CEO succession risk, plus Mangless vs. Zevra lessons, and UnitedHealth’s investor confidence

This is proxy countdown. Welcome to the Big Show for the week of June 2nd 2025 alongside my tag team partner. Matt mascardi, I'm Damien Wallace on today's countdown. Ron sugars new secret BFF at Uber Technologies, practice versus Theory Board decisions. A proxy cage match with some revealing opinions. A potential clue that AI wrote, the CEO pay policy at Warner Brothers Discovery and on the big boat. Matt falls into a very deep CEO succession rabbit hole. Is that right? It's Too deep. Okay. Still in it. Start with our top stories. Let's start with a few golden Halos. I love track in the Golden Hills. New CFO, Kevin Rubin. Starts with a golden. Hello Equity, Award of 23 million dollars. Not bad for a guy who lasted only 11 months at his last role as CFO at better up. So, yeah, that's a quick. Hello. New fact, set research system CEO Sunoco this one. Athan enters with a golden hello package. Consisting of a 22 million dollar option award to be granted in the fall. And an immediate make whole award in the form of 13 million dollars cash and 36 million dollars in equity. So, all together, that's roughly 70 million dollars. I love this new term, make whole award. So it's it's not enough that you learn an executive out of his last position, but you have to pay them every dime they were owed from their last company. I and then more, and then more. I like the idea that they were a half a person if they joined your company without that. And finally, one of the biggest stories of the week, which will get two more. When we look at the meeting vote, the competition committee at United Health Group. Canceled the performance space restricted stock units, granted to former CEO Andrew witty, which is probably a shrewd French to move considering the committee just gave Boomerang CEO. Steve Hemsley. 60 million dollars in options to help clean up a mess that he was instrumental in both creating and cultivating. So, yeah. but the Six million. What they did nicely here was canceled the performance-based award and replaced it with a non-performance based award that was the incentive problem. Witty had to perform and Hemsley who's replacing him. Now, Boomerang him back does not have a performance linked to his award and we'll get to that vote later in the show. After only two years in the job Equifax Executive Vice President Todd Horvath steps away with a lump sum cash Severance payment of three million dollars, representing approximately two years of his annual cash compensation and prorated portion of his annual incentive award for 2025. Also, while his unvested Equity awards were forfeited. He will still receive three million dollars cash as part of his initial new hire make hole Equity world where she got two years ago. Wait, what? Yeah, you literally can't lose. If you're an executive at a publicly traded company you just can't. You can't lose. So he he gets to keep the initial Equity award that they gave him to leave his former company. Despite lasting only two years. Doesn't that isn't that make him whole? What? What which hole are they feeling? How about this one? Just thanks to Ron sugar, the architect. I know Matt, you like brown sugar? 22 days after the company's annual meeting, where shareholders actually vote on the election of directors. Uber Technologies, appointed nikesh Arora to the board. And then immediately appointed him to serve on both the nominating committee and the compensation committee alongside board chair Ron sugar. So it's a nice way to avoid Charlton democracy, right? Just wait 22 days and hire a new buddy Ron. The best part about that is investors won't even blink to think of him as an incumbent in the next election. He's he would that means Would have served how long nikesh serves for how long it's 300 and 343 days. With no election, all your options on two committees. Um or one committee, nominating to sew two committees, the same committees that board chair runs sugar both, he serves on both of those communities. It's true fabulous what a job. And finally, let's end with some practice versus Theory. Here's our, here's the best practice that should be universally adopted quantum. Corporation CEO, James Lerner step down. And under the terms of his offer letter, he is required to resign as a director when he no longer serves as CEO. How about that? In bedded right there in the in the offer letter perfect. It would be nice. If the offer letter said, you aren't going to be on the board just because you're CEO also. But I'll take what I can get its true Norfolk Southern Norfolk Southern Claude mongeau resigned from the board for personal reasons. The board will appoint a successor, board chair at its next. Scheduled meeting later this month, and notice that the keywords there, the board will appoint rather than the shareholders will elect. So I asked you, why don't we have a separate vote for board, chair in the US. Why? That would be great because long Joe was one of the most connected members of the Norfolk Southern board and involved on the board during the crashes. So investors weigh in who they want to lead the board next, it'd be nice. It would be nice for them to not pay attention and vote for whoever management puts up anyway. And lastly proving that long-term your directors should not be considered independent of the companies, at which they serve. Skyworks Solutions appointed, Robert shresh Haim, who has been director since 2006 as in term CFO. In terms CF. Yeah. So that does that not prove to you right there that you're a no longer independent when you've been on the board that one, they're entrusting this dude to just step in a CFO. They're like, sure, not even is it, is he like long tender, did not independent, but he's not even as powerful as the CEO. They've said two things there, which is you we need a CFO to report to the CEO. You already report to the CEO on the board. You might as well over the CFO and reports to, in the company. This move over to their proxy cage matches. I had one case study, I want to look at closely this week Okay, bear with me is a lot to say here. Activists investor Daniel manned glass never heard of him failed in his bid. to add two additional contested directors to the board of zebra Therapeutics Despite owning just 3% of the company and having already had three nominees elected to the board in 2023. Daniel wanted to form a board majority with his new nominees. This is Arthur Reagan and former zebra CEO and her Travis Michael, not Travis Bickle. Matt, that's Travis, okay. All right, that was pickle. Was the, the psychopath in Taxi Driver. I mean, I think these are two different people. I think let's fingers crossed this is not why I chose the story because they am Travis Michael but it's close. Okay. So here we go. Proving once again that the performance of directors does matter does actually matter the performance of individual directors, unfortunately one I see it. Unfortunately it takes an activist investor campaign for the company to admit as much, but here's what zebra had to say. Zebra said that quote, Mr. Man, glasses nominees have track records of destroying stockholder value in public company leadership roles During Reagan's tenure as a director at us Watts. Its its share price fell 64% while while nickel was CEO at zebra, its stock plummeted 98%, so okay? So there's there's proof, right? Matt that, that the actual performance of directors might matter. They also a certain a filing that the primary reason to be against Reagan is that he has quote no life sciences industry, experience or knowledge which nearly makes the case map to reassess of us directors who similarly lack industry experience at their respective board seats. Is it not This is very confusing to me because we hear routinely that boards don't generate shareholder value, but it's used against them when they don't generate shareholder value. In this case, all the mystery happens during activist investor commands. Yeah, go ahead. And we see routinely that like, people put out skills matrices, which no one actually uses when electing directors, except when you need to argue against electing a directors. That's crazy. All right, let's go. Let's continue the story. All three leading proxy advisory supported the companies nominees. ISS said. Quote, the board's concerned about having a former CEO on the board and potential disruption are valid. Which nearly makes the case that the majority of former CEOs on boards. May be disruptive, does it not? We should be looking at all of those cases United Healthcare case in point, right? This is very confusing. It is cloud. Let's talk about glass Lewis glass, Lewis highlighted Mr. Reagan has limited dated and unrelated public board service. Which is ironic considering Reagan actually serves as CEO and founder of Reagan and Associates, which is a proxy solicitation shareholder services for. They're almost saying that if you work in proxy advisory solicitation. So this is, if you don't know anything about companies at all, what is glass Lewis is funny. Take on Dana White joining, the metal board. They like his, like, they likes his muscular church, I mean, I would call that unrelated public board service. Wouldn't I mean, that's unrelated, how about this one glass. Lewis also said the quote, the publication of certain social media activity by Mr. Reagan. Appears to be subject, appears to suggest something of a blight approach to compliance. Oh, come on. Well, the company, criticized, also, criticized Reagan for his erratic nature as seen in his online posts, which could cause serious risk to zebra's reputation performance and momentum. Are they talking about Elon Musk? Who are they talking about here, this what even is this right now like is the same investor class that has let Elon and his entire board go through. I mean, I don't know how about this. The company also said that as a proxy solicitor, He was unaware of or simply ignoring SCC solicitation rules clearly requiring him to file his online. Soliciting post. Again, I feel like they're talking about Elon like their, he's actively was in a lawsuit until he bought the administration. What do we even doing? I don't know I don't. Why why do we get? Why is it take a proxy cage match for ISS class Lewis and now he can Jones like start to reveal some some strange thoughts. I mean. Also none of that was about Travis Bickle, tickle nickel, whatever his name. He's right. He well no one of it was is said that having a former CEO on the board could be disruptive. Okay, so so the, the least relevant point of the whole thing was the X founder and CEO shouldn't be on the board because that's a disruption to the current CEO. Meanwhile the number of executive chairs. The number of Founders on boards, I see two former CEOs. Sometimes I mean, we multiply, what are we even doing so are we now? Should we now vote against all of them for the potential disruption? They cause the CEO? If that's your only argument against Travis, tickle or Mickle. Or what's his name? I can't remember. It's Michael Dr. Michael, yes. Well, he is, he is a PhD, it's not clear. He's a medical doctor. I don't want to confuse anyone in case they're feeling sick at the airport. But finally, let me wrap up on this Eagan. Jones also questioned the relevant expertise of A nominees saying that they don't believe Mr. Regan's background offers meaningful value in the context of zebra's boardroom. How about that? There's a thought articulating, a meaningful value in the context of the boardroom? Wow. That's sort of a mind blowing thought, is it not? Wow. It's I would say almost if it matters who the directors are I mean it we we know that it doesn't because it only matters when there's an activist write this data is available. Now for all boards you could make exactly the same case at like any number of boards. In fact you can contextualize it too. You could say what percentage of knowledge or expertise do certain you know Industries have and is this company on the outside of that how connected are the board members? How many CEOs on this board? How is the influence distributed, all of that is data? That is that exists free flow analytics has all of it. And we only talk about it in when there's an activist involved. And then we don't apply the same logic that we used with the activists to any other company. For some reason, at a minimum, ISS, glass Lewis, and you can joins you should be personally pushing the SCC New York Stock Exchange and NASDAQ to be begging asking the companies to Disclose even more data about the director. Because if this is how you articulate your positions on directors, I would think you would want, more, systematic data about who these directors are. So you could do a. So at scale, you could do your job. Uh, in the end. The contested nominees lost. They got about 25 support while there's ever directors won, they got about 74% support, so there you go. That's the end of that battle. And what a battle. Yeah, there's a little teaching lesson, their proxy K2 teaching corner there. Let's move over to our vote results table. Whereas usual nothing's really happening this year. Big surprise, I don't know if my search algorithm fail but I only found 36 large cap company meetings this week and again, I look at the 600. Largest market cap companies in the US but only 36 this past week, Out of those companies, only 25 total proposals 9 of them came from meta platform. So once again, we were seeing the absolute disappearance of Cheryl the proposals. So I mean, can we consider the nine at metal platforms, a waste of time also like, yeah, we're doing, I got To say like the there's some interesting. Proposals up metapop forms, including dual getting rid of the dual-class capital structure report on hate targeting marginalized communities, child safety. I mean, it's a great case study in kind of understanding what Cheryl proposals are include B. But yes, there is a ultimately, it it's meaningless because I mean Zuckerberg Zuckerberg's Empire, It's ridiculous. It's a public company. I will say this, too. The proposals at meta platforms actually performed quite well for a S&P 500 company. All of them, getting most of them getting above 10%. Even that the Dual class capital structure while getting 26% support. That's basically anyone not names Zuckerberg, right? I mean, he owns 52%, right? So I think yeah if you do Zuckerberg plus BlackRock, plus Vanguard that's everybody else at the 26% for sure. So anyway let's back to the overall vote really know. Nothing to really celebrate here. There's only one win. That was at Warner Brothers, Discovery. 60% a full 60% said, no. To say I'm pay. Which I suppose is a combination of Financial underperformance and a ludicrously high CEO, pay package, 52 million dollars. That's up from 39 million to years ago. What made Cheryl's pay attention here? I don't know. I mean we've we've been totally Covered over the past that media companies get a little bit more attention than than not. When it comes to annual meetings, they see people like to pay attention to Media companies. The question I have is it, is it correlated to the director votes on the pay committee? I'll jump ahead to that. I will tell you, the answer is no, of course, not 60%, which is a humongous vote, a huge foe of dissent. 60% said no to sampay pay committee chair. Paul Gould. 13% said no damn, I mean the bad part is I'm shocked. How high that is right? So again no one's to blame which may be chatty wrote that PayPal. So maybe that's why they're blaming. Oh that's there were very very few moral victories this week. I call a moral Victory and he vote above 30% but I did see a lot of you know seven out of 36 companies. That's about 20% had high say on pay boats. I don't really know what's going on there. The biggest shareholder just connected to the week is by far, you know, United Health Group which we referred to at the beginning of the show so where the shareholders did weigh in rightfully? So although the vote's not nearly strong enough, 40% said no to pay let's not forget. I'm trying to remember the the sequencing here, Matt, where they've The, the huge option award to the former CEO, Steve Helmsley that I don't think that was part of the proxy statement. It was not part of the Privacy statement. It was an update to, I don't know if they added that it might have been in a minute. It might have been 8K. I don't know how many shareholders had already voted. I don't know how the vote the no vote was so low. Even as a protest vote you think would be higher but I don't I don't I'm not clear what was in the minds of Travelers there but the biggest story here and on and even surprising me who's not a cynical as you but I thought there were protests both against the board maybe like an average of, I don't know. 20% know, I just I just look let's put it into small historical context. And a named executive officer was murdered in December. And still, it's June. Still the general opinion of people United States is that they're still mad at the company. There's still basically aligned with the murderer of all people, which is, which is pretty shocking in itself and yet average, the average board member at United Health Group received 94% support now. But here, look, there's, there's the the public outrage and then there is in investors. Investors are outraged by outside pay and like horrible decisions made by CEOs like around, mergers and Acquisitions, but generally nothing else. The thing I don't understand at all and they did file an amendment to the deaf 14a and in the end of May. So it was a vote on hemsley's pay. Not on Andrew. Witty's pay. the thing I don't understand about this is, if you conservatively Measured the actual amount of pay that Hemsley is going to get. If you actually valued it conservatively You would see that you're effectively paying him 70 million dollars a year. 60 million dollar 50 to 70 million dollars a year. If everything goes even normal for just a few years and there is no performance Link at all. Like there is no expectation that he performs. They locked him in for three years. That they're not even bothering with an interim search. They've announced that they prior CEO to CEOs ago is just going to be the CEO again. Yeah, and he was on the board. He was an executive chair of the board. Yeah. This is Kelly. Ortberg Boeing. This isn't bringing someone into cleanup house. This is just bringing in the guy who created the mess of clean up. Maybe maybe he just knows where the all the dirt is. Maybe that I cannot for the life of me figure out what an investor did. When they looked at this pay package and said, oh this is fine. Like what was the calculus here? Like other PayPal packages where you actually have to read the full pay package, you have to read everything because like they hide things like used to pull this all the time. 74. If you'd get 75% of your you know Equity award, even if you were in the bottom quartile of you know TSR performers, they would hide all those sort of weird tranches and and restrictions and investing and and it was it's a complicated space pay. This was the least. Complicated PayPal package ever, 60 million dollars, three years vests. No strings attached, that was all it was and it was 60 million dollars. All you need to do is look at the options price and see that the price was at the lowest price in the last three years, five years for United, Health Group, you know what's even worse to me? Is that Steve? And Hemsley is the third largest shareholder? Well, According to the shareholder table on the proxy statement, he is the third largest shareholder. He owns 1.00 over 1.2 million shares. That my point is, is that he wants this stock price to go up, anyway, you don't need to incentivize them. Yeah, he could have done this for nothing, right? He because he he has a lot at stake here. I mean, so you didn't have to give him a single option. So, I don't understand, I don't quite understand the calculus in investor does when they're voting. This way. I mean, I don't I don't understand it at all. Like Hemsley owns a lot of shares but he's not even a 5% owner. Right? He doesn't even own. So this is the best investors making a choice. Right? Right. Yeah. And at that point in fact he himself only received seven percent against his. I thought it would be higher. I just thought Not only would they be mad at him for this ridiculous PayPal package? But isn't he the one who kind of orchestrated everything at this company, all the All the negative stories and and the negative stories are not just about the murder of the Neo. There's a lot, a lot of other things going on that are bad for sure holders. Anyway, do you have anything else to say about United Healthcare? Can I move on? I mean, it's so hard not to want to say everything about them because it's, so, I'm so incredulous. He's, he's an advert like according free flow analytics. See that's point. Four nine eight, five, basically, that's 500 on TSR. He is average, he's an average director. He was an average CEO and you're paying him, like, he's Tim Cook, right? Like, you're paying him at a time when everyone hates this company, everyone hates this company except shareholders, if you should hate him too, because they the performance is horrible. If you correlate this to Boeing, then this is gonna get worse. You know? United Healthcare is going to face even more problems, and then eventually they're gonna realize that they need to bail on their version of Dave Cullen and getting outside her to clean this up. That's my prediction. That's a good one. Let's move back to met up platforms. How about this? This is in the my auditing section. Some of the oddest votes of the week. They actually had a vote on how often they should hold a sea on Pavo. And the winner was every three years 71% of the vote, every so talk about not caring. But to be to be fair. Yeah. Well okay, but the 2% of that is Mark Zuckerberg. Okay. But it's not just pay for the CEO. It's pay for all the named executive officers and no, no one can say anything about that either. So it doesn't really matter. Okay, our friend Jing Zhao, not really our friend, but I'm gonna call my friend is back in back on the proxy statements, this time at Juniper Networks, He had a proposal to list more candidates than the number of directors to be elected. I just like this quote, One of the corps problems of corporate governance is that American corporate boards are not democratically elected. I like that I like that. True. Unfortunately didn't agree. Only 3% said yes, which is a bit more than the anti-walk anti-esg Brigade. But we're we're beating the National Labor. No legal policy Center. and finally, that's what a roadblocks. They had a vote for the reincorporation of the company from the state of Delaware to the state of Nevada, which scares me is itself like you want to a company of video games for kids, you want them to be, you want them to be incorporated in Nevada, in the Sin, the sin State. Well, with all the The legalized process you could just I don't care where they're Incorporated, actually a little bit scared me before. But I like this, that actually 20% of Cheryl said no to this. It did win with 80% of the vote but this is important because 61% of the voting power is held by one man David bushouki. So I don't know. Yeah, I guess that's cause for celebration. Yeah. Anyway that's all I got. Those are the votes for the last week, Matt. Go to you, the big vote. You are looking at CEO succession, you're calling it a CEO succession crisis, or someone else calling it that. So someone else is, yeah. All right. So let's let me talk about the proxy pool this week. There are about 104 us companies, we have where we have some data, 92 of those companies are not totalitarian. Meaning the totalitarian companies are one person has 50% or more the influence and they they're usually controlling shareholder in some way the largest or caterpillar TJX and regeneron on on the ballot. Actually, the largest were not that interesting this week because we can anticipate at all of these. Large companies shareholders are not going to dissent at all. There's not that much happening as it's unlikely to be interesting. I could spend all day talking about caterpillar and how compromised they are, but there's almost no point because no one cares instead. I wanted to tackle a theme of the week and CEO succession largely because you pulled the story for our other podcasts business pants. And the story headline was, there's a CEO succession crisis Brewing, here's some quotes from the article. CEO, turnover is up and it could get harder for some companies to find new leaders. At many companies, there has been a collapse of the leadership pipeline. Poor succession planning job hopping cuts to middle management, could complicate CEO searches, and nearly halfway through 2025 the number of CEO changes. For the S&P 500 is on Pace to reach, almost 15% for the year according to data from the conference board and ESG are partner former former partner. Yeah, among the companies that make up the s p 1500 index, 44% of CEOs in 2024 were external hires. So which is the highest it's ever been. It's the largest share of outside of Spencer, Stuart started looking at the data in the year 2000, meaning you have I mean, this summation here is succession is that as high as level of years, like CEO turnovers at one of the highest level in years, the pipeline is weak and companies are looking for outside hires as a result because the pipeline is been so weak. That means the nominating committee. The board actually is going to have a much more prominent role in picking CEOs, right? It current CEOs are involved. But if you're looking for outside hires at a higher rate, that means you're relying on board placement agents. You're relying on the board themselves to, you know, to formulate a succession plan to work with Management on succession plans. And you have to assess whether or not you have anyone internal who's actually capable of being CEO in your opinion, in fact, glass Lewis a report earlier this year and one of their good reports they found that S&P. 500 companies that went through a CEO change in 2023 actually a cost 28.4 million and CEO compensation on average compared to 17.3 million. When there was no CEO change, meaning 11 million dollars. Extra is what it cost to investors to get a new CEO. Yeah. I mean I didn't even include the golden parachute well on the other end. Oh wow. Okay, I was gonna say because we've been covering a nauseam. The first of all, there is an absolutely. There's an incentive bill in to the marketplace for CEOs and CFOs to leave their jobs to change their jobs because their their making bank. I mean build, it's built into the pay planes that they are incentivizing you to get a new job. There. There's also now an incentive for boards to allow CEOs, to stay longer because the risk of change finding somebody who can do the job is harder, right? So you now have a situation where we actually are seeing CEO tenure rise just without a correlation to Performance. It's mostly correlation to to their inability to find a CEO. Now, I'm not going to talk about the the talent pools. They're searching in because only 11% of the Fortune 500 companies are women female CEOs, right? Like So it's not exactly like they're spreading their wings and looking for talent and all the places they're clearly. Looking at very particular brands of talent. It's the only way to describe the fact that CEOs generally are only women when there's clean up and men when times are good, But they are afraid. So I wanted to actually spend a minute, a hot minute on CEO succession planning for this week, using this pool of proxy votes because you got to make, you know, some decisions about what you're going to talk to boards about how you gonna vote. So, why not this? First of all, I want to define the risk. That is succession risk, right? Yep. Because you need to measure some way, how effective a director is on succession. And if you can't call up the Nom committee and ask them something, how on Earth are you going to figure out whether or not they're prepared if a CEO leaves suddenly, or there's like some accident or some horrible thing, the CEO did you have to replace them? You have no real mechanism to do this. So I wanted to create something. First of all, I'm eliminating totalitarian companies. So tell, your attorney companies are pure succession risk. I mean that you you see boomerangs routinely at totalitarian companies, Howard Schultz, Bob Iger, I mean, unless you have Warren Buffett and his 20 years succession process, like you basically are taking risk just by owning the company you can't really do anything about it either. So skip them, but we I created something called a director fail rate. I looked at directors that had gone through a succession at least once on a board somewhere, right, anywhere? Right. Did the replacement candidate last three years or more and if not, it's a succession fail, okay? And that's pretty generous. I mean, that's pretty low number three years. Yeah, the average CEO stays for eight and a half years right now. So, I'm being really, really generous. I made a really low number. Calling, three years of win, okay? I'm calling more than three years, is a win. Okay. And I also asked, for those same directors that went through a succession Did they fail on one of the following items was their excess executive turnover at the company. So they replaced the CEO. And in the three years after they replaced the CEO, all of the NEOS, all of the other Executives leave and get or get replaced. So, there's no, there's basically no longer term, knowledge of the company. It all gets replaced. Do they are? They targeted in those three years after succession for an accounting investigation or some sort of late filings that, you know, material internal control weakness. You know, are they investigated for basically some sort of issue or shareholders Target them, either for votes against or activists actually Target them. Take out Stakes Target them. This is a really conservative way to measure failure. Okay. I mean, effectively I'm saying, did you avoid you put a new seat in place? CEO in place. Did they stay longer than three years? And did you avoid some of the worst governance things that can happen to a term oil? Yeah, just utter turmoil. so actually, there are two companies this week that have votes coming up that are in active succession for Tria holding and Corsair gaming, okay, corsairs totalitarian, but for Tria isn't I found. That there were of the 92 companies. I looked at 16 of them have CEOs right now with it greater than 10 year tenure. That's it. Okay. Well, that's that's inevitable succession, right? Like we have CEOs with there was a CEO. There were 36 year tenure. So this is just 16 of them have greater than 10 years. There are four of them where they the companies have five times or greater the number of controversies of coming companies in the same sector at the same size, meaning highly controversial, companies with long tenured CEOs, That feels like inevitable succession planing, right? Like at some point if you've been there for 15-20 years and your company's highly controversial, You sit down and say, how long do I want to do this for? Like we I need to replace myself if you're the CEO or maybe it's time to replace the CEO. So overall we have, I identified 21 companies where succession is either on actually happening right now or is inevitable, okay? Of the companies that are looked at a couple of them. There's there's nothing to worry about First Cash Holdings. Generac Holdings, green brick Partners HCI group. Each one of these companies has at least one board member who's gone through succession and zero fails, right? Like all the successions, lasted, three or more years. No, accounting investigations are flags in the first three years. These are companies with boards that have clean records. So if successions gonna happen, you've got someone with experience and it didn't fail. So in some cases you have high percentages but at least you have someone there, right? Who's done this before. There are a couple of unknowns a couple of REITs which reads shouldn't really count in the first place because they're weird. Anyway, just shift. Four payments as a CEO, tenure of 26 years and no board member has gone through a succession Grand, Canyon education currency CEO tenure 16 years. No board member has gone through is that? Because directors of those companies really don't serve on any other boards. Partially. But even the ones that did have multiple board data in our database, no succession happened. So we have no idea whether or not they're going to be good at it or not, but that gets me to the targets. And I highlighted here basically four targets. Okay. Um, number one, core pay Inc. Corp a is a 20 billion dollar company. It's a massive company. And 36% of the board has been involved in some CEO transition at some point on, on multiple boards or at boards that other boards they've been on. All 36% of them have failed. Oh, every one of them. Have failed in some way and poor pay CEO has been there for 24 years. Oh, CEO is like this is inevitable succession planning. Yeah, in fact, CEO Clark has been on the board of de force with two other core paid directors for years. And at de force that they had a CEO and then Co CEOs and then the coach CEOs, unbeknown CEOs, less than two years later, it's like just a nightmare. So this not only not only do something, a bunch of board members not have the experience, but the CEO himself has been involved in bad transition like chaos. Yeah. One of the nominating committee members Rahul Gupta has a whopping six accounting investigations late filings or other accounting flags from the last transition he was involved in six that were open. Yeah, three of the directors at corporate who have transitioned fails, have connections between each other through other boards. So when you start to build a picture, you're looking at corporate and you're saying this, no one on this board is good at or prepared for getting rid of the CEO if it needs to happen and this seems important because this is a company with a share price, that's as high as it's ever been. I mean, it's so I would think investors would not want to rock the boat too much here, when inevitably the CEO steps down, I mean, we're talking about a 20 billion dollar company. This is, this is, this is a large company. So, my recommendation here looking at just the CEO succession data, but then diving into the company. You vote. No on Gupta and Thomas Haggerty who are the two of the directors who have a history of failure, and CEO successions. And then you have to engage the board on the succession given Clark is 69 years old. He's been the CEO for 24 years. How long can he continue? He's not gonna be there when he's 85, he's not Warren Buffett, right? You need to actually start asking questions about what is in the hopper? How are we doing this? Because the board has a third of the board that is done. This before has largely fail that it in other in other boards. second company, I looked at, Open Door Technologies. Okay, open door has an eight times. Average controversies compared to companies in its sector. At its size. Yeah, it's it is a weirdly controversial company that I had never heard of. I don't know anything about them, but they're weirdly controversial. Both of these, like both. These companies selling, they could be companies in a Bond movie, corporate Open Door technology. They may be where and the villain would be Adam Bain. Oh he's actually like a yeah. Sounds like we're just completing the picture. Yeah. Who's on the Nom Committee of Open Door Technologies has been in one transition which faild and it failed by virtue of excess executive, turnover following, the transition. Like so he was at a another company, they transitioned the CEO and following the transition of that CEO. We I checked to see what's the average number of Executives who leave a company after a CEO transition. He was in the 95th percentile for for after a CEO or Executives, leave after CEO transition. So this is an easy engagement Target. I don't think there's a vote recommendation here but I think you engage the Nom committee. Now, even if the CEOs only been there for two years like it's a new CEO. Is that the case? Yes. But it's a highly controversial company. How are they planning on keeping key Executives? You know, over the next two to five years so that they have a pipeline if they need to fill it, because it's a highly, you know, controversial company. And the only person who has the CEO succession. Didn't go so well and keeping the executives. So it's a good time to engage frankly this is a company that probably is about to see a CEO turnover. The current share price at Open Door Technologies is 67 cents. Yes not and it's only been going down since the current CEO carry wheeler took over in 2022. So it might already be a succession about to happen at this company, which I think is it's smart to ask, which is so now is a good time as good, a time as any um, two more Williams-Sonoma Oh, okay. William Sonoma is weird. Laura Alber is the CEO of William sonova. She's one of the rare cases that she has 53% of influence on the board according to our data but it's not a controlled company. Why is that? Why does shift so much influence? I am unclear. I cannot figure out like I even you're unclear. Yes, and it's our own data, right? Like I have to go deeper into it. She's the only member of the board with prior CEO transition at a public company too. And she failed at it, when she did it, it was at Salesforce where they lost five Executives when they flip-flopped cosios, because it's Mark Benny off, right? It's a totalitarian company, but they flip-flopped coat, you know, between having a CEO and Co CEOs, and then executive chair. The new CEO that Salesforce is like a CEO mess, but she's the only one of the board that has transitioning experience. And she's been there since 2010, she's been the CEO since 2010. So we're talking about a 15 year, 10 year, CEO, The Nam committee only has two members on it and finucane and Scott donkey. Okay, who have we're gonna have to replace Albert at some point, right? It's it's a one share, one vote company. So this is a good as good, a time as they need to engage the nominated committee and asked what the CEO planning is right now in an expectation that, you know, three to five years from now at worst, you're going to you're gonna need to replace this the CEO and the pipeline is is difficult. And then finally, I'm not blaming our data providers, but is it possible? There's a data error on that that she's so high and influence. I should buy one. No, I think for sure Holdings. It's not it's not she doesn't have significant shareholdings, it's not it's it's a thing. So she was the founder I think of a prior company that Williamson on the bought. Oh really okay. So she may be tagged as a as a as a prior former EX. Or, or a Founder does does pay. Does executive pay enter into the influencer percentage? know that will say, this is one of those rare companies where her pay alone 28 million dollars last year is, is a multiple greater than the next four named executive officer right, which suggests that our data is absolutely correct that she is by far the most powerful figure at this company, her pay dwarves, the other Executives. So yeah, there's something going on there. There's something going on. It's I can do, I'll dig in and another show and find out for all of the listeners, that really want to know about low, Laura Albert's influence number. And then finally, for Tria, I mentioned them as doing active succession right now. For tree is a case study in having your CEO. As the only member of the board with CEO succession history and that CEO leaves. Tom Pike, who's now left for Tria was the only seat. The only person on the board, he had seen two CEO transitions, one of which failed at Martin Marietta Materials while he was on their board. No one on this board has transitioning experience. Which means there's an engagement opportunity. Here they have an interim CEO clearly they're going through succession. Yeah. But you have you have a poorly a poorly planned succession. If you have an intern poorly planned because you have an interim season, never got old terminal someone like it's like health reasons or something. And the only CEO, the only person on the board who had any experience doing this before, was the former CEO, who just left so. So for Tria is, I think there's not a vote here. I don't think you want to. There's already turmoil. I don't think you need more, but I do think you need to ask a question, what they're doing, who they're using, what they're shortlist looks like. I mean, I know investors don't like to micromanage but if you're protecting your asset, you really need to know. You know who are your top? Where your top three candidates for this CEO job coming from, who's providing them? What kind of what are the qualifications that you're looking for? What's your plan to put them in place? How do you make sure we don't lose Executives in the process because right now we have an interim CEO, you bring in someone new, or they going to want to bring in all their own people. We're gonna lose any institutional knowledge, Those are all good questions to ask. Those are my company up this week. I love, I love this. I loved it. It was this easy to Koli this was not easy to collate. It took me some time but I did, I did take some Global notes because I was curious. Yeah. Could you apply this to our entire data set? Like what would that be a complete. Oh yeah. So I did. So I did. That's why I took the time. I did it for the whole data set first and and then applied it for this week, the active director with the most transitions right now. There's a tie between James hands and Jim. Kilts both of whom have been involved in eight separate, CEO, transitions, each, is it now has anything to do with the fact that they're both named Jim James probably. It's I mean, I think Jim they're more prone to CEO successful with eight transitions. I don't know if you had the the granular data here but were they involved multiple transitions at the Same company or like some at the same company but mostly at different companies that what one of them is 806 years old, or 85. So, like just been around a long time. You're on their boards and lot of different pools at all long, ten years. They seemed it all. um, but more interestingly, the director with the most fails according to the data, most CEO successions fails Was Brett Icahn of the icon family? I love this. Yeah. Well, four separate transitions all failed. Well in one way a court for flagged as a failure. Now you're talking about transitions involved with with activist campaigns. Those kind of transitions with the with the with the activists. It's it's really interesting because you can actually look at just activists who have sat on boards and see successions, but this is an activist who Brett gets on the board. They usually push for a succession and then we have the information of whether or not that succession was successful. If anything this is a little bit more proof that that we've called out. Carl Icahn so many times in the past for for doing one thing and that's enriching himself, he comes in. That's correct. He does his jazz hands. The share price goes up right for a few months or whatever. He cashes out. He's gone. And it's all about him. And this would suggest that that they don't stick around to see if the, if any of the board, succession even works, right? It's not matter. It doesn't matter because they've already flipped out which, which suggests that you got to pick your activists wise. Well, because some of them are going to be focused on governance and others will replace everything pump up the short term stock price, and leave and we can tag them as having failed, right? Like, they can say during their tenure, they were successful if they stayed for two years. But in that third year, if everything goes to shit, we've got the data. We can flag them as a succession fail, right? Finally, like maybe I love it. Go ahead. Glass, the last little note that I took out of the global data, Roger Moore not to be confused with the double sevens. Yeah, mentioned that. Yeah, currently at verisign has been involved in Vaughn, villain movie in five, separate CEO transitions. Four of them, have resulted in the CEO, staying three years, or less before leaving again. So, you saying this is an outlier, right? Is an outlier. This is, this is 80% CEO leaves within three years rates with five or more transitions. He's, he's the winner. He's the winner. This is great data. Yeah, there's a lot of data there. So if there's anyone interested in CEO succession Flags, succession risk data, we got it. Yeah. All right. Anything else Matt, I feel like that's a lot. That's funny. Yeah, that's the proxy countdown for the week of June 2nd 2025. join us next week, when we jump back into the alternative democracy pool Forever on the lookout for shareholder Shenanigans Dopey directors, scandalous, CEO pay ratios, and maybe I should add, you know, fail, CEO succession and wayward