Transcript
This is proxy countdown. Welcome to the Big Show for the week of June 16th 2025 alongside my tag team partner. Matt muscari I'm Damien rolles on today's countdown, a Hollywood ending for Warner Brothers, CEO, David zasloff, Boeing directors, getting promoted. Activist investors continue to teach us about boards and governance. Chipotle investors say no to the burrito but yes, to the taco. And on the big vote, Matt takes a closer look at founder. Let's start with her trade wire, big stories of the week. Let's start with the money. In response to angry shareholders two weeks after 60% of Warner Brothers discovery. shareholders rejected, CEO Davidson's, 52 million, dollar, pay plan, the compensation committee restructured, his plan Using Hollywood's latest CGI, special effects and most seasons stunt doubles, his new plan, reduces his annual paid targets significantly from 37 million dollars to 17 million dollars. If he hits 100% of his targets, But the devil is in the details as he is eligible now for 37 million dollars. If he reaches 200% of his targets and is getting a massive option, Grant of 21 million dollar, 21 million options, right now and then another three million in January at an extremely low strike price of around 10 dollars per share, giving him the theoretical opportunity to make about one and a half billion dollars. If Warner Brothers share price regained its 2021 high of 77 dollars all that to say Matt that the restructuring of his share plan seems to be a lot of smoke and mirrors. What they amazing part about it actually is I like the idea that investors rejected his pay and then as soon as there isn't a shareholder meeting happening, they can restructure it to more pay to do whatever they want. They just they just Increased his pay in response to them rejecting his Peg. They've already given him the stock option. They've already been created those first 21 million already have an exercise price of ten dollars and 16 cents. Apparently that's that's if you want to get paid, give yourself just enough that shareholders reject it then give yourself more afterwards, two golden, hello packages, the reporter on Sienna corporations, new CFO Mark graph will get 2 million dollars in cash and 11 million dollars in equity that just best over time. No Performance Based conditions and a rishta networks new CEO. Do I have that right CEO? I don't know. Is it could it be the CEO? I don't know. I'm Trusting my notes here. Todd Nightingale is welcome to with 32 million dollars in equity. I the reason why I questioned that because usually CEOs, don't get such a huge, Golden Hill Package, 30 million dollars of this Equity just simply vests over time without any Performance Based conditions. That's a, that's an incredible amount just to walk in the door. In fact, that amount is 92 times greater than his base salary. So, it's a 92x. Yeah, it's a lot that's like an Andrew witty package. A Boeing and Helmsley package, Boeing's longest tenure direct your Lynn, good joins the board of Morgan Stanley, just two days after the crash of Boeing 787 Dreamliner and India killed more than 200 people just reporting, just reporting the facts there. Yum brands CFO, Christopher Turner has been promoted to CEO to replace David Gibbs. In doing. So the company skipped right over. Cheap Chief Operating Officer and chief people and culture officer Tracy. Skeins. who was been at the company 20 years longer than Chris and in her dual role overseas, two key industry, areas of risk and customer experience in Labor Management. So maybe we have Yum brands Board, chair. Brian Cornell. Yes, that's right. Target CEO. Brian Cornell is the chair of Yom Brands. Maybe we have him to think for this decision because as a CEO of Target Brian has overseeing the company's recent demise due partially to Custer alienating decisions. Surrounding the lack of support for gay pride and the southern abandonment of the company's Dei policies. Do to perceive threats from a US election. It's worth noting that At Yum brands annual meeting last month. Board chair. Brian Cornell received Far and Away the most votes against his reelection, 17% votes against his election, more than three times greater than any other director. So, interesting twist their young Brands where they're skipping over the more qualified woman, who's been there for 20 years more than the CFO. Do we think that Cornell actually was involved in the succession at all though? Or do we board chair or chair would not be involved in the success? You would assume but the more we look at the more we seem to notice that they actually defer to the ex CEO, that could be true. I'm happy to blame Brian Cornell, not one. Could continue to follow on this trend of large cap companies with only two women on the board or something. I'm trying to keep my eye on very closely. This year's all the large caps. The Fallen below this previously held threshold of having a minimum of three women on the board. So first Thomas Frist, the third stepping down a verisign. Now, this is a board with only two women. So I'm watching verisign because I'm wondering, will they take the opportunity to replace him with a woman. So, they have a vacancy. So, my theory is at five years ago. Yes, they would have replaced him with a woman, so, we'll see what happens. Same thing at Newton Knicks. Brian Stevens is stepping down on a board with only two women so we'll see what happens. There, same thing at Live Nation entertainment. Where Greg McPhee's 33% influence is stepping down. From the board. They only have two women. And then finally, a firm Holdings. They are. I guess they're keeping their two women because Keith rabois stepped down. He's already been replaced by Richard galanti. So they're They're ignoring that that used to be that minimum threshold of three women on the board that used to be the thing. So anyway, I'm just keeping my eye on that. Now the trick as we talked about last week is to expand the board and add a man, that's the new trick. And finally Pitney Bowes Pitney Bowes has cleverly circumnavigated, shareholder approval, as it appointed. Brent Rosenthal to its Boyd, only a month after its annual meeting in May. So this is something else, I'm looking at this year is companies boards. Who appoint directors right after the annual meeting to completely circumnavigate the process of Cheryl approval it is a clever look because it's, it's It happens. You're pulling it now, every single week, it happens more frequently than I would have thought, but yeah, it does give a director, almost a full year of a directorship. Basically, their shares, vest, by the time, you know, they even get a vote against them, they could get a vote against them, which is crazy. Let's turn over to our proxy cage matches, far away, proxy cage matches. My activist investor interest doesn't usually get a lot of headlines that the big one last year was Disney. So many headlines and Disney. This year though, I am seeing dozens and dozens of headlines on this company because why? Because it's Victoria's Secret. But so many headlines on Victoria's Secret, everyone wants to talk about Victoria's Secret activist investor. Berrington Capital which owned about 1% of Victoria's. Secret is arguing that the company has failed to realize its potential since its separation from its parent company. L brands, that was back in 2021. specifically they're looking at CEO Hillary's super Who are they say, has limited chief executive and public company experience with only a brief 10 year and intimate apparel, okay, okay, so, first of all, it's a little goofy. Hillary is only been CEO since September, So I don't know how they're they're pinning this on her when they separated, from L Brands and 2021, in fact, she actually was the CEO of an intimate apparel retailer. That was Savage, X Fenty. That's, I think that's Rihanna's Brand. So she actually was the CEO. There she was the CEO of Major Brands like in anthropology. She was at Anthropologie for self a year so I don't know. It's a little bit of an awkward look to. I don't know why we're blaming Hillary's super for this. There's a said that there are six directors on the board. During the company is a client and the remaining directors have limited experience successfully scaling. Global consumer businesses. We believe that Victoria's Secret requires a reconstituted board comprised of directors with proven experience and brand. Revitalization operational execution International expansion and Shareholder value creation. Now the measured that, right? So again, this is a lot to ask for that. We should be asking this up for every Board. Of course, the reason why it's a little awkward here is that this is a brand for women. Uh, and one of the only boards that I know of that is dominated by women. It's actually 80% women eight women and two men. They're also looking specifically at this, this one, I might agree with They're looking at board chair, Donna James who has in fact been on this board since 2021, when they separated and she was on the L brands Board, since 2003. So she actually is long tenured and might be default here. I don't know again, I don't know if I agree with focusing on CEO. Hillary super all this to point out math, that it is just magically fascinating that when inactive and investor gets involved, now suddenly we pay attention to board performance. Actually it you're right about Hillary super the targeting her. Arguably makes no sense at all, like, as a Target. But this board is interesting because not only is it a majority woman women, which is, which is rare. Yeah, or we never see it but there's still Only a 4% positive power Gap. Meaning. Even when men are in the minority, they have the amount of power that of their representation. They they don't, they aren't underrepresented. and you'd think if anyone should be in charge, it should be a woman who did do Intimate Apparel, And Retail and she's been there since September, it's been seven months, eight months less than a year. I mean I I this is a weird tough retail Market too. This is a weird contest. Yeah. What the thing that I also want to point out reiterate is that they're they're upset at her for having a limited chief executive and public company experience. Now, which is unusual because often activist investors are upset at people who are over now Network to have too much experience or two connected, they're too entrenched. So again that yeah, that argument strikes me is like like that. We we know the Fortune 500 has about 12%, female CEOs, right? At where is she supposed to get that CEO experience? Like, there's not enough places that actually allow women to become CEOs. The first place to hold it to. That standard is to ignore the systemic bias that women face to even get in the chair. They usually only get in the chair when things are going badly, which is exactly what Hillary's has happened here. Where she gets a CEO role because things have been Going so badly for Victoria's Secret since they split in 2021 that they bring a woman in to clean up what was a male run companies problems? And now she's held to the immediate standard of you didn't fix it fast enough. I mean immediately immediately. Well you yeah, all these arguments you know like no no offense Berrington Capital group but all these arguments sort of They they betray the fact that you probably had an activist I on the company and you just need scapegoats. Not this is well thought out thing, especially since Berrington capitals team is, Zero women. One woman on. There's one. There's CFO is a woman. Yeah, they're compliance officer. Well, I wonder tooth. This is part of a growing Trend so we just reported a few weeks ago, that Pitney Bowes the activist investor himself. Kurt Wolff actually became the CEO. A Pitney Bowes now barrington's 1% in Victoria's Secret. They're clearly trying to completely assert themselves here. They want to completely take over, not only the board, they're arguing to get rid of a majority of the board and the chair and they want to get rid of the CEO CEO. Yeah. That's based on their 1% Holdings. Yeah. That's right. The other proxy cage. Match happened at Ford are with anchor, A Holdings board Chair. George Mays was voted out, and he actually resigned, and he's gone all so. Directors, Javier polish and Laurie Tucker. Have stepped down. They were the two other directors, targeted by anchor. Now they received a majority vote, but they did the right thing I guess and left. Anchor Holdings. Again, said this, the board. These directors could not be trusted based on their quote history of inaction, fails, oversight, and highly problematic decisions, and quote. So, again, When activists investor getting involved is okay to suddenly look at the performance of four directors, but no other times I guess is this acceptable. Yeah, I just I'm just waiting for the ISS glass Lewis. Inevitable weigh-in which everybody appears to maybe possibly do a good job or a bad job. I'm just waiting for that as the next drop. Let's move over to our vote results table. This is really we're kind of wrapping up proxy season. Now there aren't a lot of meetings coming up in the in the future weeks. There were 45, large cap annual meetings over the past week. Once again, the trend continues very few Cheryl to proposals, only 30 total half of those came from one company. That's alphabet. Alphabet had 13 Cheryl proposals which interesting about these trailer proposals too is the, is the subject matter. Only three of these were actually on traditional governance issues. Four. Four were on AI so there are more on AI than even governance. So this is how much the ship has gone. And of course, even more on the political theater of anti Anti-walk anti-esg proposals. In fact, I know some deal book today in the New York Times that they actually interviewed the head of one of these political theater groups, National legal policy Center. I guess. So they're getting more and more press as they're very kind of, they're basically very. I mean, they're racist a lot of these. I'm just gonna say it right out. They're kind of right, like borderline racist, proposals, they're putting up, they're not just anti-wolf, they're kind of, they're kind of horrible. They get very low support often below 1%. But anyway, that's the that's the story of this proxy season. There are those votes. Well, I'm going to call it right now. The era of the shareholder proposal, I know where on a decline right now and we feel like it's because of the political winds, I think it's dead. I think there, the more investors that I keep talking to are suggesting that these shareholder proposals are non-binding. They begin with, they're effectively press releases that. It's nice. That the anti-walker has really, yeah, gotten deeply into this game. But the reality is the outside of the G ones, the Jim MC Ritchie the John Chevette in some of you know like you know simple majority voting or you know the or the long string at Netflix of, you know, declassifying the board. You know, things like that outside of pure G ones. I actually think Cheryl the proposals are going to go by the wayside and the anti-woke, you know, sort of crowd is jumping on a dying bandwagon and the move is going to be voting against directors. It is way cheaper and more effective to do. No vote campaigns and do exempt solicitations targeting directors for failures to engage your failures of performance for failure. All sorts of failures. If you want to change the, the company Target, the same people over and over again, is actually a far better way. To change the way the company operates strategically, then just ask them nicely to put out a report that might or might not give you any information about the company. It's kind of this weird cultural moment right? Where we've we've jumped the shark with your proposals because anti-esg firms are by using ESG our attacking. A ESG by being antihist, right? Like it's like, yeah. So they so, they've uninsured. They're unintentionally, devaluing, traditional share of proposals by turning the whole thing into a circus, and I think you're right, the whole thing is sort of had having its jumped, the shark moment where No One's Gonna care anymore, and I think we're starting to hear, probably based on the fact that we've been pushing this for several years is, we're finally starting to hear a sentiment in this area where people are starting to now, pay attention to directors more and more And not not to mention that at Google alphabet in particular, its dual class company. People, it's literally just it's way cheaper to go to Business Wire, put out a press release than it is to put this in an SEC filing because it's never going to pass. It cannot pass unless Sergey and Larry, think it should pass. That's actually I wanted to focus on one of the alphabet. Share the proposals this week. That probably the most interesting one this week was they had one on equal shareholder. Voting, they wanted to get rid of the Class B shares with 10 votes, all shares equal, one vote, which interesting about this vote. Matt is as you point out Larry Page Sergey Brin Eric Schmidt director, John Dorr, who I think he's a he's a VC. Yeah, Kleiner Perkins yeah. Something they combined to control 57% of voting power, just to four the base on The fact that they own a vast majority of Class B shares. 31% supported a proposal to have equal shareholder voting, which is a vast majority of people not named Larry Page, Sergey Brin, Etc. It actually represents 73% of real investors. Alphabet, I find that. It's an important thing to know is all I can say. I, yeah, I wish it would mean something. But it's a very important to know that a full three. Fourths of all alphabet voters, actually want to get away with. Do they want to get rid of dual clusters again? Again, what it says to me is The G votes are the one, the last vestiges you shareholder proposals that matter because those are the ones that do matter even if you know, you can't win. To your point. The only two shareholder wins this week were on traditional G vote to elect directors. Every year a Fidelity National Financial and give Cheryl is the right to call a special meeting at Monolithic Power Systems both victories. I I like to point out some of the moral victories, which I call above a 30% threshold, the big one. I want to look at this week is Chipotle Mexican Grill. 45% said no one pay, which is pretty impressive. I I'm always impressed when shareholders suddenly decide to pay attention. Maybe this is just the effect of ISS and glass Lewis. I'm not sure but what they're mad about their is that when Brian Nichols left, the company, Brian Nichols is now the CEO at Starbucks. When he left the company in August 2024, the board kind of panicked and they handed out 38 million dollars in one time, retention Awards, to all the other named executive officers, which is really a poor. It's a really poor way of doing your job, which is that we couldn't keep our CEO, we don't know. We don't, we have bad secession planning, we don't know what to do. We're working on a throw shareholder. Catch at these people, just in case and, and the sheriff's actually responded by saying. No, that's that's nonsense. We're gonna vote. No, but here's the problem, and I don't know again, I don't know if this is not SS in class Lewis thing, but the problematic is that the lowest directors. So, 45% said no one pay, but the lowest no vote on any director was four, four percent on any direct. So again, this is the Classic Chevrolet that I'm talking about every week. What the hell? I mean really what the hell? You're absolutely right that the that vote is it? That's a succession plan. Yeah that's a failure and success failure. It's a failure. It's a failure from your compensation committee to nomination committee. So you actually have directors that you could be angry at. I mean, you should know internally at a minimum who can take Brian Nichols seat, right? Like, that should be like this very poor people, sure? That's the, that's the permanent job of the Nam gov committee to pay attention to, when you work at one of the most famous brands in the world, your CEO is going to be extremely potable. Yes. And then investors, you know who sets the pay, right? It's the people and committee that says responsible for succession planning, you know, that's it's says right in the proxy who's responsible for both of those things, if you don't like the succession plan, it's if you don't like the pay, you the thing to do, isn't just vote against pay to say, we don't like it, so vote against the people because they're not doing their, Job, the people you elected didn't do their jobs, you don't say we don't like the job, you did, you fire them for not doing it? Well. How about this shareholder disconnect? We've been talking a lot about Target this year, mostly because Target suddenly suffering part of it has to do with the, you know, the retail economy is tough. The threat of tariffs is tough, but Target specifically is, they're claiming, you know, losing a lot of its liberal shopping base. They're losing them to Costco. Because last year, they abandoned their support of Gay Pride this year, they suddenly abandoned their support for Dei, they got rid of all the Dei, Paul sees nobody knows why these perceived threats from from Trump. But what are the what are the actual threats? What are they gonna do to Target? Here's why I point all these out again. Target has been The Whipping Boy of bad corporate performance this year, you see in headlines all the time, Investors had a chance to weigh in. The two directors with the lowest no votes were only 9% against in 5% against only that they both got above. 90%, support that CEO, Brian, Cornell, and director, Dmitry Stockton who we talked about a lot? Because he's also sat on the board. It was a deer or caterpillar that he's on, he was on Harley, I think. Oh, he's okay. Well, he's on another board that got that got rid of its Dei policies. And again, investors had a chance to get mad at the directors. They did not, they everyone everything passed a target with ease. So let me tell you something because now, I have a conspiracy theory. It might be straight conspiracy theory. I bought a share one. Share just a protest share of Target. You think you're in January? Yeah, I bought one share with the intention of registering a protest vote against Cornell Stockton and the actually the entire Board, really, because I think that everything's been mishandled at the board level down. I did not get my control number from Robinhood, which I bought the share. I did not get sent the proxy materials from Target. I contacted both Robinhood and Target investor relations, Robinhood help. Both of them said, it's the other person's problem. You have to talk to the other one. This is, I never got it, and I never got to vote my share. I was on the phone with them, I called them, I emailed them, I didn't get a single, I didn't get any information, they like sent them screenshots and statements showing that I owned it before. The, you know, the the date necessary. And I never got the ability to vote. I actually think Robin Hood is not making available to many shareholders, the ability to vote at all. So this is gonna do with Target. Me for, for several companies, could be happening. This could be happening everywhere because I, I did not. I have one whole share, it's not a fractional share. I bought one entire share, so that I could vote, because I know fractional Shares are a different problem. I actually, I'm not totally sure that these votes represent retail thinking at all, and anymore. Now that I've now that I've done, I've gone through this a couple of times, I do not get notifications from anyone Robin Hood, or the companies themselves? They both point the finger at each other. And I do not get actual control numbers so that I can, I can do my voting. Well, with your vote against Cornell, it's possible. He would have gotten 9.001% of a guarantee. He would have been that much closer to getting voted out. Finally, let's wrap up the look at the votes from last week with Pure Storage pure. So we actually had a one director last week that got voted out. In fact, I don't think any other director even reached the 30% threshold against their vote. This was Scott yet and dietzen at Pure Storage. Now, what's interesting about Scott is that he's the vice chair of the Pure Storage board. He's the former CEO of Pure Storage, he served for over seven years, he left in 2017 and yet the company calls him independent He sits on the nomination committee. He sits on the risk committee and I guess. Hey, shareholders! Notice and voted him out? What will he leave? I'm sure he won't leave, but I always applaud. It's probably another victory for ISS and glass Lewis. I applaud them when they noticed things. I mean, I like that. That's our minimum threshold noticing a thing. Yeah, well, yeah. All right, that's it. Unfortunately, I wish there was more to report but it's a very sleepy investor class. They don't like to vote against things. That's all I have. Let's move over to the big vote. Matt, you're looking at founder firms this week. so, I looked specifically at Nvidia, here's the thing. There is nothing to hate about in video, the three and a half trillion dollar company and at this point three now trillion dollar trillion and on any given day it's the largest or second largest company on Earth. Wow it is. It's had a Mercurial rise, right? Like it's basically the last Three four years. It went from, you know, it's like a three, three hundred thousand X, you know, return depending on when you bought it. It's been, it's one of the best performers in history. So really, when I started this I started with the idea of there's a proxy vote coming up. It's a one share one vote company, Jensen Wong owns 3% of the company. So he's not some sort of like you know, 20% holder with dual class shares. So it's one club, one class of shares, one class a shares. How do you tackle a company like this? Other than just rubber stamping? Everyone and saying like hey think the stocks doing great? And it got me down this Rabbit Hole of the idea of the founder firm, particularly a Founder firm at the top of its game. Well yeah, talk about founder fetish. There is no, there is no leader, no founder and CEO these days whose fetishized more than Jenson Wing, arguably not at all like. Um, and it made me think when I looked at all of the data and analytics around this, I looked at msci, I looked at free flow analytics State. I looked at sustainalytics data, the biggest glaring thing, it's our top rated Company. By, by most accounts, everyone's saying it's, it's still might even be a buy, even at the price. It's at the one glaring thing was governance. And the reason why governance was a glaring thing is because the board of Nvidia. is this deeply entrenched board that effectively has the same founder fetish that everyone else has about Jensen Huang and it got me thinking is NVIDIA the next Tesla? Is it the next next Netflix in which we have these companies that we start to feel like when they're not at the top of their game as they start to decline at all, we're wondering, what can we do about this? Do we should we have seen this coming? Like is who's governing this company? One disaster is. All it takes, right. Well, so I used to suggesting that it's like almost a meme stock territory. Is that where you should? I mean, a clearly like unlike Tesla with musk who was driving up the price by saying every tweeting weeks, you know announcing some you know, hysterical Target that they're never planning on actually hitting Jensen Wang's not quite that. Right? But he is showing up on stage like investor days with a robot that he's talking to and saying like this is the future, he's not immune to that. He's on every, you know, Chat Show talking about how great Nvidia is doing in their supply chain, everyone loves them. Yeah. In fact, you know, Not only is he sort of like an outsized leather jacket wearing CEO, he's also went to Stamford. He is an immigrant like like musk was he's been paid, massive pay packages largely built on the fact that the stock has gone through the roof with or without because of him or not. He, they're the company trades at a 40 or 50 PE ratio, which is exactly what Tesla trays at now. Oh, well trades, like Tesla's is worse now, but it was trading like a 40 or 50 and Even just went out of his way to kiss Trump's, but about tariffs, he in 2018, there was a story Us chipmaker in videos, founder and chief executive officer. Jensen Wong said curbing China's technological development, could not be achieved by adopting heavy terrorists. And then from May of this year, he said, quote obviously, I don't know all of his ideas, but let me tell you two that are incredible and he's talking about Trump. The first one is utterly Visionary. The idea of tariffs, being a pillar of a bold Vision to reindeer eyes to onshore manufacturing and motivate the world to invest in. The United States is just an incredible Vision. Despite the fact that there are numerous stories, which suggests that where are you going to find Americans to actually do these manufacturing jobs? I'm just saying that. Like the he's willing to flip with the political win. Sure. Like most of these Founders are like most CEOs are, you know? And it got me in this place where I was like, well, what is a Founder board. If you're an investor, this isn't the only board you have to worry about like this. In fact, when I Define a Founder board, as a company, that is mature. It IPO 10 or more years ago, it isn't controlled anymore, it's one share. One vote. So there's no more no majority shareholder so you can't call Meta a Founder board. It meta is a Mark Zuckerberg Borg. It's just yeah, he chooses them, right? Yeah. Um, there are 152 us companies that fit this bill, there's over 150 of them and when I compare so what I did was I compared them to the nearly 1400 US. Non-controlled, non-founder firm like just a cohort of, you know, companies that don't have a Founder on the board. No family. No, you know, control aspect and I said, what are the difference is what's a Founder board look like what are investors willing to put up with a Founder boards? More than they are at a normal? Board. Okay, a couple things were surprising. A couple of things that were the same that were surprising. There's no age difference between founder boards, and non-founder Boards, they actually have the same percentage of VCS on the boards on average. Yeah, I guess they're everywhere. VCS are everywhere. I guess. Private markets are so important that everybody wants at least one or two, VCS on the board, is it? There are no age differences because a lot of these companies that you're looking at are actually kind of older company like they're more mature companies. That's 63 64 years old on average because part well because what people don't probably don't remember about and videos it's been around forever. I mean, it's been around since the night is Right, 90s, it iPod in the 90s, it was pre.com just boosts it just for a long time. In fact, I was looking at the share price yesterday, it was like below one dollar for 15 years straight or something like that. I mean, Nvidia basically. It's entire business model was selling chips and computers for like, the, your monitor for graphics accelerators. It was Just and it was the best of the best at that but there were questions persistently over decades. Well, what else is there? Like you know how many graphics cards can you sell? But they're also was no gender gap on average when you take out the CEO and the founder at the control of the founder, founder companies or regular companies, right? That actually surprised me that the gender gap power. The power difference was nothing. There was, I mean, it was the same. It was still like, okay, and minus 6% or minus 8%, right? But it was not different between one group or the other when you include the founder on the board, the those companies have massive power gaps, right? Because, yeah, usually outside founder power because for, as an example at Nvidia, Jensen Wong is a Founder still. In the board is other than like a couple institutional investors. Is the most dominant shareholder. I think about three or four percent which is a lot for a Yo, she's a lot, right? And thus our data, free flow, analytics.com data would suggest that his influence is 66% of that board. So he is, in fact, the dominant Voice by far the most powerful and you will see this with founders of that nature. And and actually got me to a solution or if you wanted to remove the power Gap at companies. It isn't about adding more women or giving them more responsibility. It's actually just vote out the CEO or the founder off the board, right? This is like, this is like the billboard, it would be basically a 50/50, it would be a parody sort of situation, right? This is like the Bill Gates of effect. Elon Musk affect the Steve Jobs effect, right? Where you don't actually control the shares but you're the power of your presence and personality and influences just huge. so then it got me to the those are the commonalities, but the biggest difference is, Founder board skewed longer tenured by far. It makes sense to me because don't they insulate themselves with their buddies up? First, 15% of founder boards have more than 15 years 10 years. And it was, it was just under 12% for the control boards. So it's not this massive Gap but when you actually look at it, the skew the tenures are so much longer. It's all the way back to the IPO. It's not, it's not like just 15 years, where a lot of boards have a direct, you're on a 1517 years, The founder boards tend to have a director on it 30 years. It's the j-hope effect. It is as long as you've been as long as this board, this company has been public. You've been on that board, like that situation read Hastings has his j-hope was been there for several decades. Yeah. And in fact, speaking of j-hope, who's a VC, the VC stick around, much longer on Founder boards, also the VCS who are the ones, who go to the founder and say, you're amazing, we want to invest in you, we support you, their primary function is to be sort of cheerleaders and investors in that person in that founder. They are, they are the tip of the Spear of founder fetish their cheerleaders and they provide defense, it'll come both the exactly 46% of VCS on the board. Stay more than 10 years that founder firms and only 36% for the control group. Yeah. Well this is just to us is that is the real power of the CEO on these Swords because they're not gonna let these directors go away. Exactly. The VCS in general have longer tenure. This is all accruing to this place of you get more founder Power by surrounding yourself with the people who were your cheerleaders from the beginning. Founder boards, actually tend to underperform on earnings and outperform on TSR meaning the market values, Founders? Right, found by price, but the companies don't perform on average as well. That makes sense to me. That's sort of the, the Curiosity of the founder fetish. Is it not like the meme stocking this of a Founder? There's some like anthropological bias. Yeah, to someone who founded the company being on the board. Founders also relied Less on connections on the board. The average connections are lower on Founder boards than they are on other boards in terms of other public boards. It's not a mature company where you get all your boards from this board pool that's out there. It's usually it's one set of people you've been connected from the beginning, you write your friends, your mostly, where about your own friends, it's just your group not who your friends are friends with it. Got me to this place where I realized that Sort of two types of boards that I'm seeing in the market and the US market. Broadly, you either fetishize the most powerful person in the room, whether it's a founder or a CEO. Like a Jamie dimon is not a Founder but you could that you have a board that fetishize fetishizes him or you have your musks in your wings and all those people or effectively. The boardroom is a social club where there's a high degree of interconnectedness, between the members of the board where they all know each other, they are a collective power, and the CEO is sort of this rotating entity. That knows when they rotate out of CEO, they rotating onto the board slate, it's effectively, you get picked up on the board slate. As soon as you're done, being a CEO. So it's like the social club, or the fetish club and there seems to be not much in between. That's most boards that describes most of them. Okay. Which gets us back to Nvidia and what to do about it Nvidia is actually an outlier. 60% of the board is long, tenured. Well, one third of this, Board has 15 or more years of 10 year, the only other company. This bad. That's a mega cap company, is Netflix and all of the people that have stuck around this. Long enough are original investor VCS. There are the VCS who invested in the company. Tench coxe, who's on the Nvidia board has been there for 30 years. In fact, there was a news story this year about how his shareholdings just in Nvidia. It's the only board he sits on made him a billionaire. He's a billionaire because of Nvidia which is exactly what happened to Robyn. Denholm at Tesla, just by just by staying and getting that staying around, and you will Equity Grant You become a billionaire and then what are the chances that you are going to challenge? The founder, who you would give credit for you? Becoming a billionaire to like you're not gonna challenge that person. Yeah, in fact Jones, yes. Because there are three Three Nvidia, directors have been there since 1993 30, two Year's, that's right, Harvey Jones, and Brooks. See well are the other two who have been there? 30 years each and they actually worked together. While they were on the Nvidia board. They both worked at synopsys in the 1990s, so they've been on this board together for 30 years. And one was the CEO of synopsis in the other was the CFO of synopsis together in the 1990s. Of the 13 directors. On the sport, 8 have been on the board at least 10 years, and the average 10 year of the Nvidia board is 13 years. 62% of this board would not be considered independent in the UK. They would not. So you would have a majority non-independent board. In fact, like I say, what is, what is fascinating about? These situations? Is that because of the share price, right? Because now this is a board that everyone fetishes everyone, everyone loves Jensen Wong. Now what happens is that old-fashioned corporate governance Falls by the ways. Exactly. So now we don't actually pay attention to long-term risk anymore, we just celebrate the short-term gains and we don't do a thing about it because all of these directors become untouchable, right? The hardest thing to do at a company like this is to stand up and say we have a governance problem. Your company shares are doing amazing, you're one of the biggest companies on Earth. We applaud you for the success you've made but they're still a governance problem and as much as we don't have any investor control of this company, it is effectively, whatever Jensen wants Jensen. Gets that can be just because you're not as an investor. You're not supposed to be. Just looking at the short term you're supposed to be thinking about long term, long term repress. And there's a little bit of evidence that investors notice that because the longest tenure directors, the 30 year plus direct Trio, they get roughly 90% vote for Routinely over the last decade, while the rest of the board gets roughly 94.95%. So, that's just like a trigger. Probably, a proxy advisor is a trigger. Right, it's not triggering quite enough, but like just on its face. And if I just told you the bios of these people, you guess who makes the decisions here, there's an ex-head of marketing from the NFL on a former food executive. Okay, there's another food, executive a Taco, Bell, executive. So we have two Foods on the Taco Bell. Yeah, okay. Taco Bell and Pepsi two food Executives. Yeah, we have two professors. John Deere is one of the most accomplished, I've seen him on other boards. He's one of the most accomplished people I've ever seen on a board and persis Drell is also another professor highly accomplished but their professors right like their their professors, you have an ex-nasa engineer, a lawyer and the CIO of a drug company, And then you have go ahead, no exaggeration. Five 1990 Tech VC Bros who have been together on in aggregate. 15 to 30 years. And Rob Burgess tench coxe Harvey Jones, Brooks Sewell and Mark Stevens. Not including Jensen Wing not including Jensen Wong. You know, what do you think makes the calls? Well, this is what's fascinating about this? And this is why I argue to have all American CEOs off of the boards because what you've actually described is a pretty, pretty great diverse. Group of thought leaders that come, you know, because look, I I'm laughing at Taco Bell and but you need marketing and, and you do need brains, you need professors. And having Engineers is great lawyers certainly. But with Jensen Wang's presence, even if for forget the five tech Bros, but just with Jensen Wong, you're right. You're not going to get these people to help you make decisions because they're over there. They're overwhelmed by by Jensen Wong and his Tech buddies. And I think that I think is the ultimate sort of thesis here, which is if you've achieved this board is fairly diverse. It is like diversity of thought, diversity of demographics. It is Well constructed on paper. And yet, you've leveraged none of the power of that diversity of thought, diversity of experience and perspective, exactly. Because you've essentially Consolidated power in five tech Bros and Jensen Huang and the five tech Bros their, their entire lives have been have circulated around Nvidia and Jensen Wong. They've been a three of them have been on the board for 30 years. I mean, 30 years is the is the majority of like people's work life has been involved with Jensen Wong and Nvidia and deferential to him. So so like this is easy from a recommendation standpoint, that's never going to happen, but it's easy, you bring up the 90s Tech VC for eternity block, vote out, Brooks C. Well, Harvey, Jones and tench coxe And and you have to start thinking not of this board as just along for Jensen, Wang's ride. But as your elected representatives to make sure that a 3.5 trillion dollar company can go to seven trillion dollars over the next decade without basically, blowing up somewhere along the way, because we've deferred all power, to the one founder this board, this board is fetishizing. So that's my, that's my, it's a Founder boards. It's a great Theory, it's a great vocal recommendation but it does make me think of Netflix though, where investors have tried for years to get rid of their version of Brooke, Sewell, Harvey Jones and tench coxe, which is j-hope But that keeps failing. He keeps staying on the board, despite being voted out, but there you go. All right, that's it. That's the proxy countdown for the week of June 16th 2025. Join us next. Oh no, not next week. Join us in a few weeks when we come back from breaks and all that, when we jump back into the alternative democracy pool Forever on the lookout for Cheryl shoulder Shenanigans Dopey director's scandalous. CEO. Pay ratio is Wayward Band-Aids and maybe some 90s Tech VC Tech Road.