Transcript
This is proxy countdown. Welcome to the Big Show for the week of May 12th. 2025 alongside my tag team partner. Matt muscari I'm Damien rawlas on today's countdown. The pope steps down at Berkshire Hathaway. While a night leaves in battled the United Health Group. Some chicken fingers nepotism at Tyson Foods a finger licking good board fight at Kohls, a very small handful of shareholder victories at 89 large company meetings and on the big boat. Matt looks at my cell phone carrier Verizon Communication. Start with our top stories. We got a lot of this week. United Health Group, CEO, sir, and Andrew witty. Has resigned six months after United Healthcare CEO. Brian Thompson was murdered in New York City in his place. Former CEO and current executive chairs, Steve Hemsley, will Boomerang back into a role. He originally vacated in 2017, Steve will receive a golden Halo again. Consisting of a one-time, 60 million dollar, option award. Now, while the company claims, there will be no additional annual Equity Awards during the first three years of Seasons employment. There are no performance hurdles tied to this award. Meaning Steve could make a boatload of cash even if the stock market just goes up independent of his work as as CEO talked about a boomerang. Yeah, that's a healthy Rich boomerang. Lots of music holes. This one's exhausting first CEO. Ashley Buchanan was terminated after an internal probe found that he directed business to a vendor tied, to his romantic partner. The vendor received favorable terms and a multi-million dollar Consulting deal which directly violated Kohl's, conflict of interest policy. So he was forced to step down and all so forced to Forfeit his Equity Awards. And you must repay part of his two and a half million dollar signing bonus. That's the first, that's the first bit of news at Kohl's. Which is already crazy, they're on their fourth CEO and three years. Yeah man. Well this is this is their second CEO in five months. Yeah, he took over in January, right. January was when he started, I believe the total signing bonus was 3 million and he has to pay back two and a half million of the three million because he didn't even make it to the end of the year or something like something like that. But the nuts part of this is who's choosing the CEO. Well yeah, let me get to that. The well, the man in charge of the board, now is a man named Michael Bender and the board in itself is been in place for years. So having said that, let's get to the next part of the coal story which is sort of connected and sort of not connected all the same time which is weird, coals, directer and compensation committee, chair Christine De resigned From the board on May 5th 2025. Kohl's initially claimed that her decision was not due to any disagreements with the company or that was in filing. Yeah, that filing or any matter related to the company's operations policies are practices then they sent and email which was included in a subsequent amendment to that filing. Saying this is, these are her words. I want to stress my concern. That this is an inappropriate way to handle this. All shareholders deserve the same access to the same information and for us not to respond to ISS is not good governance and the 8K filing for my departure. It would not be accurate to say, I have no disagreements with the board. Unfortunately I have been continually disappointed with the level of governance process. This the 8K needs to reflect this. That's her first email then she goes on and several other emails to point out some of her concerns and to and also to To say what she was saying about ISS, which is kind of vague and that first female. She says, There is now she's calling out specifically board chair. Michael Bender. Saying there is no delegation to committees or chairs, Michael handles everything, maybe speaks to one person or two. Then tells everyone what the decision is. Some people know, more than others leading to board members feeling alienated out of the loop and worse developing a culture where real discussions really occur. Now, Matt Her main be seems to be that ISS called out the paper practices as a Kohl's, recommended a vote, again, East and Kohl's the board did not respond to ISS. Now she's a chair that she was the chair of the competition committee and I guess she was clearly upset at chair. Michael Bender for not letting her response. I guess it runs through the chair but that's the weird sort of Fallout of her resignation now before you comment I want to tell you that shareholders had a chance to kind of weigh in on all of this yesterday. Matt May 14th was actually coals annual meeting. Only. So only 5% of Kohl's, shareholders said no to board chair. Michael Bender so they're not mad at him. Yet. 45% said, no on pay, because remember ISS recommended a vote against while the average. Director support was 92%. Yes. So well look, they're happy with the board. But yeah, go ahead. There was no activists involved here which means no one. Actually looked at the board numbers to see whether or not including ISS which had a chance to weigh in here because they did look at pay. Oh, well the who's pay, are they rejecting? Because the guy who's paid their Regional just quit? It's weird because because again we pointed out the fourth CEO in three years you said you know, the third CEO and second one like six months. Well really because right? Yes, correct. And yeah I SS didn't weigh in all that and in fact again all of the boards saved average support of at least 92%. So and as I pointed out this board has been in place for years. So the boards clearly not to blame for it. Any of this. So the A committee chair who sets the pay wasn't allowed to talk to ISS about the pay because your email implies that Michael Bender. Who's the now chair of the board wouldn't let her because he quote handles everything, right? And she wasn't basically allowed to talk to ISS. She resigns in protest ISS. The remaining committee members, do not get votes against the pay for a guy who left gets votes against a 45% but that guy doesn't exist anymore and the rest of the board including the nominating committee and nominating committee chair. Our wildly approved, despite having three CEOs, in six months time, that's crazy. Investors are you not to mention of a very public fight that makes coals look even worse? It wasn't like. This one was just snuck in an 8K somewhere. This one was reported on by the business news. This one was out there and you could find it. This actually is one of the most telling stories so far this year, let this be a perfect use case of how investors are not actually paying that close attention, right? Yeah, yeah, what's remarkable is that? They they let ISS the determine how they vote on pay and they also let Issa in how they vote on directors and ISS is not paying attention to the board. That's the, that's my takeaway. A moving on. There's actually more Matt. Oh, geez. But this one where investors don't really have a say, but it's still a great crazy story Tyson Foods named the chicken wings of board chair. John H Tyson to the board. That's his two children, Olivia Tyson and John R Tyson. And Matt, you might remember, John R Tyson from such number one hits as pleading guilty to a charge of driving while impaired. And I love that I played that I repeat and public intoxication criminal, trespassing. After he was found stripped down to his boxer shorts and sleeping in a stranger's bed. And if I finally his sleeper hit called, I lost my job last year as CFO because I'm a criminal. So John R daddy appointed, Okay, no John, this is a hard to keep treating, John H, appointed his son, John R to immediately serve on the strategy and Acquisitions committee, and the technology committee which is good news here. Because if there were to have put him on the governance and nominating committee, he would have been in charge of stuff like reviewing and recommending to the board of code of conduct, right. And identifying, an evaluating and recommending individuals qualified to be directors of the company, which he clearly could have appointed himself, right? I mean, because he's clearly not someone who should be recommended to the board, despite all this despite being part of the control and family. A family worth billions of dollars. That Tyson children will be paid $315,000 dollars annually, like all other non-employee directors. Now this is an important distinction because John Are Tyson the son, it is still considered an employee of the company and yet will receive the pay. The the non-employee directors, received traditionally, Matt employees of the company received no pay for their service on the board. That's because he is not actually an employee of the company, but still considered an exactly the company unlike his sister, who's not considered an employee of the company. Well, look, the fact is that John H? Tyson has 40% of the influence in Barbara Tyson has 33% of the influence. This is a dual-class company with family dictatorship and there is no shareholder right to representation at this point. Because if we should briefly go over John, R Tyson's, illustrious career, that wasn't deviant involved, police. In some way, it was graduates becomes Chief sustainability. certain foods and then chief Financial Officer, he was the CFO without degrees in finance, right? He had an MBA, I believe his understudy at Tyson Foods when he was the CFO had been with Tyson Foods for more than 20 years, in the finance department and didn't get a shot because John H, put John R in the role. Yeah. After the Deviant Behavior. He leaves the company only to not leave the company. So now he represents as a fiduciary. He couldn't do the job of Finance at the company. So he's going to do the job of representing shareholders, who financed the company, overseeing management at the company. Yeah, I mean, if coals was a perfect use case for the fact that investors are not paying attention to directors. Tyson Foods is the perfect use case. For the that controlled company is like this, like meta platform should not be considered public companies because the behavior is not right. The at a minimum you that data pointed his son, back to the board almost immediately. It's just a bad look. It's just proves that this is a private company. They just do whatever the hell they want. They don't care. They don't care. That almost every article now coming out is really just kind of embarrassed by this making fun of this decision. I mean, this is again, these are the actions of a private company and this, this is right. It's a private company and that's the way to think of it. Despite the fact that in 2020, the are 2021. I think the New York City, put a shareholder proposal to recapitalize One. Sure. One vote, which got 19 20% of the vote, which is and, which is very, very high, considering the fact that the Tyson family controls the vast majority of the vote which means every virtually every other shareholder thought this was a good idea. This is a private company because you do not have a say, if begs the question, if all this had happened at Kohl's, do you think they would have elected John or Tyson? You think they would have or anything? They actually would have voted him out. You think actually so they wouldn't have voted him out if I assess did the recommendation right, but but do you think that they should actually Here's a thought in order to invest in a private company, you have to meet a certain certain qualifications you need to, to have, you know, a certain amount of capital. You have a liquidity. You there are like regulations about how rich you can be because private companies are inherently risky. And non-liquid this company is quote unquote liquid but shouldn't It actually be not allowed to be on an index where a retail investor can own it because you don't actually own it, shouldn't it be considered like a private company? Where only institutions, who can do the individual research on this company and afford to take risks if Tyson Food stock, went to zero tomorrow, there is nothing you can do about it. No, there's nothing that investors. There's no one you can use no one, you can vote out. There's no way for you to actually make change, you know, arguably voice, John R Tyson's, you know, historical record suggests we're not in for a nice smooth ride as a fiduciary so if you have no recourse maybe it should not be investable for any retailers. This is one of the areas of a call like corporate governance one point. Oh the pioneers of corporate governance this is one of the areas that I'm I still to this day 2025. I'm still surprised that there's not more pushback. I really only hear the push back at us. I don't I don't get how we allow these companies with these structure to exist in public markets anymore. It they to your point, they completely eliminate the voice of shareholders. I thought the whole point of this shareholder Revolution, or whatever you want to call it, that that word crediting people like Bob monks for which, you know, no disrespect to Bob monks who passed away in the past few weeks. Did great work, but but these companies have no shirt holder voice. So should not be considered as part of the public market. And there should be a loud voice against allowing them. And I'm always surprised that there's not more pushback against them. So there you go. Anyway, let me move on to a few other stories. About 12 days ago, May 3rd in a story covered everywhere. So I'm not gonna spend a lot of time on it Berkshire. Hathaway CEO and chair Warren Buffett decided he didn't want to be CEO anymore. So, we handed the Baton to Vice chair, Greg Abel, so that succession plan finally happening, that's been in the works for 400 years. The Trump 2.0 Administration is stealing two more directors from the free flow analytics database. It seems to me Matt that Trump 2.0 is mostly just people from our database but here the two that happened this week Phi, serve CEO and chair. Frank besignano has been confirmed as the commissioner of the Social Security Administration and FedEx. Lead, independent director. David Steiner is the the new United States Postmaster General, that feels like a conflict of interest. Speaking of conflict of interest, Steiner is the perfect brand of trump 2.0 executive. I was somehow called the lead independent director at FedEx despite having served on the board for 60 years and amassing 50 million dollars of companies stocks so really not independent at all. So perfect. So we're saying that is another dual-class company, Fred Smith runs that company which means He is going to be perfectly happy with the dictator as a boss. That's not a problem moving over to egregious, pay, we've been covering these all proxy season, new Integris, CEO. David reader starts with 400,000 dollars in cash and 11 million dollars in equity before even making a single decision. Other than yes, I'll take the job. Likewise Western digital's new CFO, Chris senes. See all starts with 2 million dollars in cash in 10 million dollars in equity. And then how about this one at MGM Resorts CEO, William hornbuckle gets a special one-time cash bonus of 8 million dollars. Merely for continuing to do his job as he signed a new employment agreement. So I guess the old agreement was what 8 million dollars short. So that's why he had to come up with, he was doing his job but they wanted to do his job more despite the fact that the agreement that was replaced actually expired in 2026 as actually no reason in 2025 to rewrite that agreement. Look at the final, some cash at him. I don't I don't mind these per se. If we treated these people like athletes you would re-up and athlete's contract a year early. If you thought we want a long-term contract in place where we can have this player because we love them, they're great for our brand, they're great for our performance, whatever. But there are measurables around that Give me a measurable about William hornbuckle, that suggests that guy should stick around that. He's worth another 8 million for a longer term contract. And lastly, in our top stories, and a trend that we've been following closely called the down to two uninfluenced 2025. I don't, it's got caching names to catch a name. Something I'm seeing as a kind of a quiet, anti Dei policy that's been going on in Corporate America. Laela sturdy steps down at UI path. Leaving only two women on the board with a combined influence of 2%. And remember, this is notable because for the most part large cap, companies had a minimum sit really for the last 10 years. Maybe, 15 years of a minimum of three women on the board. But this is, you know, they're not really paying attention to that Benchmark anymore. They're just kind of quietly. And I'm not saying that they're kicking out the women. I'm saying that the women are resigning and they're not replacing them, they just don't really care about that polls anymore. We're also seeing dilution where they add members to the board and they add largely more men than women. So we are winning on both fronts. Let's move over to our proxy cage matches. The big match this week is between Phillips, 66 and Ellie and investment management. In a nutshell, Elliott has nominated four directors, once the split, the CEO chair role, and wants to get rid of classified Board elections, they want annual director elections this week, three proxy advisors who represent over 70% of institutional votes weighed in on the May 21st meeting ISS and Egan Jones are saying yes to all four Elliott nominees. ISS said, the nominees would dismantle Philips culture of complacency. And that Philip CEO, Mark leisure's, dual role as chair represents a disconnect from shareholders before I go on Matt. I don't know why I SS isn't screaming about every door every single one is it here not everywhere else. And I'd also like to kind of know how it quantifies a culture of complacency. I'm happy with the term. I just kind of want to know how they get to that conclusion, but I all this to point out that glass Lewis on the other hand Is saying yes to the men, but not the woman. And, you know, look, I'm not saying this is a gender thing, but it's just how it happens to be the glass. Lewis is saying no to Stacey new vote. A former senior energy in Industrials analysts as Citadel glass, Lewis, if you're listening, I don't know if that's really necessary to single out the woman in this in this fight. I mean, just I don't know. Is it really not necessary? I mean, do you do you really have proof that the three the three other people are going to do such a good job. But she's not going to do a good. I don't know. I don't Optics wise, just what? I don't know. I don't know what gloss is doing, but I wanted to point that out. Phillips. 66 is arguing That Ellie should back down from its fight. To break up the Energy company. Because the activist investor is conflicted from a separate effort to acquire one of Philips. 66's Rivals, sit go petroleum now sick, go Suiter Amber energy is led by Oil Man. Greg Goff. We've talked about several times on these shows. Greg Goff revealed on April 9th, that he bought 10 million dollars in Phillips 66 shares and was backing Elliott's campaign. Phillips, 66 is called the conflict concerning because Amber energies, executives are actively helping support. Elliot's case to undermine Phillips 66 strategy. That's is a well this is a big one. That's a weird one. This is this one gets a lot of headlines for some reason, you know, it's not that weird though. Because like the so you're talking about a culture of complacency, this is a board where we have in our data, 19 Loops between the directors and that covers basically the entire board. This is a You know, large cap mature us company. And these are names that if you follow board members, if you follow the people like you follow athletes, you'll recognize some of the names. There's Glenn Tilton, there's Charles Holley, Denise Ramos. These are Greg Hayes of RTX. These are board members who not only sit on Phillips 66 but have been on other boards considered complacent to you know when dealing with investors the real question here is ISS. Why? In this case, are they complacent? And the board chair combination is bad because an activist is knocking on the door, that's why, but in I could, we could name easily off the top of our head. 50 US companies that are exactly the same by those metrics which means you're not doing any due diligence unless Elliott. Does it for you? Yes no one's doing it. I don't I don't get that part of isis's policies. I don't get why they can't and if they have they must have some formula where they're where they're branding boards complacent. And when they're they're saying that the new directors will work. So I don't know why they can't apply. They can't play that to scale to the other company. I think the formula is Elliot plus says so equals vote out. That's well, it is and I repeat I repeat, I feel like every week on this show I assess if you need data to support your arguments whether you are for or against directors at publicly traded companies, reach out to Free float analytics and they will give you the data to help support your arguments. Sure. Let's move over to our vote results table. Here are the highlights from 89 large cap, annual meetings over the past week. We're really in the middle of the proxy season. Now, out of, you know, we keep hearing so much about shareholder proposals. Oh, you know, the the shareholders are taking down Corporate America right there there the there the I don't know what they are there. The Socialist wing of the ESG party but Matt overall, I know the 89 meetings. There are only a total of 54 proposals. That's it 504. And they only come from 41 companies. So that means that 48 of these companies had nothing not, not a single proposal. In fact, nearly half of the meetings. I looked at nothing happened. There were no Charlotte proposals and there was no shareholder descent meaning. No directors really had anything above 10% there were no votes against pay or nothing, just nothing really going on. So anyway, yeah. So we're saying that shareholder proposals are Voluntary, but they don't have to listen to them. They're non-binding vote. So like I know we want to curl about victories. I mean, I've been talking to a lot of shareholders, who are, who are discussing this sort of anti Dei or anti-esg shareholder, proposals the rise of them and they're, they're very happy about the fact that they're getting very little shareholder support. Meanwhile, the percentage of shareholder proposals that have passed in the past 10 years is 4%. So are we should we be gloating about? You know, like those Cheryl the Bulls aren't winning when almost none really win. It's rare when one wins. So, let's look at the highlights from these 89 meetings. First of all, let's look at the winds that we refer to really there are six wins, but maybe it's really five because I had X Laboratories. There was a vote for annual election of directors, and since the board had no recommendation, that usually means a win. I don't know why that's the case I guess. Maybe proxy advisories set their their votes that way they if the vote if the board doesn't recommend this is good question and auto vote. Yeah I guess because it's 92% supported that idexx. Laboratories and there were five other victories. Uh, you know, they're they're really governance. Victories. Simple majority, vote shareholders, ability to call a special Meeting. Those occurred at companies like LKQ and ICU Medical. But here's this, here's a surprising one, this one, floored me and and I guess is a new trend going on this year. I don't know if this is a reaction to Trump to Trump 2.0. I have no idea. We'll see if this continues to evolve. And by the way, I think Matt the only winner any and ever again anymore is John Evans. He seems to be the only one who puts up a winning proposal, but there were two, both in the transparency and political spending at terradyne and sibo, Global markets. They both got more than 50% support. I'm just surprised. I'm I don't I I'm not, I'm not no. Tell me what simple reason, so when I looked at the data this year, so far, the there, everyone's talking about the sort of changing political environment, what it means for sure. What if you like actually look at Trump 1.0, there was a dip in, in any support for most, you know what you would consider woke shareholder proposals during Biden, it goes up, and during Trump 2.0, goes down the exception to that rule. Almost every single time is driven by the proponent. In this case, John, His proposals are the only ones out of all. I think I have a database now of Fortune. 250 companies that I I use proxy monitor to get some data on msci. To get some data, really, the S&P 500, roughly of data. He's the only one who routinely gets 30% on average for his votes. It's it's driven by him. I think he could put a proposal up asking for largely anything and he would get 30% of the vote in favor because I think it's a proponent driven model where now we're not voting on the substance of the shareholder proposal. We're trust, the proponent and evidence been around for so long, he's a gadfly. We know he's what he's about. It's almost always gee related, it's very practical and I think that's what's winning. That's what's winning vote. Case in point, I got 20 Morrell victories to point out. I'm not going to go over all of them, but that's I call a moral Victory or anything over 30%. Remember I pointed out several times that 30% is is the the threshold which is considered the effective control over a company. So if you control 30% of shares, your effectively, you control the company. This is the figure used in companies like msci. I'm looking at the internet right now, it says 30% is often enough for control because it's usually more than anyone else has. And in a fragmented shareholder base, it's enough to steer or block major decisions. This is why we free float call for if you get 30% threshold on a shareholder. Vote that should be considered a victory. This 50% thing is hogwash but here are 20 moral victories. The one that stood out to me, speaking of John chevin and is Cheryl holder approval, on excessive golden parachutes. This is getting a lot of love this year. At companies like Illinois, tool Works tea price row, Lockheed Martin All Above 30% and you see some, some of the old favorites like independent board chair at Prudential Financial shareholders, ability to call a special meeting of produce. And again these are all John Chevette and I'm calling these victories. but a couple of oddities, I wanted to point out first, another political spending one at Cadence Design, got 44%, but yet your point, Matt, this is they're really supporting, I guess, John shevid and maybe in Trump to point out that just they just want their little extra angry. But how about this one? This one surprised me at Gilead Sciences Shareholder proposal requesting a comprehensive human rights policy in human rights. Due diligence process somehow managed to get 36% support. I have no idea why other than the fact that I looked into it, this was put up by The Sisters of Mercy of the Americas and I'm thinking, hey, this boat happened like a week or two after the pope died. Matt. Do you think there's like a flood of Catholic love that went to this vote, because we never see Human rights policies, getting 36% of support. I just that one floored me. I don't know how that happened. I mean, that one's Pope weird push because the major holders of Gilead are Vanguard black rocks, State Street Fidelity. It's all, I mean, like don't care about different. Yeah, I don't again, this is I love the erratic patterns of Cheryl votes. We also had a handful of I'm calling shareholder. Disconnects. That's where essentially, as a high vote against pay but no vote against the directors, the one of the ones that I'm really looking at this week was S&P S&P global Where there's a 31% no on pay but all directors received at least 95% support. So I you know, again what why what, who do you think is creating these policies that you're angry about? I don't. It's but anyway, there was like seven basically seven of those that fall the same pattern. Let's look at directors. Matt, no one's been really close to being voted out so far this proxy season in a large cap. This week, there were two percent of about 900 directors, even received just over 20%, but nothing no one on over 50. The loser this week, I guess, was at CME Group, Nominating committee chair Phyllis Lockett, she received 41% votes against, I don't know why we have a very astute listener who reaches out to us and and he seems to have a good grasp on why some of these votes happen. So if you're listening, reach out to us again. Tell why did Phyllis locket? Get 41% against the scene. If I'm, if memory serves CME board is one of those incredibly weird boards with sort of two voting blocs one, is there like competing voting blocs and I think they have 20 Queue directors or something like that? Yeah, it's a giant board and the vast majority of the board has been there since, like, 1995. I mean, some of these people have been sticking around for 20 years. It's a very strange board, and I think every single year they get whoever's up in the class just gets votes against from other from themselves in a weird way, that's my memory of CMA finally, let me end with some Oddities. I'm always looking for Trends with all these stupid votes. How about this one, Matt auditor descent just a vote against the independent auditor. Which we never see, but I found five companies this week Edwards, Life Sciences, Ecolab service, corp, idex, corp Striker. Where all of them had, at least, 10% votes against the auditor. What, what the heck? What, what could be happening? I you just don't see this. I mean, do you think you have to fire the auditor at a 10% vote? Again. Absolutely. That's a really high, massive, massive. So, if again, if anyone knows about this, please reach out to us because this is a trend, I just don't ever see And finally, I want to point out this one, this one, I I hate, I'm calling this, I'm putting this in the bullshit category, this is a, where the company requires the vote of 80% of outstanding shares, the past something. This happened at two companies this week, Eli Lily, and Abby. where there were trying to get her shareholders to eliminate super majority voting both of them and also classified board structure at Eli Lilly The one that really stands out is Abby. Where 99% of the vote said yes they want to eliminate supermajority voting but because it's under the threshold which requires 80% of outstanding shares? It doesn't pass. I mean, come on. This is just how many shares they get. Did they did they did they actually say I can look into that and report back next week but no. I but again I mean what do you what do you what are we playing at here? I mean, By all account, a lot of times when it said that way, that's like 77% of the shares voted, right? And that's an impossible structure to overcome So yeah that's it. That's again I got a lot more data, a lot more stories with all these meetings. So if you are interested in your listener, reach out, if you want any more details or you want the list, but that's it for me Matt. Which is enough. I'm gonna hand it over to you on the big boat. We have a lot of again there's a there's several major companies up for a boat next to concluding the Giants like amazon.com, JP Morgan Chase mcdonnell's. But what do you focusing on this week? All right, this week because there's so many big companies. I actually, there are about 20 companies with 50 billion in Market, us companies with 50 billion in market cap or more that are just coming up for a vote in the next week. And because of that, I thought, well, how do you even sort? We don't, let's say, you're, you know, a pension fund with a team of one or two, maybe stewardship people. How do you sort? What's important to vote? Where which directors vote against, which to vote for. There's so much going on. All at the same time, how do you do this? So my goal here was actually to take all 20 of them as a case study and say, how would I narrow in on just the outliers? How would I figure out? Which of these companies, is the one worth focusing on. Not to say that there's not directors, on all of them, we're focusing on. I mean, I can name the directors at McDonald's, that should be voted out everywhere because they've been there sort of like, the, the protected class of director, but forget that. Let's just say, give me some outliers. So here's what I looked at. First, I looked at the market returns. I looked at one year and five year. TSR just really simply versus the S P. 500. These are blue chip old school us companies for the most part. Only JP Morgan. McDonald's. Sarin Schwab beat the S&P. 500 in the one year and JPM, The Southern Company. No. Sorry the the other one copper. Yeah. Copper Southern Copper company, which I get both of them. Confused servicenow EOG Resources in Schwab be in the five year, TSR versus b500. So you talking about out of the 20, only five actually beat the S&P 500, and only three of them. Beat the S&P, 500 in the one and the five year. So this is fair's, fair game. If you are an investor Five years is for all intensive purposes long-term as an investor, you did not get long-term returns right aligned with the SB 500 from the vast majority of these companies, you might as well say, like, okay, it's open season right to anyone, affected mid-caps and small cops caps. This is the routine behavior that when, when companies underperforming this way, that the investors actually do Target the directors at a much more frequent rate. So, so at this point that leaves you with the people that leaves you with, okay? If all of these directors of which there are 220 ish of them are up for grabs. Then who, how do I focus on a board? That's underperforming because there's so many that are underperforming. So, what I did was, I actually looked at the director, I just did straight performance. First and foremost, I said, give me every director. That has underperformed on TSR plus one other thing. Okay. Meaning TSR and earnings carbon or controversies. And then I said, give me all the directors that have underperformed on any two things. So, it could be earnings and controversies, right? And then show me the boards. That have the highest percentage of those underperforming directors on them. This is very, very simple way to sort of narrow down to, where am I getting my worst performance? And bearing in mind that these directors at these companies are largely, the average number of boards. They sit on a two or more, they are on boards for years upon years, often decades across multiple boards. These are not these are professional directors, the vast majority of them, right? Only one company stood at the top as having the highest concentration of underperforming board members and highly interconnected sort of insular board when we looked at our connections data and it was Verizon. Yes. So let's talk about Verizon Here, the easy wins, there's 11 members of this board including Hans Vesper. Who's the CEO who we featured last week? Yeah, on BlackRock, right. Here's some easy wins. So, I've already narrowed it down to one company to focus, focus on simply using a bunch of filter data about directors. And now I'm going to, when you dive into the easy wins, this is again, this is easy, filtering wins. I did not have to even open the proxy for this data, okay. Dan Schulman and laxman. Narrow semen. Laxman ex CEO of Starbucks Starbucks. Yeah, they are connected to 64% of the Verizon board. Well, almost two thirds of the board. They are connected to through either board interlocks or non-profit interlocks These, this is like a deep fist bump board. These are directors who all have friends in common and 64% is incredibly high percentage. Even for companies in the US large cap space. So easy targets, right? Do I want to to directors who know two thirds of the board or a friends in common with two thirds of the board? How about Roxanne Austin? Yeah. You know that name? Because she's on four boards currently four active boards, she's the chair of the audit committee at Verizon and I'm glad you brought up the auditor sort of pushback. I want to do a little bit of insight Intel. Because the audit committee, I've I've been talking to some directors, which is something I don't particularly like doing, but I'm yeah, I talked to some and then in almost every conversation, the directors themselves, say, the audit committee takes by far the most time on the board. It is the biggest time suck. It's the most time consuming, they have two to three times as many meetings, as the rest of the board and their board book. They get the normal board book, which is like, you know, 100 pages and they have another one to 200 pages of financials. Yeah. And in their book, I remember you pointed this out last week about Black Rock and we were talking about Hans vestberg and it struck me that This guy is the CEO of Verizon and he's also on the audit committee at BlackRock where they had 15 meetings last year. This is guy. I mean if you're a black rock shareholder I'm thinking this guy's too busy to do all this work. Well it gets worse, okay? Because this committee is by far while they're by far. The most informed about financials. They are by far the the most time, constraint sure. And they're not actually that necessarily that influential when it comes to long term strategy, they're kind of the Nerds, right? Like that you. It's not really that you're listening to these people because they're influential. You're, they just know the most about the numbers. But here, yeah, go ahead. Here's the startling high level piece of data. In the US there are 9,970 audit committee members right now. It's chairs Plus members, right? 1,113 of them, 11% of them are on more than one audit committee on a publicly traded board in just the US. Okay? That's multiple boards, right? Yeah. 11% so one in ten audit committee members is sitting on another audit committee somewhere. Yeah. Shockingly. Well, shocking to me. there are 11 directors in our database who are on four audit can't be real, like really Wow, separate audit committees. Not like, yeah, they Geniuses. I would like to see them figure out how to keep all those numbers separate their heads. Imagine. So imagine if you are on four separate audit committees and the average number of committee meetings that I could tell are about 11 per year across the US, right? That's and let's say that's 44, audit committee. Meetings that you have to go to if you're on four of them. And let's say that every one of those Auto committee meetings comes out with 300 pages of data that's 3300 pages of financial data times, 44 meetings, What kind of time do you have? That's like reading a JK Rowling book, every like two a day. That's, that's an insane amount of time. Yeah, of those, those members who are on multiple boards. 263, 23 percent of directors, who are on auto committees and multiple boards. They're on audit committees with the same auditor as another board that they're on. This gets to your audit committee, your auditor pushback, right? These are people who are effectively are on the board of ABC company your your your price Waterhouse Coopers does the audit and you're on the, you know XYZ company, a pricewaterhousecoopers, does their audit guests who is on that list? Rock Saint Austin of Verizon. Wow. She's on the board for she's not, she's on Abby crowdstrike, Verizon audit committee. She's the chair of two of them and ey is the auditor at both Verizon and Abby. She's chairing Verizon and crowdstrike how much time does rocks and Austin have. Exactly. I don't, I haven't you, I've just learning this. I have not time to dig in to what else she does. She's also The lead independent director at AbbVie. And something called Fresh works. I mean, she's also she's not just in the auto committee, man. I mean, and, and not to mention, she's the CEO of her own investment advisor company. That's right. Austin investment. Yeah, which is just too much app is ridiculous. I mean, what is the expectation for her? I mean, she shouldn't show up to every single meeting but how can you possibly? So what what ends up happening inevitably, is you make you only have the space in your head to make the, like a sort of global decisions. So let's say you're talking about tariffs, right? You come to a conclusion about like how tariffs are going to matter to businesses. You take it to all of those companies because there's no way for you to new in a nuanced way. And we know this, when I look at this big data, I can't just look at the big data and do nothing else. I mean, I could, but the best information is when you do it and then do some research on top of that to figure out what is the new ones. In this company. You can't possibly do that if you're on three separate audit Committees, your chairing, two of them. You're the leading to bed and direct or somewhere else and you run your own company. These are like musk like numbers. That's that's it's just insane amount of business you're doing, but you want to know who else on Verizon is on multiple audit committees. Two of the Verizon audit members, Clarence, Otis, and Shelly archambeau. Okay? So, there are four people on the audit Committee of Verizon, three of them, sit on multiple audit committees at multiple publicly traded boards. Wow. So in Clarence Otis, actually just finished being the leaded independent director at Verizon. He has been on the board for 19 years and he handed off lead into director to Dan Shulman who I mentioned as one of the most connected people on the board. Which brings us to our arguably, one of our last layups here, which is CEO of Vsepr and we covered him on BlackRock. As here's here's my own quote Vesper, quote, flatly, underperforms Verizon's, board has returned to 388, DSR is a group 264 in controversies. This is a deeply underperforming board with zero, directors, batting above 500 on TSR or controversies despite two of the directors being on just the Verizon board. This is a pattern and it's consistent. 70% of the Verizon board members, have a background in economics and only 40% have communications backgrounds. Included in the 70%. With economics, backgrounds are Dan. Schulman hands Vesper, Clarence, Otis. Laxman are semen and Roxanne Austin. Yeah, just unfortunate overlap of skills. And then if we look at Just Pure Performance, just who underperforms the worst performer is Vittorio colao, the second worst is laxman narrow semen and Clarence. Otis is actually the most expensive. He calls Verizon is a new ratio, I'm coming. Oh, I like this. I like this. I looked at for every point, zero, zero one of batting average. You get how much did it cost you in terms of paying that director realized? Pay Clarence Otis cost $508 per zero, zero one of TSR and he underperformed on TSR So you're you're overpaying for underperformance so wrapping it up. Yeah, there is a case, there are so many easy Labs here. There's a case to be made that you could vote most of the sport out almost the entire board, right? But your layouts. Are you vote? No on Clarence Otis. Vote. No, on Roxanne Austin. She never worries. She needs a break. She Could break. She'll be fine, vote. No, on Dan Shulman and laxman narcy. What about hands? And then your alternate vote. No is Hans Vesper. I gotta tell you hands as the chair and the CEO. It's too much speak. What did ISS call that? Oh yeah, they they really don't like it now, they have they already said, it's a disconnect from shareholders, right? So at a board like this, you know, Verizon will be fine with a board overseeing management where the management is not controlled the agendas. So I say vote out hands too. That's my my vote and look when you do this vote, I know. It feels icky to vote out five members on 11 Vogt. No, on five members on 11% boards, you are making slots for five new people. To change the board culture from one that is over busy. Overtired, insular and underperforming to one that is future looking future forward, better knowledge. Type's not to mention that we have a backlog in background in economics, which is not, you know, a few is fine but maybe not appropriate for a Verizon communications. And, and top this off with the fact that like, your ability to engage with these companies and do shareholder proposals in this Administration. With this SEC, you have data to back up voting no on these directors. This isn't a personal it isn't about. Like, you know, this is a strictly data-driven approach to saying, well, you know what, we are limited in a lot of ways and what we can do, but we can look at the data and we can vote. No, on some directors, anything else, Matt? That's it. That's the proxy countdown for the week of May 12th, 2025, join us, next week when we jump back into the alternative democracy pool, Forever on the lookout for shareholders Shenanigans Dopey directors scandalous, CEO, pay ratios and Wayward Band-Aids.