Transcript
This is proxy countdown. Welcome to the Big Show for the week of February 24th. 2025 alongside my tag team partner. Matt mascardi, I'm Damien rolas on today's countdown. Quiet anti Dei maneuvering on public company boards. Zimmer Biomat understands its own governance policies. An apathetic and Confused proxy cage match at Matthews International. Ongoing antidepression, you didn't know you needed. Start with our top stories from our trade wire. Let's start with the secret anti Dei agenda. Matt that's going on at several public company boards. First of all Meg cropton is stepping down at hce, HCA Healthcare meaning the board will have only two women with a total of 3% influence all. So Suzanne nimox will be leaving the board of ventev. The oventus board is now down to only two women with the total of 12 percent influence. And after two decades of board service, with only 3% of influence Diana Cantor is out at Domino's Pizza, which means The Dominoes board is also down to only two women with a total of 8 percent influence and I'm sure Matt that women don't know much about Healthcare or pizza anyway so maybe it doesn't even matter. Oh, phew also despite her background in Arrow, nautical engineering and board. 10 year of only two years. Sabrina Susan is stepping down from the Boeing Company board. Wow, that one's a big deal. Like it's not often that, you know, you know, a name and can pay attention to the 9000 active directors. But Sabrina Susan was the, the arguably, the only one on the board with actual Aeronautical, Engineering experience at Boeing a company, which blessed. We remind you basically does bad engineering. Now, everything falls off the plane, so that's a big deal. And lastly, an honor of our fake meritocracy in a very real anti business. Climate American Financial Group is expanding, its sausage party to 112 women as Craig Lindner, Jr. And David Thompson Jr, are added to the board In true meritocratic, bulshit the press release states that there are no arrangements or understandings between Mr. Linder or Mr. Thompson, and any other person pursuant to, which they were elected as directors of the company, but but it fails to mention anywhere in the press release map. That Craig Jr. Is the son of the co-ceo and then nephew of the other co-ceo. There we go, that's the meritocracy and action. Goldman Sachs, moving on, Goldman Sachs added CEO John. Waldron to its board of directors a month after he was given a retention bonus. A massive retention bonus. Some say, cementing his position as a potential successor to djd, Saul, CEO, David Solomon. And money news. Media platforms, approved an increase in the Target bonus percentage for all of its named executive officers accept Zach from 75% to 200% of base salary. I don't really know where that's coming from and the new president of product and Technology of workday. His name is Gerrit. Kazmaier is being welcomed with a bag full of 1 million dollars in cash and 30 million dollars in equities. So that's getting a job as a Neo is that's that's the easy quick money these days man. Where do I get that bag at a publicly traded company? And lastly, in smart free flow. Approved moves director, Kelvin Westbrook is stepping down at T-Mobile us. He is the lowest performing director overall at 393 and has served in the board for over a decade, but has only 3% influence, Builders fort First Source has remedy to sad situation by appointing Cheryl anoya. And Maria renz to their board. That means that Corey Jacobs boydston is no longer. The only woman in the Builders First Source boardroom Uh, due to the company's mandatory director retirement policy board chair. Christopher Begley is stepping down at Zimmer Biomat Holdings. So there you go. Matt that's a company unlike Apple that knows its own policies. And finally a milestone at Edison International with the appointment of director Jennifer granholm. The board has reached full gender parity. Sorry. Are we even allowed to care about such things in 2025? I can't say. I don't even know how to celebrate that anymore. Those are all the top stories. Let's move on to our proxy cage match. There was a big proxy contest over at Matthew's International. I'm calling this a apathetic group of investors. The three company nominees were all passed with the bit over 50% saying, yes, and the three Berrington Capital nominees all failed with a bit under 50%. I don't know that investors knew what to do over there. Matthew's International. Wow, that's very strange. You do you rarely see it that close? Especially, I believe it was Matthews, were both ISS and glass, Lewis agreed, that barrington's nominees were there, that was their recommendation. So everyone's confused about who to listen to about, what? Well, remember on this show, we, I took a deep. We took a deeper look at the bearing in nominees, and we couldn't really understand what their use value was for the Matthews International board. So maybe, maybe there were millions of shareholders listening to our show That makes sense. We were the Tipping Point. Let's move over to our vote results table. Here are the highlights from last week. The two big meetings, clearly were apple, and dear. Most shareholders were happy with directors apple and dear to be on us. Sam paid basically the same about 10%, no at both companies, but the big story out of both of them were all the the political theater going on with shareholder proposals. both companies, Matt had, I think four shareholder proposals up for a vote and there's there's nothing really interesting report here. Shareholders are routinely voting against anything that comes out of the national legal and policy Center. All the anti Dei stuff. Everything that comes out of the national Center for Public Policy research, and anything out of Boyer research, the one real winner here was John Chevon, who had a civil rights audit a basically, which is parading what we've been saying on all of our shows, which is Prove it, prove, prove that there's a reason to get rid of Dei and he actually got a 29%. Yes, vote, a deer, which is actually a considerably high for any shareholder proposal. Let alone one for a civil rights audit. I don't know if there's anything else you want to weigh in here about the apple and deer votes. Well, so there, there are things that you could weigh in on mostly. None of this is that surprising. The surprising one to me is really the report on ethical AI data acquisition and usage by the national legal and policy Center. So often I I think there's a proponent sort of bent, where the investors are actually citing with proponents more often than not. John Evan has been around a very long time and done a lot of sort of governance work around. Majority voting around, you know, traditional governance, issues, poison pills and all sorts of issues over the last two decades. He's been filing Cheryl to proposals. He's a very known entity so it's not surprising to me that when you write a proposal he's likely to get more triggering yeses from investors who know who he is, it sort of trust his instincts on these proposals but There wasn't 11%, yes, on a national legal and policy Center report and we actually agreed. Yeah, we did with the request on that report. So either that 11% is a bump because of us, right? It is, it is or or there's a lot of agreement around that as an issue. However, I'm curious what happens with national legal and policy Center. If they become if they more routinely put in sort of thoughtful, shareholder proposals and mask their their other proposals like seizing Dei, you know, and other places whether or not they sort of are trying to trick the market into thinking, they are a trusted proponent and then can sneak in dayferts that I'm actually curious because it was very not typical the way they did that, that full proposal. It was not Their standard sort of naked anti Dei or naked anti-trans or break. You know, whatever the case may be, it was a normal sort of thoughtful proposals. So I'm curious about that worth watching to be clear though. The John shoved in vote happened at Deer. That's where he got 29, right? Correct. And the vote you're talking about happened to Apple and yeah we agree that all the Boyer research Proposal another entity, we're not big fans of also got about 10% support which and why is notable Matt? You pointed it out is because routinely anything that boy or research National legal and policy and all of the the political theater wonks, everything they put up routinely hits about one or two percent if they're lucky. But this boy a research proposal also got about 10% and that was a One that we also thought was perfectly fine and report on costs and benefits of child sex, abuse material, identifying software and user privacy. So you're right. Like those are the first times that they've kind of left the arena of just straight hate straight anti-black and anti-woman anti-trans, whatever, anti you want to talk about. So, yeah, those are the the big vote that happened last week. So let's move over to the big vote, picks for the week. There are. We're now getting a bit more into the proxy season. There are there. Several companies with market caps? Well, above a billion dollars that have annual meetings next week. So Matt, I don't know where you'd like to start on this one. I want to start with you on nordson. So the companies we looked at this week were, I looked at nordson and Applied Materials primarily and a couple of trans dime, directors as well. But I actually took a bit of a different Tech with Applied Materials. So let's come back to them towards the end. Why don't you start on nordson and tell us what you have. So I looked at first, I what I've been doing all proxy season is I'm looking at the board and from a certain perspective, I'm almost and which I will repeat here. And I'm also looking as for sale on pay, I'm looking very squirrely at the CEO, pay ratio, and I'm ashamed to say this out loud, Matt. But at nordson. The CEO pay ratio was only 119 to 1 with Wow. Which in America seems low. I mean, I still think 100 anytime you get above the 100 bar, it's just obscene. But as we were, We've reported over and over and over. 100 19 to one is actually pretty sane, so that's what's going on at Norton on the board. Now the board's, a different situation, So according to the day at free flow, analytics.com. This board actually performs really well. Overall setting 758 And maybe this is part of the reason, the gender gap also falls into an acceptable range. It's only minus 6%, which is, I said, if it was above minus 10%, it would be a problem. So what's the best way to handle board refreshment here? Because every board I look at Matt, my perspective is, every year is an opportunity for board refreshment. There's always someone who is doesn't have expertise, it's been there too. Long is doing something and we could we could find someone that increases diversity on the board. Not just from a gender perspective, from a knowledge perspective, from all kinds of perspectives, they're they're ways to increase their diversity. So at nordson, this one's easy. There's a long tenure, directer who is served for over a decade and still has only just four percent of influence. And Matt, we have both talked about how if you've been on a board for over a decade and have absolutely no influence. And what in, what are shareholders need even need you for. He all so happens to have the lowest batting average by a law. Actually for earning coming in at 4:34, which is not a good figure. And his name is Frank Jenner. So that's my target for Norton Frank Jenner. All right, so I actually largely concur with everything that you had this week. Is it rare for me? Because there are multiple boards that are up for, you know, and sort of the large cap category. I'm 100% vote for with the caveat that the only places to sort of focus on a vote against would be a director who has more than 10 years, 10 years and simply because I'm principal and this is a little bit of a blunt, you know, instrument. But I'm principal, you're no longer independent after 10 years. I mean, you could argue that, you're not independent after five years considering like, I, you know, we've known our neighbor's for six years and you know, I I feel like I'm not independent of them. So but in the UK that actually is a, an actual 10 years is the amount where that you're not allowed to call yourself independent anymore, But nordson I think I strict performance basis, this would be one of the rare cases where you know, according to the metrics. These are Hall of Fame directors, almost entirely across the board and you could argue, this is a strong performing board, keep him in place, keep them in place. Okay what, what company want to hit next? Let's do trans dime next and I want to do trans dime because we differ pretty strongly here. So why don't you hit trans Diamond? Then we'll wrap up on applied material. I don't want to say about trans dime. First of all, the CEO pay ratio is right at that figure. That is an automatic know for me. Basically, the idea is that if your CEO is making the median worker, pay the first day of the year, you vote. No. And the ratio here is 343 to 1. So that's an easy know for me. Now we have a now, I'm looking at the board so we got a lot of problems on this board from my perspective. First of all, the gender gap is high, it's minus 16%, so I'm already looking to remedy that situation. And so we're I start is this, this three-headed, this three three prong power of manhood, which is the CEO Kevin Stein. He has 13% of influence. We have Walter Howley who was a co-founder, a former CEO. He's been chair for over two decades. He has 39% influence and we have a leading independent director who is served for 15 years. That's Robert Small 5% influence. So again, so we have we have that and we have a very high gender gap. So he's here, the remedies and I'm going to do something. I never really do here Matt, which I'm actually going to take the companies own skills Matrix, seriously. So oh, so that's so, the trans dime board, that the company actually has a skills Matrix where they, actually, they actually rate the directors for the skills. It's not just a check, they actually make a kind of a quantifiable guests about their skills assessment, whether it's their expert, they're proficient or they're merely. Competent, which they call adequate. And, and I, so I I assigned Point values to each of those and I in in looking at just at Robert Small He comes in at a the boards lowest at 5.75 points, which is maybe why he has so little influence on this board. And when you compare that to Walter Hawley who's a former CEO, and co-founder and chair. He has eight points of skills. And in fact, one of the two, one of the two women, Michelle Santana. She also has eight points so that alone I would get rid of Robert small, but when you combine that the fact that he's a lead independent or has been there for 15 years, you got to get rid of him. He's a so. So you get rid of Robert Small that frees up 5% of influence and then I'll say this for all boards. One CEO is enough. Investors you choose. Do you want the former CEO around? Maybe even try to get to the boomerang back as a CEO? Or do you want the new CEO around? Make a choice for me, it's easy. Walter Hawley has been around for long enough. It's Time to Say Goodbye. And you know what, he's super busy anyway so he'll be fine according to the proxy statement. Here are some of his other board appointments. First of all, he sits on publicly traded committee board perimeter Solutions where he's actually co-chair and he has the most influence with 17%. So he's actually has the most influence on two publicly traded boards and you know to add there's The Coincidence of course that the current CEO of trans dime, all the same board perimeter Solutions. So that's a fun little boys club there. Here, the other boards that Holly is sitting on the Cleveland Clinic. The Cristo Rey network, The Drexel education fund. He's the chair of the Holy Foundation. He sits on the board of the Rock and Roll Hall of Fame. Drexel University in Saint Joseph prep school. So there you go. He's already busy. Hit the keys. Got a lot. Yeah, he'll be fine. So there so that that I made it easy for you. You get rid of just two directors how Holly and small you freed up. 44% of the influence, this takes care of the gender gap, you appoint two women with industry experience. You make one of them, the chair and this Board needs it, by the way because there's not a lot of Industry experience in the sport from what I can tell. So that's it. That's my problem. Yeah, go ahead contribution problem. I think you're actually like you're analysis is better in as much as you've gotten deeper than. I think I'm targeting certain things though. I'm I'm really looking at that trying to remedy a gender gap. That's that's my main. Prerogative here. So, I looked at every single director up for a vote and in this coming week. And I basically filtered by, I want anyone who's been on multiple boards in the last seven years and who bats greater than 666 and TSR, and I chose that number because it's basically two thirds, you're better than two thirds of the active directors, and you're up for a vote and you've got multiple board experience, and you want to know who I found. Four directors on trans dime. Including Nick, Walter Howley, David Barr Jorge valladares and Michael Graff, okay. And the reason why Halle is there Howley, is the founder of trans dime. You see, so he's been living there for the last, you know, two decades or however, long he has in the last run. I know you have him at, you know, just under 40% of influence but in the last run we did, he actually has 43% gone offline using old days. He's got up because someone else has come off graph came off of a committee so he and he recouped some of that influence. I know that how Lee is one of the more connected members of the board. I know that he used to be in executive there. I know that he is the founder, and I know that he has a tremendous amount of influence. He's all. So one of the top performers on the board and if you're looking strictly at performance, which I'm not How these earnings batting average is 952 is TSR batting, average is 671. He's one of the best on the board. In fact, the whole board and this was where I landed where I said, you know, multiple boards, this week are in a great spot. This whole board is an outperforming board. Yes, true. So I you know, I think, you know, the yellow flag here would be to have a lead independent director. That's been there for 13 years or 15 years rather know influence. That is problematic but the reason why no one has any influences because the founders still lives in the foreign whenever CEO and founder is the chair. And if you're the executive chair of a company, you're the ex founder of the current, the founder of the company and the ex CEO of the company, you're, you're going to hold more of the influence. You're going to see the female power Gap. The gender power Gap is going to exist as a result of that, but if you're voting strictly on performance, there's reason to say this thing. Still working, let it keep working. Yeah, what, that would be my argument? What I love about the data a free flow analytics.com. Is that you you? There are just so many different ways of parsing out and investment strategy. I mean right because clearly you're looking at performance. I'm looking at closing, gender influence gaps. There are just there. There's really like a staggering amount of combinations that you come up with. There's no one remedy. So I'm kind of glad that we we disagree on occasion because again there's There's no the data itself does not purport a certain slant or, right or certain investment strategy. There's just there's a myriad ways of letting it work for you, so that's all I have. Matt, do you have anything else for the big boats? I have one more and I have. I so I did a unique take on Applied Materials. We know the upcoming tariffs are coming from the Trump Administration. They're likely to reinstate tariffs and Canada and Mexico, and they're increasing the tariffs and China. I actually wanted to take this as an opportunity to take something in the real world that's happening and say, how do I apply it to a board? So I went looking for tariff winners and I didn't narrow this down to just the companies that were up for vote this week. I actually looked at the US Global set of directors. And what I said was, I want to find companies where they, they have direct exposure to Tariffs from the prior Trump Administration Administration. I want to ID directors, who survived Trump, to 2018, 2019, tariffs, and covid. So these are directors who have been sitting on boards for nine plus years. There are almost 8,000 of them. They come from the industrial manufacturing or electric components sectors that there's 1100 of those. They are not insiders or Executives or family members. These are not dual class firms. These are not directors who kept sitting there and survived because they can control sitting there. There are 780 of those. And then I wanted to find the directors. Who outperformed on TSR and Ibotta over those years greater than 500 on those years 1988 of those. It turned out when I did that filter that Global filter. Three of the directors were from Applied Materials, that was just total coincidence, Applied Materials, fit, you know that next week March 6th. 86% of Applied Materials Revenue comes from outside of the US 31% and the first quarter Revenue was from China. So and they have Canadian subsidiary. So the tariffs are going to directly affect Applied Materials but here's why I wanted to do this as a process. Apply materials have directors who have been there before they've already seen this. In fact, the three directors that that I targeted, Andy Carson, Thomas Iannotti, and art Degas, they have a combined 37% influence on the Applied Materials board which is means nearly more than a third of this board has lived through the tariffs on China. They've lived through tariffs before they know the drill and the rest of the board. Actually is strong all the way around. They are above average performers all the way through, and they have existing directors who have seen the tariffs, their tariffs survivors. So, I actually use this not as an opportunity to take, The real world, problem of tariffs are coming and say, who is strategically positioned to deal with them and Applied Materials. Not only do they have a board full of high-performing members, but they have three members and 37% of the influence on the board who have lived through this, all ready, and survived it, and come out of the other side and strong position, my recommendation is a full four book and for the whole board and maybe the only person doing this kind of work that can actually have a reason why they're supporting certain directors. Yeah, when you write down your reason why you support them, you can actually say we're supporting these directors specifically, because they have experience in the sector. They have experience going through tariffs in the Trump Administration prior, and they're strong performers. It's a very it's a simple analysis and one that's possible to do. I love it. That's the show. Anything else before we wrap up. No God, that's the proxy countdown for the week of February. 24th 2025, join us next week, when we jump back into the alternative democracy pool Forever on the lookout for shareholder, Shenanigan's Dopey directors, and scandalous, CEO pay ratio shows.