's not forget another important thing. John Wiley, and Sons is a company that specializes in academic publishing Brian Hemphill is the president of Old Dominion University's only been on the board. For three years is the only black man. He's, he's for he's relatively young for a board at 55 years of age. I mean, what kind of ridiculous. It's banana. Ridiculous. But but you're right, I'm totally torn. Because investors said, no, it doesn't matter if investors are idiots. Well, then they should, they should maybe, you know, maybe then he should leave the board for you, then they should read nominate him the next year. I don't know, I don't know what they should do on this next year last Louis. If it's you, you're Dopey, you're Dopey. Yeah, the real problem is the proxy advisors aren't using any real data except checking the box of how many boards did they disclose, not? How many are relevant, but how many that's left required disclosure, you cannot apples? He cannot do with that. You are required to disclose the current directorships publicly traded companies, but none of this other nonsense, like, you know, Like Hampton Roads, biomedical research, Consortium, I mean, God forbid, he spends his time doing that, but that's not required disclosure. The Fabulous part about this is, um, CEOs if you read their bios, They actually disclose a number of nonprofits there on the board of, but they didn't disclose it in a set of bullet points. So a CEO, if you're like, Tim Cook and you sit on the the board of like the boys and girls club, and you sit on the board of like your local PTO and you list them in your bio that guy is significantly busier as the CEO of Apple. You think then then this guy, Brian Hill. You don't know on the board of widely in Sons. More importantly nuts, he has a, he's got a nice smile and he has a really nice yellow bow tie. I I just, I'm offended by this. Yeah, you that those were the, yeah, that they should have considered before I handed over to all the. I don't know what you did this week. You looked at a bunch of surveys. That's what you did. Yeah. Next week, not a lot going on in the big boats, Procter and Gamble. That's the biggest one. They're only one two with a Sherlock Holmes. Chevrolet just dead. Like they seemed like gone away as you. So, Has one about plastic packaging. Okay, give me a give me a prediction vote for it. Give me. Give me a prediction. What do you think that's gonna vote gonna come in? Give me a prediction 23%. I'm gonna write that down. I'm gonna check that later. All right, that's all I got for the big vote. Matt, what do you got? All right, it's survey season. Okay this is this is the time of the year because the voting hasn't started in Earnest in the US where all the consultants and and like you know, data providers are sending out surveys to a variety of people saying, what do you planing on doing? What's important to you going into the season? So they can generate some content around it and prove their worth. Well, we looked at the surveys that came out in the last two weeks that includes pwc's board Effectiveness. Survey something that they actually do every single year. That one actually came out in August, where they surveyed, Executives, executive companies about boards. We've talked about some of whom are on the boards himself. Some of them are on the boards. We there was a survey of directors all by PWC is their annual corporate directors. Survey came out two lessons surveys, okay? Two different surveys. So they surveyed executive about the boards they surveys directors about directors and they Made Morningstar actually surveyed asset owners. The voice of the asset owner survey 2025, these are investors Pension funds and and, you know, like superannuation funds and like big investors this like them giving surveys. It seems like an easy job. I want that job. So you ask people stuff. Yeah. You just write up some questions. You send them an email and then you get the answers back and you make a bar chart on this. I like this. So they surveyed about 500 Neo. All were any EOS for the executive search. The biggest rep was in tearing media America. These are all American NEOS. These are largely American videos. All of these were actually Globe, they had some Global touch, but it was largely American, mostly made in large cap companies. 35% mid 26%, large the directors survey there were 600 directors, surveyed, mostly mid and large cap again. 33% mid 37% large, mostly men 65%. We're male Executives did not give it demographic breakdown of the executives, not all. We know. That's mostly men too. Has to be the directors were not asked this year about their race or ethnicity, that was not a question. I don't do that anymore. Probably because if like one of them said like I'm Hispanic woman there's only like one person could be. Alright. Let's figure out what's right? Yeah they were mostly longer tenured six plus years 56% had been on a board for six plus years or so. These are people who know who know they know what's going. They know they know what this is like they've been on boards for a while that's actually an interesting cohort. The asset owners there were 500 asset owners surveyed with 19 trillion and assets so up that's a big set of acid owners so mostly mostly a u and a EU and APAC overall but 20% were in the US. And the they were big us owners and mostly had between one and 100 billion in assets. So a big range in assets. But in the billions for the most part, okay. We're going to play a little bit of a game here. I'm going to have you guess some of these answers and we'll see what the surveys say. Okay. Here's a question that these are all questions that were effectively either asked on all the surveys or some approximation on all the surveys. Here's here's a survey question. How important is voting out a director? What do you think? Effectively, they're saying, like should someone leave? Is it important to get rid of directors? What do you think? What it, What was the executive answer? And you know this one already? Well, this is anonymous survey. These are Anonymous surveys. I would I don't know the exact figure. I, my assumption would be the, the executives themselves would think this is more important than the director's because there might be some conflict, right? I mean, they might, they might hate some of the directors because, you know, they're they're providing a counterbalance to their jobs. Maybe there's irritated by them. Well, so 93% of Executives. That's all, that's essentially, it's all of them. That's all of them said, at least one director should be replaced. Yeah. And 78 percent said two or more. So nearly all of them. All of them. Say one nearly all of them. Say two or more which which suggests that. Yeah, well, okay. Is interesting with the executives because It makes me wonder if they they just don't like them or they're getting pushed back too much by them or we don't know why they don't like we don't know why they don't like them right? Or do we'll come back to that. There's there are some answers to that, some directors themselves. This is a this is the more interesting one to me, 55 percent. Yeah, think at least one director should be replaced. So that means that more than half of the board knows that there are other directors who are just suck, right? They just they should not be there, they should not be there. That's the definition of sucking and nearly one in 10 directors. Think that more than two directors, should be gone. Not two. But more than two and I wonder three, four, five, I wouldn't worth all these surveys. Is that sometimes they even though they tell you it's Anonymous, I think that people are little red and to actually speak the truth. So I bet you these numbers are actually higher. Its most surveys. They err on the side of conservatism the last Corporation work for was msci when they used to ask me stuff. Especially until tell me it was anonymous. Uh I was not too sure. No, I wasn't exactly saying anything that I thought could get me in trouble. Let's just say that which brings us to investors themselves. Okay now remember these are asset owners And this number shocked me. 35% of asset owners in the morning Stars, 2025 acid, owner survey, the voice of the asset owner. 35% of them one in three basically said they voted at all in either direction. So or against directors, so they just didn't vote. They just don't vote. So they get the proxy and they just recycle it. They Outsource the vote. They have to Black Ross, or someone says you do it, someone's, but they give no guidance, right? Like they just say, whatever you vote it. I don't care. Yeah. And that they must effectively don't care. Now, is this the entire proxy or this is just for directors, they don't want this. This was the entire proxy, okay? They don't do any of, they just don't care, they just not interested. And to put that in perspective, that vote rate, that voter turnout rate is roughly the same as serious, the country of Syria. Okay. In fact, Iraq and Iran have higher voter turnouts. What does the Middle East? Exactly? Well, I just was looking at globally, right? Like, when you look at the math, it's like Chad and Congo had higher turnout, like it's places with low turnout. I've talked to Chad, he likes to vote, yeah, he does vote a lot. Um, here's another question. Are your boards. Any good? Are there any good? Is there any good at their job? I like this. I like these surveys. And now I'm paraphrasing like because they all asked that question and a more tackle way to get to know, or they asked a version of that question executives. 35% of Executives rated their boards as excellent or good. That's one in three. That doesn't seem like very good. That's not very high. That means the majority of them think their boards are not good under good. Yeah, less than less than good. Yeah, in fact, it Executives thought their boards were the straight up worst. Well hey I might agree with this because we were something I shot about all the time is like how do you have no one who's like who has any expertise in cybersecurity as an example? Well, 40% said that their boards were poor. Yeah, straight poor. They didn't even like, mince words. Like you. Look at some of these. Just poor on these Tech boards, like a little like money Bros. It's like VC Bros. Like, that's not gonna help anyone. Like how where's their expertise, it's not useful. What do you think the directors had to say about whether the boards were any good? Well, you said that half of them think that at least one person should be replaced. So maybe, I don't know how I think they're good. So 68%. This is a, they didn't ask this question directly. They asked it in this sort of backwards way, but here's what they said, 68% of directors. Said, they had an effective assessment process of their board, okay? Meaning all Nearly seven and ten directors. Thought they were doing a good job. Assessing whether the board was good, aren't a lot of these though aren't they unfortunately, aren't they self-assessment process in the self-assess? They're all self-assessed. Not because investors are, they're not involved, they're not voting so that they're not assessing anything. In fact, 34% of directors, think that the chair or lead director is very effective in dealing, with underperforming directors. So one in three think that the chair is doing an amazing job dealing with underperformers and seven in ten, think that their assessment process is amazing. Why are there? Why are there underperforming directors in the first place? It's because there's underperformers on every team. You got underperformer everywhere, like there's no one who's like, even the paths in their like Golden Era run, they had like terrible players. There were people to cut Wheels went to the Super Bowl was Versace Caldwell. Okay, you're fever completely off track. Investors. You've never been more off track than that last statement. How about Investors? Yeah. Go ahead only 35% of investors said board composition was even material, okay? But that's the same amount of percentage of voted. Right? So the ones that don't care. Effectively might be voting on the directors. Yeah, everyone else thinks the board isn't even material but who's on the board isn't even material. Yeah. Much less worrying about how effective those boys are. They don't even think it's material. That why, why do we have these boards? Why are we paying now? What are we doing? Excellent question. Investor get rid of the system Care One in three investors basically said Yeah, it's what you it's one of three investors said it was material, meaning, two and three said it wasn't material at all. Yeah. So their decision making stupid well, lack of creativity, lack of imagination lack of due diligence as to calling underperformers. Well, like, this is one of my favorite things. So, we'll jump, right to investors first because we are already know. 35% don't don't like don't even bother, right? No, only 35% are doing the sorry. 35% are doing voting at all are doing nothing 2/3. Aren't doing anything. The average vote for a directors, 96% in favor and 0.2% of directors are voted out. So there are they really still don't care. They still don't care, right? Like it doesn't even or not. Voting, they're voting for every single a big. Yes, rubber stamp Correct and dip it in their ink and they just shove it on the process. Pounding it on the desk. Yes it's like a library. Yes yes yes yes yes. There's somebody who's arm is really tired from pounding on the yes stamp so we can ignore them entirely Executives though. Oh, 50% of Executives. Feel confident aboard will remove an underperformer. Why so while I feel that 3% of executive say that at least one director should be acts only 50%, think their board will do it. Well, this does suggest to me that some of the confidence must come from the fact that they know that the seats since the CEOs off on the chair And the CEOs always, almost always on the board specially in the US. That I think they're really suggesting that the CEOs in charge and that the CEO we know and half the time we're gonna get rid of you because we don't like you, right? Is that what they're suggesting? I think if it sounds to me like 93% of executive say at least one director, should be replaced means that they're looking at their board and they're like they're so I there's Gary definitely needs to go. There is a dope and the way that they feel confident that the board will do it is because they go to talk to the CEO chair. Who's says, yeah. Gary's we don't carry. He's only got a year or two left on this board. We'll get rid of him. Don't worry, he's gonna resign soon. Right here is questioning the audit process too much. So that's too many questions. Yeah. But think of that Loop right? Is there a single investor involved in that Loop right now? It's it's an executive saying like Gary says and the executive on the board saying I agree. Gary needs to resign will will get rid of him, eventually. This is what troubles me and why investors need to get Baltimore because we don't I still don't know why Executives have determined that. Someone should leave the board. Because again, could they be asking too many of the right questions? Is that why they want them out? I don't know. And as I said, only one in three directors. Actually think that the chair lead director is very effective in dealing with underperforming directors. That was the lowest of the options. So, one, in three directors, actually, let's not forget a lot of these chairs need directors. Have been on the board for far too long often, over a decade alongside a CEO and a founder. And so they might not, they might be too scared or too friendly with the CEO to help underperforming directors, perfect segue. Because the next question is, why aren't we cutting directly this? I want. Why do they not get caught? Okay, so we know that investors don't really vote in the ones that do don't cut anybody. So there's not a good reason why, but I will tell you 52%. Of investors that do vote vote on shareholder resolutions. So, what I think the missing piece is here is investors, don't care about directors at all, but they do care when they care. They care about shareholder resolutions. So maybe if there was a shareholder resolution that said, do a report on individual director assessments They might actually approve a report that says individual directors are underperforming, then they might care if it came in the form of a shareholder police. Those 35%, you mean my care that 35% that yeah, that do vote. All right, executives? 57%, of Executives said board, leadership is unwilling to have difficult conversations with underperforming. That's that, that's what you, that's what you just said, that's just afraid and then all. So suggest that these boards are are full of people within their own networks, their friends, their colleagues, and the reason why they're afraid, and why they're even calling them difficult conversations because they don't want to upset their buddy. Right. That's well, and it turns out that this checks out, because 27% of directors said that, as part of the assessment process, they do win individual assessments. So, 70, basically three quarters of directors are saying. We don't do individual assessments and almost two thirds of boards 57%. No, 6, almost 60% of 4 are Executives, they're saying I'm sorry, 50% 48%, said, individual director assessments are not performed meaning Nobody knows how the directors are actually performing. Because no one's doing actual assessments of directors. And this is the fallacy of the meritocracy, I believe. Because, what we've proven is that the people who come from outside the network are overqualified highly qualified. We know that that there there for the right reason that they're probably doing a good job. It's the people, it's the friends that don't get called out. It's the and, and they don't often have the mirror, they're just part of a network, they're partly like a phone call away, and they're probably the ones who are not being obsessed or are underperforming. So it's, it's a problem. Well, it's a pretty easy action item here, do individual assessments. Yes, and disclose them, and disclose that, you're making that much money for that for that little work. The shareholders have a right to know. Anyway, I mean, as we pointed out a million times, a bench player for, for a basketball team gets scrutiny, his, his her stats get published ya. Published everywhere. They get asked questions by the media. You could, you should not only perform these assessments, but you should disclose them in the proxy statements. Here's here's one. More thing that I thought was good about the directors themselves and it's basically what makes the sucky director is there were some reasons why. Yeah, I know obviously not for investors. Only 14% of them of asset owners actually find it very useful to do stewardship. 14% is. Abysmally low and they included voting proxies in that 14%. Thought it was very useful to vote proxies. 16% said they didn't know if it was useful well sir, I'm not kidding. That is an actual survey and I believe them. Meaning, like they have no idea whether or not they're actually at all like what are we doing? So we can exclude them at all. Executive said in no particular order Advanced age, overboarding long tenure and not being prepared for meetings. Well it's one of the major reasons of for underperformance. That's funny them suck because those first three things are all things that came that have come from the corporate governance, Revolution the ESG movement, so they, they are listening to some things. So I don't know why, they're out listening to more things. Just those three things. The fourth thing is fascinating because I would love that information. I would love to know. I don't I don't seems like the most relevant thing. I mean now some of these directors are making you know, close to a million dollars a year and in equity and cash and some of them are getting signed on bonuses. Why won't you tell if you're telling us how many meetings they go to? Why can't you tell me if you think that this guy or this woman is unprepared for the meeting? I don't, what, who are we protecting? I don't understand. Why are we protecting these people? I don't get it. Well, there's a great. Here's a great follow-up for on the executives because they, when asked, What the board chair like? How, like the coaching that a board chair should give to an underperforming director? The executives 36% of executive said that the board chair should coach Directors, who are not actively participating in discussions. And 33% of Executives said that they should coach directors who were dominating discussions. This is nuts. This is this is stuff. You're supposed to deal with like in high school like how to effectively how to talk in a group setting, how to make your voice, heard how to let others how to let others participate how to paint a very Vivid picture, which is effectively, there's a large portions of boards that are not participating in discussions. And there are a few dominant voices in the room and the exact things. The board chair is supposed to be stopping them like or leave a dependent directors, be when the CEOs that when you when the board chair is the CEO. We know that the CEO has a way different agenda going on agenda. Sure. Agenda might be that, I hit a certain Target to I get my bonus. The agenda might be that. I just keep my job for two years, more years. The agenda might be that I accomplished this test, I'll look better for this other company and they'll hire me away. I don't know what to see CEOs. Agenda is it's it. The CEO should not be the chair of their own board ever. Ever. Ever The Fabulous cross reference here that they don't tell you is is the CEO who is chair one of the dominant voices that the leadership directors supposed to tell the shut up, right? Like, you know let me think, meanwhile, directors themselves. Said that, what what basically, what makes the sucky director is if they did not meaningfully contribute to discussions and if they had long tenure, so why do we so much? Why do we see so much longer on these boards? So that's the question there. They basically both Executives and directors, have basically given you some parameters of what they think is, no good. On their boards people have been there too long. And people who do not meaningfully contribute to discussions either because they're too loud and they don't let anybody else contribute or they don't participate themselves. And by the way, somebody simple by the way, is someone who is his, you know, gone to high school, gone to college, got a master's degree, someone who has shared boards and a under polymer country order, you know, with the way they, they chair boards and like countries like Canada or whatever. It is absolutely the job of the chair and or the lead director to get everyone on that board to give meaningful contributions at every meeting. If someone's dominating or someone is too quiet, quiet, tell him to be quiet. That the chair, the chair has the power and authority to affect that. So if anything I'm now thinking like like this is all suggesting that the chairs themselves are under effective and not performing well right? I mean they're they're responsible for all. Yes, they are. Yes, they are. Absolutely responsible. You don't blame the the kid in the class for not speaking up, the teacher has a role in making sure everyone participates in the classroom. yeah, and when the CEO is the chair, That is immediately a massive problem and you because because it should only furthers all these things. It also suggests to me that if directors and Executives largely agree on some of these things and the CEO is the chair of the company. The CEO chair, the CEO running their own company, probably has the same problems. They probably dominate discussions and they don't let Executives talk. I mean, they're effectively telling you, if you could, if you knew which companies they were, they're effectively telling you these assholes. Don't let anybody else participate or keep their friends around too long. The two most important things I think facing the corporate governance world right now are that Is everything should be one share, one vote. And CEO ocean beach chairs of their own. I mean, I think I think those are the two things that we need to eradicate immediately. I think there's a there's a third thing and that is investors need to vote. They I don't look, I am the vote. No, look, I have a list of 20 things, I would change. I'm just saying to me that the two most important things are those. So that was a bulk of the surveys. There were a couple other things that I thought were interesting, including Executives were asked what they thought board should spend more time on and 50% of them said, ESG Okay. That's not that's right out of the survey surprised me because again a lot of these boards are like they're back loaded with like you know like three VCS three CFOs. Like it's like this this is not enough variety. There's not enough flavor, you know what I mean? 34% of directors themselves said that the plant their plan was to add more industry, expertise to the board. That's which would suggest that one in three boards don't have enough industry, expertise terrible, that's horrifying, yeah. Again you don't want your butty, you want someone who understands the industry. Meanwhile investors the investor survey. This is a Morning Star. Problem is much as it is the investor problem. The investor survey spent a lot of time on AI and climate change. In the survey, there are multiple questions to climate change, AI things, that are two things that might destroy Humanity basically. They investor answer for the number one, ranked material issue out of every issue in the survey where they didn't ask a follow-up. Single follow-up question, they asked about Ai and climate change, but the number one ranked material issue and it's the number one, ranked material issue. Every year they've done the survey is business ethics, 68% of asset owners, agreed, that that is the most important issue. That's bad. And there's not a single follow-up question, in any of the surveys about business ethics, and what boards are doing about it, how they're voting on it, how it's managed, what the process should be. It's just well, look and we see in the backgrounds of the people who are on these board. There are very few people qualified to who have backgrounds and things like business ethics. I mean business ethics is board composition, right? Like that's that that is directly speaks to who is running the company. This is the fascinating part to me every single one of the asset owner issues, like the things they thought were material. Were a question of like, well, who's gonna manage that? That was the, that should be the immediate follow-up question, like, who's managing that? And they don't seem to think at any point that the boards of material, but they do seem to think that business ethics are material. Well, who's it? If this is not an ethical company. If they do something unethical or illegal, to take it back to John, Wiley and Sons, absolutely, why it would be so important for boards to have people, like, presidents of universities on their boards, right? I mean, you do want people who represent things like ethics. Absolutely. I don't think there's a one size, fit, all fits all, but I do think we should be asking the question who at a bare minimum, right? Like like who's going to do it? So there was one other tip that I thought was interesting, which was Only 15% of Executives think the board has sufficient gender, racial ethnic diversity. That that was shocking to me but I don't know. We don't know what that means, right? Look what they might think. There are too many women. Is that what the right? I don't. I think they, you think it's the opposite? They think there's too many. There's too many ways. I think, I think they think there's too many white men. That's incredible. Really only because we know that by and large most executives are white men. Meanwhile, 25% of directors themselves. Thought they could improve the board by seeking more diverse Viewpoint. Well, this is literally directors, don't think they need any more diversity. And executives are saying you guys are woefully non-diverse. Oh, so you're saying that a low number of directors thought they can improve the board by seek? I mean, 25% is one in four directors, thought they needed more diverse viewpoints. But what like nine 8 percent of Executives said, no, you need more diversity. You need more, one is the one is dealing with demographical, diversity one, dealing with Viewpoint diversity. That's because at this point, we're not really asking questions about scary anymore. We're just asked about like racist because of our we write you racist president, we're scared? Yeah. Okay. So there are a couple action items that are obvious. Clearly Executives, want you to vote out their directors. Clearly directors also want their begging him out there, we don't know, we just please vote out directors, they're asking you to do really Are it's not too aggressive. So all the surveys suggest that's what they want you to do. Well I think it's healthy in any any environment. I mean, any, any team environment. You're always, you're always moving forward with you, you cut a few, you add a few, it's healthy. It's just the way you do it. It also means the second action item is to stop obsessing over shareholder, proposals. You don't they? The the problem is people, it isn't a proposal, it isn't you don't have enough reports. It is that you don't have anything. You're not doing anything about the people running the company. The last two action items are pretty simple. Start looking at the skills of the directors because there are closing more skills too. Well, there were a number of questions about how like companies are under skilled and it didn't have to do with AI, it had to do with what they didn't have enough industry experience, they didn't understand the long-term risks facing an industry. The question about ESG suggests, they want directors who understand long-term strategic exogenous wrist, that's what they see. Here's a failure of, we're talking about ISS and gloss Lewis before the failure of places, like ISS and glasses, they should be coming up with a system that helps evaluate the skill sets of these directors and public analytics public, but no, really. But publicly disclosed is, it maybe even Lobby's get it. As part of the, the proxy statements. It make your own make assessments publish the assessment. Don't just charge for these. I mean, this is all information that needs to be disclosed and investors need to know and as a corollary to that don't stop asking about AI skills on the board. AI by itself, is not cybersecurity yes, AI know. But it's so myopic to ask about like AI or like like start asking about long-term. Exogenous risk. Not just AI. You want to know all the risks and you want directors who know the industry? Well enough that they can see risks coming five seven, ten years down the line. One of those is AI obviously but you if you just focus on, what do you guys doing about AI, then, you're only focusing on whatever's hot right now and not what the big money. That's what the surveys said to me. That's all I got. This is supposed to be a short story. You got anything else? That's okay. Thank God. That's the proxy time for the week of October 6th, 2025, join us. Next Maybe not next week, coming by weekly schedule, when we jump back into the alternative democracy pool Forever on the lookout for shareholder Shenanigans Dopey director's. Scandalous CEO pay ratios and Wayward Band-Aids.