Transcript
This is proxy countdown. Welcome to the Big Show for the week of May 13. 2024 alongside my tag team partner, Matt miscarry. I'm Damien rawlas on today's countdown, a new director at Exxon, that shareholders, cannot vote on Shareholders at Tesla are being threatened to support its CEO exons. Thoughts on shareholder democracy. A non-sugar, sweetener shareholder proposal at Pepsi and a non-human primate proposal at Charles River, Laboratories and on the big boat. We look at the dirty three Chevron Exxon. To get to our trade wire at wesc Energy Group. Gale klappa, has transitioned from executive chair to non-executive chair, according to the filing. In light of the company's performance during Mr. Clapis tenure as executive chair and is significant contribution to that performance. The compensation committee approved. The acceleration of the vesting of unvested shares from Mr. Klappa. So this may be the official green light to attach all company performance to board to the board members positive. Yeah, I like that. Also, Mr. Clapham will be entitled to an annual retainer fee of 120,000 dollars and Equity value to 16000 dollars on top of that, according to the company. In recognition of his Service, as non-executive chair in the additional duties that entails the committee determined Mr. Chlapa, will receive an additional annual retainer fee of 187,500. He was getting enough, I like the extra 500 there too. Yeah, shareholders at wiess. Energy Group, your board is making stuff up as they go along, mental note. As part of Abby's leadership transition, where Robert Michael will become the new CEO and former CEO of Richard. Gonzales will become executive chair. The company announced that the former CEO a new executive chairs base salary will be 1.5 million and that he will continue to be to participate in the company's bonus plan. So to be clear the chair of the group tasked to provide oversight of Abby management will be the second highest paid employee at the company, making even more than the chief operating officer. That sounds. Like a accountability in action. After exxonmobil's merger were worth Pioneer, Natural Resources. Mariah Dr. Was added to the board, but according to the violin, Ms, Dreyfus will not be included with the company's nominees for election by shareholders at the company's annual meeting in May, but will be reappointed by the board immediately thereafter full full term. I never seen that in my entire life. Look, that's brilliant. If you don't want anyone to weigh in on something, that's why I don't know why. They just fire everybody on the board, the day before the AGM and reappoint them the day after. And lastly, Aspen technology, board chair, Jill Smith resigned last week, and Rose by Robert wheel and Junior. This means that there is currently only one woman on the board of Aspen technology. That's Karen Gold's with two percent. Influence, two, wow, Let's go to our proxy cage matches. We don't have traditional Proxy cage matches are poured on this week, but there's two companies I wanted to highlight first that Tesla which never buys ads is now buying ads. To promote Elon musk's record. 52 billion dollar pay deal. Before the companies, annual meeting multiple filings, refer to an 1100 percent. Total shareholder return since elon's award was granted March 2018, but the footnote unfortunately cuts off the math, at the end of 2023, when the share price was 248 dollars. And not at today's $174, that's convenient and how about this actual file into shareholders that post a portion of a recent earnings call? I I'm sorry, Matt, I had to do this, I have to read this because this is the state of investors ship and board oversight at Tesla, this is an actual filing with the SEC. I'll try to do this quickly. The question to Elon was the thesis hinges completely on AI the future of AI full self-driving, neutral, net training, all these things and that contacts, Elon you've spoken about your desire to obtain 25% voting control the company. Uh, so here's here's essentially the answer by Elon Musk referring to. How is he gonna? How is he gonna manage to attain this 25% of ownership? Here's what Elon said, verbatim. Well, I think no matter what Tesla, you know, even if I got kidnapped by aliens tomorrow, Tesla will solve autonomy. Maybe a little slower, but it would solve autonomy for vehicles. At least, I don't know if it would win on with respect to Optimist or with respect to future products. But it would but there's enough momentum for Tesla to solve all autonomy. Even if I Disappeared for vehicles. Now, there's a whole range of things we can do in the future on that. I'd be more reticent with respect to Optimist. You know, if we have a super sentient humanoid, robot that can follow you indoors and that you can escape, you know, we're talking Terminator level risk, then I'd be uncomfortable with, you know, if there's not some meaningful level of influence over, how that is deployed. He also says and if there's you know, shareholders have an opportunity to ratify a real ratify, the compensation. So he might he's basically saying wait a minute. If he doesn't get increased influence at Tesla, then it's possible that the robots. They're building, may start falling around and shooting you, like, Terminator that this is the logic. This is the reason of going on at Tesla, I want 25% control of the company. So that the robots that we make don't kill you, is that Veil threat to shareholders if I've ever seen one. That's a filter to humanity, forget, shareholders crazy. And please, I don't, we're not talking about Tesla this week, but vote against this pain, vote against Kimball musk. Just do your, do your job shareholders. And finally Exxon is fighting back against class, Lewis, the company filed, its letter to Glass Lewis to respond to the proxy, advisors decision to vote against Exxon lead director. Joseph hooley in the letter X on asked glass Lewis to recuse itself from all opinion. On Exxon due, to conflicts of interest involving other shareholder groups which is essentially gloss. Lewis's job. One of the letter he takes takeaways, is this quote from Exxon? For shareholder democracy to be real. A no needs to mean no. So Matt I think Exxon may have unwittingly opened the door for all proposals at American companies to become fully binding. I love. No means no and a Yes means, yes, I like that. I like that. Except that that does very much mean that no one votes against management. So we know that the votes actually look like. So that would be stifling but it would be nice. If things weren't binding, when they did, when they did pass or whatever, stay tuned. In today's show, we are covering Chevron Exxon and shell. Before we do that, let's move over to our vote results table. AGM season is in full swing. So we took last week off, Matt, which means I looked at 90 and you will meetings from May 3rd to the May 15th. Now, I only looked at the largest cap companies in America but it still had to go through 90 filings. Yes. I opened up all 90 file filings of those. I took notes and only one third of meeting results. Which means, essentially that the other 60 companies nothing is happening. Absolutely. Nothing shareholders are just blanket, supporting everything they see, there's no due diligence, there's no glass Lewis, you know, trying to shift, there's no performance metrics because it's not possible that of, like, 2/3 of companies outperform. It's actually, it doesn't seem possible some of these meetings include well known companies like Occidental Petroleum MGM. Resorts General Electric Philip Morris at Exelon. In fact, average directors support was 99% 99%. All right. So, the vast majority of directors received well over 90% support only nine directors out of roughly 900 received more than 20% votes withheld. That includes David Trujillo at Uber Technologies who received 44% against. But it's only because he failed attendance. This seems to be the one thing that shareholders recognizes a problem. The only thing is being below the 75. This arbitrary 75% threshold. That is included, within proxy statement. That's it. You have a cold. One day, doesn't show up. Vote them off. And that's that's the policy doesn't matter. If he's the worst performer on the board. Nothing Else Matters. Other directors, receiving over 20% of again, include Barry Diller at Coke. Andrew lavaris, IBM. Michelin chow and Lewis Kramer at Las Vegas Sands. But Matt, the real winner is a man named John zillmer. He sits on the boards of CSX and Ecolab both companies, he received 25% votes against his, so if you do the math and combining them, I think he should just leave There was wide support for pay practices as well despite growing media coverage over excessively High CEO to worker pay ratios and massive pay packages. So out of the 90 companies, I only counted three three companies that showed considerable descent only three, Las Vegas, Sands 35% voted, no fortune Brands, Innovations, 32% against and at axon Enterprise Say on pay barely passed with 50.4% of the vote. Despite this Pay committee. Chair hottie partovi, 94%. Yes, it doesn't make any sense. You know, that chair. Does the pay And other management, proposals shareholders approved, an amendment Pulte groups articles, incorporation to eliminate the 69.3%, supermajority voting requirements about that. They had a 69.3%, super majority voting requirement. I don't understand. I loved one point, three percent, a proposal to amend articles to eliminate supermajority voting. Provisions did not receive the required vote of 80% about standing shares at Eli. Lilly this is a crazy one. I hate reporting on this one so they need 80% of outstanding shares. despite the fact that 86% of the voters voted to amend, it didn't pass because this owner was rule at Eli Lilly, and to Ecolab an auditor, Pricewater whose house Coopers actually received 12% votes against their ratification. I he don't ever really see that to you. That you don't see that that much, but I will say this investors. There's a lesson here when you agree with thing like supermajority, voting Provisions, like dual class shares. It is really hard, if not impossible to repeal them right? Like even when you want to Yeah, moving over to the world of shareholder proposals. There's ongoing success for only one proposals this year. That's simple majority voting passing, at both idexx, Laboratories and Striker nearly passing Abbey with 49% saying, yes. So I have the right thing. There's only one real outlier here which was Molina. Healthcare were only 9% support the proposals. I don't, I don't understand why it's passing everywhere. But I don't, I don't understand the shareholders up. Maybe no one cares about Molina, Healthcare Beyond Simple majority voting near shareholder proposal. Mrs. Include a report on the effectiveness of Dei efforts, expeditors International of Washington. That was from as you sow that received 35% support and a proposal to call a special meeting at Steel. Dynamics fell just short at 41% Matt. I wanted to point out my three favorite sounding Shirley proposals over this term, they all failed at Kraft. Heinz a report on group house pork. Oh interesting, group housed pork. That is that a fancy way of saying? Pigs. Living in the same cage, the same house. Yeah. Same, it's yeah, it's okay crates. I like that group House book at Pepsi, a third party assessment on non-sugar. Sweetener. Risks fails non-sugar, sweetener risks. What about the risks of all of Pepsi's products? They're all carry. Inherent risks. Everything eating all of it? Yeah. And finally, at Charles River Laboratories a report on non-human primate imported by the company fails, non-human primates imported. But where the imported from like German France? I don't want to unpack there because why specify non-human was there. Some confusion about the human primates that they were importing. Those ones are off the table. Yeah and finally in my you are all governance Heroes to me category. These are my some of my favorite proposals. Over the last 10 days. A proposal to reduce the voting power of UPS, class A stock from 10 votes per share to one vote per share it failed, but it did receive 36% yes, votes I applied, you John chevin. A United Rentals shareholders. Wanted directors to be elected by majority vote, right? Enough said, but only 15% of shareholders went along with that. Why? I don't 15% at Ford Motor Company, another one from John chevin, he he put up a one vote, one share proposal. Despite the Ford families, 40% voting power. This one received 30% support. That's incredible. That is pretty good. A proposal requesting a railroad Safety Committee at CSX that seems like a no-brainer only 8% said, yes, only 8% want that that's from the AFL CIO. And finally, my favorite at Gilead Sciences, a shareholder proposal requesting that the board included one member from the company's non-management. Employees received only 6% support, nobody likes employee. What is the harm? What is the harm? You already have the CEO on every board? You can't work right there Damien. That's why you have HR to talk to them. So we don't have to I applaud you shareholders at Gilead Sciences for that one. I love that one. That's it. That's a lot, Matt. I know you post these on LinkedIn every week, so if you want to know the details, To any of this, Matt will put that in that post. So now, let's move over to the big boat. Again, we're doing something different this week because there's just an onslaught. So companies to cover. So, what we thought we'd do is again, we're only focusing on the largest cap companies in our, in terms of our data, we call those league, three League four companies, there's only about roughly what 600 in the world is that right? Or is it in the US? It's about 550 roughly, the world 500,000. So Matt we just decided this week because we have three meetings coming up at Big oil companies at Chevron on May 31st, that's Exxon on May 29th. And then we have Shell Shell is not an American company but we thought we'd cover that's coming up this weekend May 21st. So Matt how can I hand it over to you? All right, there's a lot here and I'm gonna introduce some new Concepts but stick with me. All right first we need to agree on some rules before we cover it oil and gas because I looked at the entire sector I didn't just look at the big three. I'm gonna give recommendations on the big three, but I looked at the entire sector. The rules. We need to do agree on our number one, directors are guardrails. They're not Alpha generation, its asset protection, you are picking them for that. Number two, directors are hired by the investors. They're chosen by investors for long-term asset protection. So their guard rails over the long term and number three, and this is the big one for oiling gas. Climate change is the most fundamental long-term risk facing this and arguably any sector right by the sector of course. So you got it. If you don't think that those rules, apply that climate change is not real. You don't care about directors for the long term. They're just sitting there for a little while directors, shouldn't be Guardrails. They don't even need to be there. If you disagree with those three rules and none of this will really sensory you might as well just stop right now. Congratulations. Why are you even listening to us? Anyway, that's what you believe. So, with that, is the backdrop, right? The current Revenue model for this sector. As we all know, is they just sell energy conversion, they suck something out of the ground of some kind, usually a liquid, or a solid, and then they transform it into fire, a physical product and plastic or and and the byproduct of which is pollution and of effectively, climate change at this point, we can all roughly agree that this what they do. We know that direct sales of oil and gas is like 4% of the global economy ish in the second order. Economy is magnitudes larger like plastic and glues and paints and whatever you're going to other things that they make the investor economy. So there is this interesting report by Deloitte that surveyed investors and found that 75% of investors, institutional investors expect a three plus percent dividend payout from the sector. When you think about that, that means the directors that are investors are putting their, the expectation on them is that they approve dividends to get dividends. You must have constant and consistent cash flow. This becomes important. When you're talking about a sector that needs to Pivot from being a legacy sector, sucking Dino juice out of the ground and burning it to effectively a startup model, it needs to transition its entire business model over the next decade to doing other things, with whatever it pulls out of the ground. It doesn't matter if it keeps pulling it, out of the ground, but it does have to do other things with it. It has to you, can do other things. I used to seeing that this allegiance to Dividend payouts might get in the way of innovation exactly. What if you are holding to, if any of these companies were to say we're going to cut the dividend, we're going to spend that on basically R&D to Pivot our way out there, there's likely an investor Revolt giving that two thirds are three quarters of investors. Expect them to pay them to cash flows. That is a lot of pressure on management to not pivot to keep what you're doing to pay that dividend. It's interesting. You say that because Exxon especially Are these freeze companies these three companies is is going on going out of its way to be anti shareholder. This especially this, this proxy season. No suing. We've reported on this several times, suing Arjuna Capital fall this, right? Large sections of the proxy dedicated to complaining about Cheryl proposals and, and activists, they're sending out letters to Glass Lewis, but their core the core reasoning. Here, we we both watched a 45 minute interview with CEO Darren Woods talking about this, this week. The core part of their argument is that we can't do anything because it's against the interests of shareholders shareholders. Don't want it. This is all over, right? Shoulder. Yes. And and woods himself is Exxon in particular. Is differentiating between shareholders that they agree with effectively and shareholders like the real shareholders, right, which he actually says and then shareholders who are hijacking, Unquote, the process and abusing this abusing the system, right? Effectively, there are shareholders who recognize the transition is coming, and need more, and more information about how you are planning to deal with this transition. Not in vague terms, but in specific terms because this, your job is to be a long-lived asset for us. And then there's these other shareholders that are asking for 3%, annual dividends where the transition is much harder to actually manage and woods himself is sort of differentiating between them, so that becomes important. All right, let's talk demographics who's in the sector, this is where it becomes interesting to us. The entire integrated oil and gas. Sub industry has 289. Active directors is about 24 companies. There are 186, active directors, that aren't Executives at the company, family members, government representation and employees because true independent through independent agents of oversight. So, we are talking about 186 out of 289 directors, where if you are an investor that is your target cohort? That is, who you elect that like with your direct vote? No questions asked, that's that's for you. These are relatively young people, they're in their early 60s relative to other directors, who are in the mid 60s on average, 35% of them are female. They're actually higher than the global average percentage for female directorship. They're, they're not even long tenure directors. 10% of them have been on their boards for 10 years or more. So that means 90% are pretty new This is the funny part is three of the longest lived. Tenured directors are on the Chevron board. We'll get to that in a second to say one thing that suck out to me, was that the exam board, the, the longest turn, the longest tenure, director, is Angela braylee. She's only been there since 2016. Yeah. They're very, they're the turnover on these boards is actually pretty strong and partially because this is a very mature sector. They have Smart director rotation, they have highly connected individuals on this on the board, which is like a hidden source of tenure, right? Like if you've all your friends are just cycling through all these different boards, you effectively, get sort of groupthink 10 year versus actual body, 10 year to put it that way. The average of these independent directors is they sit on one point two boards on average, which means they're almost all multi borders and more than more than two in many cases. and when it comes to Performance, 47 of the 186 are unrated, they've just they just joined so you can ignore them entirely which gives us roughly 140 directors, 60 of whom have above average carbon intensity performance and 446 of whom are below average it's a fairly even split when it comes to that TSR is where they stink, the full average sector. The full average for the sector is. 436 batting TSR were 500 is exactly average and only shells Board of the big three bats above average for TSR. So you are getting carbon without returns. In fact, in the last five years, the entire oil and gas, the global oil and gas sector stock return is negative 1.8% for the oh, sorry, that's 10 years the last 10 years. So you're not getting returns for the byproduct of what they're producing at this point. So, the big question here is looking at the demographics of the sector. Are the people who are on the oil and gas boards, the Shepherds the right Shepherds for a new future. Are they? The guardrails for long-term viability of the sector in the face of climate change. Okay, let's start by looking at, we're going to look at this in three ways. Number one influence. Do the investors have an interest. I influential power on these boards such that they can actually change the direction of number two, this is the new part for us knowledge. We did a super deep dive we've used. I'll get into it. But we've we've been able to actually assess the knowledge base of every board and every director on these boards. And we want to know, do the directors actually have the knowledge or skills to Pivot from a legacy asset to a future asset. And number three is performance, do they actually have a track record of outperforming on any of these things? Okay. I'm going to try to move as fast as possible. There's so much here. Let's, you know, let's start with influence. Let's start with influence. All right? At 10 of the 24, integrated oil, and gas companies, the majority of the top influencers are independent directors, meaning about half of the companies that we're looking at, investors have a say in the majority of influence. Yeah, these are, no, this is a secularist, notably not full of dictatorships, it's not. Well, there are State dictatorships, which is different problem. But not management dictatorships relative to say big Tech here in the United States. It's a much, much different ownership group. Exactly. And in fact, the big three, Exxon Chevron and shell are some of the most democratic, 50% of the board of influence is held by the top third of the board. So a full third of the board at takes to get to 50%. These are our top targets the reason why we chose the big three and in part is because they are Democratically elected. They are not state-run orgs. They there's a lot of opportunity to create influence voids. You can take a director and create a vacancy that will be a high influence vacancy. So you can replace them with a knowledge or skill set that you want or top performers. So that's why like those are the companies that we chose Now, let's talk about knowledge, the actual knowledge you want in these boards. So we're rolling this out. This is very Alpha, it's not even quite beta. It's a knowledge map for every single board, 9500 companies in the world knowledge map, a knowledge map, we use the industry exposure. The industry, that a directors worked in where have they actually worked and what are the common skills in that industry? So if you worked in Aerospace, we're not assuming that you're an engineer, but you do have to know like mechanical process of being an aerospace. We actually are using over 30 Bureau of Labor Statistics occupational, databases and mapped the titles of these directors, which is the second part of this titles and roles of these companies, the titles of directors and the titles that are most prevalent in Industries to understand, okay? What are the knowledge sets inside this industry? What's the common knowledge and to be clear? You have to have worked at an aerospace company as An example, you can't just be a director at, exactly. You have to have direct experience. We're not saying directorships. We're saying direct experience and we can look at your titles and your resume and say, what skills are associated with knowledge, is associated with that title. So if you're the chief marketing officer, there's obvious knowledge that you need to have about marketing and sales and Communications things that are, you know, associated with that title. And this isn't us making it up. This is built off of surveys of thousands of companies in the US. So we're using that as our proxy. And then finally education, we actually went through degrees and we said what focused the directors have did they hit on, you know, and and what are the, what are the base knowledge required? So if you got an engineering degree, there's some base level of math and Engineering obviously, like, there's some base knowledge, you have to have when you have those degrees. By doing this, we can find figure out that for, by example, a director who is the CFO at an airplane, manufacturing with a degree in economics, what is the basic knowledge that they're likely to have? They're likely to have some mechanical Knowledge from working in the airplane industry, they were the CFO and they got an economics degree. So we can actually say the likelihood is that they spent all of their time on economics, accounting. Now that type of knowledge less so on engineering production, they're not going to do those things, right? We can do this for every single director and let's do this for the entire industry. Okay. The first thing that we did, we looked at all of the independent directors, the 1806 independent directors and we said okay I actually I think we, I did every single director for the entire industry and I said, what is the best knowledge? The base knowledge is a mechanical knowledge. It's effectively, the they know how to build stuff, the process of building stuff, I can manage the building process. The second highest knowledge set was economics and accounting. But again this that you're saying that will include executive directors, not just, that will include Executives. And the reason why I say that is because the important thing I'm looking for when I'm doing this is what is the gap of knowledge between A non-executive director and Executives. What we found was the the majority of the mechanical skills were actually held by the executives. So Executives know how to build these things. They know how to go out and mine. They know how to pump gas. They know, they know how to the process of doing this but the people on the board do not what that were. Okay, who are providing oversight? Do not have the do not do not in on average necessarily have that skill which means you have this power Gap, right? If you walk into a room and there's only one person or maybe two people who have ever pumped gas before out of the ground. Know that production process, how comfortable are you? Raising your hand and saying are we doing this right? Should we pivot? We need to Pivot to something. Is this? Not the exact same argument that Elon Musk was was making that you, you need me to figure this out, right, right. Essentially, what your Golden to management to figure this out. It's oddly similar to the Disney situation, right? Where where Eiger was. The only one with media experience on the board before they got activists and they brought in other media Executives to the board. This is why I've been making the case over and over and over that modern day American boards are not actually providing oversight. They're not actually representing a diverse set of skills. They're actually there to provide to play defense for the management and really for the CEO. That's right there there to to ensure that the CEO was usually who's off in the chair gets to make decisions, right? Gets to do what they want in the in the short term that they're actually at the company because the 10 year of CEOs, and CFOs is already pretty low. So the board just seems to ensure that they could do whatever they want and those five years and then get out. It's effectively a way of sort of, like, consolidating power with management by right by having, as Short tenured. In fact, the average tenure in this sector is five and a half years where on average in other across Global publicly traded companies seven They actually are on the boards less here. They have less direct experience or knowledge. In what the companies do? They actually tend to have the, the economics and accounting of on the board is almost entirely the investor selected Representatives. So investors are routinely, choosing people who have backgrounds in economics, backgrounds, and finance, they come from investor, there's choosing the cells to sit on the board but you don't innovate by doing that. There is a caveat to that which is at the board itself are nominated. These are uncontested elections, the board of self is our nominating, the directors and investors are invariably saying yes to everybody 96, that's true, right? So, I think what you're suggesting is that it might want to look at the makeup of the board, a little more closely, right? All right, right? Oh, just not just rubber stamp everything, the the board throws in front of you. Which is funny too, because we see unlike in oil and gas where we have this Gap. We see in something like healthcare or biotech, the exact opposite is true. You tend to actually see boards full of high expertise people. You know, I looked at vertex Pharmaceuticals as just because I want to get a baseline. I wanted to get an example and engineering. And technology is the number one knowledge skill on that board. Half of that is from the executives in the other half is from not executive directors but the second Is knowledge base on the board by influence is computers and electronics and it's all the non-executive directors. They are effectively looking at innovation technology as the core skill core competency required to be on a biotech or biopharma firm where in oil and gas. They are not looking at it that way and they are not looking at it like they need to innovate out of this problem. That's why Darren would spends 45 minutes. Talking about carbon capture setting scope to targets that they can meet some general efficiency metrics and not talking about Perhaps, we need to figure out either a new thing to do with the oil that we do pump, or we need to Pivot away from oil entirely as a revenue Source. It's interesting that you mention this because when you combine the very short tenures of American CEOs, and CFOs with the extra short, 10 year of board members, at oil and gas companies suggests that the people the investors are voting in Really only have a short term interest in the company right there. Yes, they're not thinking about Exxon 20 years from now, let alone thinking about the effects that Exxon could have on the world. And I would say though that the 10 years of the CEOs aren't necessarily short because Darren Woods has been at Exxon since 1992. These are lifers who generally has been CEO since he's a complex 16, but he's been at the company since 92. So, to get these jobs, they're not hiring outside of the company. They are keeping, the companies largely intact by maintaining sort of a life. First Status like life first, get the CEO role and the board cycle really, really quickly as mature boards and they're all highly connected. So they're all friends and they have a short-term interest to keep recycling themselves. It is a very bizarre Dynamic, that's a unique to oil and gas. So let's go Company by companies through the big three because I think when you go through, True. I think there's a there's sort of a three-part recommendation, which is this year you need to focus. And this is sector. Why do you want to focus on the independent directors who have high influence, where you can create some influence void? So that you can get rid of some of these duplicative skills in the next two to three years. You really need to focus on the knowledge skills mix and I don't mean like you need to add a climate change expert. I mean, you need to add open-minded Innovative, you know, other sort of like Tech experience onto these boards and you need to break up the highly insular connected boards. You, you're essentially suggesting what companies always say when, when they exercise, when they do layoffs, and restructuring is get rid of the redundancy, that's right. All I'm saying, I can't that apply to the board hire out the redundancies. So if when you look at Chevron, we'll start with chevron. Chevron chevron is obviously owned by Vanguard and BlackRock a, but it's all got a big steak with Berkshire Hathaway. Is a Chevron investor. They own six. Almost seven percent of Chevron. Overall, the performance is just like everyone else, terrible controversies. This is a board that is one of the most connected. This is fits in. I, this is a classic Ron sugar board. If you listen to the show, you know who Ron sugar is? In fact, Ron sugar was on the board of Chevron and his fingerprints are all over it. The companies that like that are represented here include, Lockheed Duke Energy, McDonald's Wells, Fargo, caterpillar Uber Amgen 3M. These are classic American companies with professional directors running. Yeah, you know, I was gonna say for our world, these are some of the most famous directors in our world. Maryland, Houston Jon Huntsman Enrique Hernandez. One to Austin. These are these are Big names. These are all big names. And I would say that ironically, somehow on this board, the Knollwood skills, mix is actually one that you would hope for building construction is the largest knowledge base represented. Mechanical biology those in the next two, what you're missing is engineering and in fact the only one with engineering as a Corinth set is Chevron but it's really A minimal one of their directors, guests Alice Gast. She's a chemical engineer. She who spent the better part of 15 years promoting investment in climate change. She she's a climate change investor but through the lens of biodiesel, right? Like she does fluid dynamics and things like that. You have a Wanda Austin. Who's an academic, she was an aerospace exec, but she is an engineering background. She was an Obama science Council, she has a deep history of innovation, and another, all three women in fact, Cynthia Warner is the last two who's focused on renewable all. So, but came from came from the oil and gas sector the rest of this board outside of those three. And they do not have a tremendous amount of influence is utter cronies. If just to be blunt about it, there are 122 Loops between them and including 42 Loops between current directors. The, this is one of the most Pick your friends and put them on boards that in our database frankly. Well it doesn't surprise me because one of those people you're talking about is Enrique Hernandez. Who we talked about a lot part of it is his involvement on the board of McDonald's. Right? So let's start with the recommendation vote against Rick Hernandez. Enrique Hernandez. Yes, this is actually has been one of the directors, who was consistently received High vote against over the term of his career, you have to ask the question. How does a guy who's background is in home, security systems, whose prior board seats? Even if you looked at him and said, oh, he's been on a lot of professional boards. They include McDonald's where he saw oversaw Easter books Club back for for like, non-disclosure of a relationship. He had Wells Fargo, he was the chair of the board there during the account Scandal. Like it was his responsibility there. He's on the board of a company right now called mace Rich. There are about to default on Half of their properties. This is a guy who jumps from board to board everywhere he's gone. There have been terrible outcomes everywhere unless I forget at his core, this is a guy who's experienced in the business world was because he inherited the company that his father founded. He's a he's a nepo baby in our world I'm not sure how we get you get to seat on Chevron with those qualifications except if you're just there because we know the people and you're you're cool with management. That's not what you want in the board going forward, you can't afford that you don't have time. If it might be three rules, it might be who CEO and chair Michael worth wants. But he wouldn't be in the interest of shareholders and the second one I'm saying, vote against is Wick. Mormon, whose name might be familiar to me more minutes. Okay, wik wik his name, might be familiar to you because he is actually the ex CEO of Norfolk Southern he's the one who had the problem with the safety. All of the safety problems is that happened under his watch. He has 11% influence on this board. He's basically the Godfather of poor safety experience. He is the chair of the competition committee Wick and he's on the nominating committee and he's the oldest member of the board. Do we want the wick Mormon, network of friends leading Chevron into the future? And I will say, I want to point out why this is maybe important is that you know, we're talking about Chevron which pays its CEO 24 million dollars Exxon. I think pays it CEO 36 million dollars but you look at show which is not based in the US somehow they're managing to do it just under 10 million dollars. So you should pay attention to who the chair of the pay committee is, if you care about stuff like that the future votes, I suggest for Chevron of this, it was really hard to choose because they are all so intertwined but Deborah Reid played who was on Boeing and Maryland. Houston are things to our people to look at in the next round of votes. Okay, let's get to Exxon. And again, we're going to put this all up on LinkedIn, right? Yeah. It'll be on our website and I'll link to it on their first of all. The news about Exxon is how they're suing Arjuna Capital. Yes, there's no way around the fact that somehow, the lead independent director, who is the ex CEO of State Street, who is in investor is suing and investor, because they didn't like the shareholder proposal, they put up even when they retracted the shareholder proposal. They are maintaining the lawsuit to send a point. We hate you environmentalists stop it with these hijacking. The shareholder process from the quote unquote real shareholders. That is what is about you talking about Joseph hooley? As you lead directer at Exxon, he's the chair of a nomination committees, the second, most powerful member of the sport. This board also has Larry Kellner on it who you'll remember as the chair of the Boeing board, who's now stepping down? Look, I will say this. We like you said, we watched that 40 minute interview with Darren Woods, the CEO. And Darren Woods is a incredibly smart. Slick operator. Every question he was he he's nailing everything by the end of it. He has you willing to sell your children to his company. Except the question about our June, a capital and suing shareholders where he could barely Veil his anger and disdain of them. He visibly turns a little bit red and starts to shake a little bit. I mean this is but he very clearly. Hates them. He thinks they are ruining the process, they are in the way and it's it's barely veiled in their letter to Glass Lewis that they and their recent filing. And in their actual proxy statement where they go on for a page and a half about how the process get high Got Hijacked and Cheryl to proposals, basically are, you know, environmentalists are using form of company abuse and hijack. Yeah. And let's not forget that he attacks glass. Liu was essentially forcing with shareholders and not with management. That's really the core of their argument is that you're you're partnering and listening to a bunch of shareholder groups, but you're not. But what you should be doing is just voting for management. That's the core of their argument. You, he says you wait on this before already. You said no, no means no, you should now you should just side with us. Here's my recommendations. Yeah. Vote against Huli. J hooley which gloss Lewis also is recommending a vote against Joe, Hulu, right? And and woods does not like that. I don't care the knowledge map for hooley is economic Finance. He's the worst carbon performer, not just on this board but of all the big three and this is not a person who's sitting on carbon heavy boards. I'm talking carbon intensity per dollar per million dollar Revenue carbon released. So this is a normalized basis. He's still the worst performer out of the big three and he's on another board. He's not gonna be homeless. This is not a guy who like needs this board seat but he very clearly is willing to okay, antagonizing other shareholders, despite being a shareholder, that's was his life and let me add before you go on. While I do agree with glass Lewis targeting Joseph hoolie, I the part that I think that I'll go far enough is that Also should be suggesting that shareholders vote against Darren Woods for that is again. Second vote. Okay good, a shareholder vote against Darren. Woods does not remove Darren woods from the company that he served at since 1992. You share those do not have the right to displace management but they but they don't need to have the CEO on the board and they could vote against Aaron Woods here in this case. I also don't think Darren Woods earns himself a position on the board. When, when he's repeatedly saying about misinformation campaigns that Exxon has been running for 30 years, he's saying that was the past, he's on since 1992 that's your past, it's your company. So you can pretend that it didn't happen by saying that's the past. I'm dealing with the future except that you are suing investors. You don't like the investors you don't like and it's your past we're not upset about like the history of some newcomer to Exxon, we had nothing to do with that. This is squarely under your purview, while you've been there. And what Matt's referring to is that in this interview with Fortune Magazine? He does explicitly say I'm not basically, I'm not here to talk about the past. Yes, he doesn't want to talk about uses the music, fashion campaigns. That Exxon has been running for decades and finally vote against Larry Kellner for once. I agree with the national public policy Legal Center, or what you handling, their thinking here is, he's terrible on Boeing. You should vote against him here. I don't think that's wrong. I think, if you're not a good director, you're you made, you're not a good director. We can demonstrate. He's a legacy of overseeing, a family Airline. And what? Because he was the CEO of Continental that he's parlayed into a legacy of a fairly Airline manufacturer onto the board of Exxon, I think that there's Merit to the fact that you shouldn't be failing up. You should Exactly up exactly why I started this, show with the announcement, from wesc Energy Group, which attributing positive performance, their chair, and paying him extra because of that, we can also attribute negative performance to board members as well. So I'll agree with you wesc Energy Group. And again, that's why I started with that report. And finally I want to end on shell before we get into the seventh hour of the show Shell is the clear winner of The Big Three, not least, of which in part because they're based in the UK, which means the rules are already different in and of themselves. But the knowledge base, that first of all, the investor, the non-executive directors on the board engineering and Technology. Knowledge are, there are their core strength. This is the company with a strongest carbon intensity performance as a group. And I'm talking about the directors, not the company itself. So everywhere they go, they're pretty good at it. They have the lowest interconnectivity of the big three and the history of interconnectivity has steadily been shed. They also wrote in their proxy statement or in their annual statement. The board is grateful for the time and contribution of all those stakeholders Who provided feedback. And for the overall indications of support for Shell strategy, they actually are thanking their, their investors, despite having just one plus resolution. And while many of them are management resolutions, they're all so facing shareholder resolutions. I think the only one, I think you vote against this year is and God Behar whose name on butchering, but she has 14% influence. She's the longest tenured on this board. She's overall just a mediocre performer and her knowledge base is heavy and economic and you don't need more than that. She's an accounting and banking background and some exposures. Some less Stellar boards and British tobacco in Atlanta's. She's also the most connected director but this is a much more tepid sort of recommendation here because this is actually a board that seems to be doing largely what it's supposed to be doing. I'm going to stop there if you want more analysis because we have the full analysis on every single oil and gas company in the sector and we have knowledge maps of all of them reach out to us. These these knowledge maps are wonderful. I know you're going to post them online. So we're gonna be talking more about these. This is this is very new to what we cover here. So we're going to be talking more about these on our shows. That's all you have Matt today. That's all I have for today. To shareholder proposals are there's so many of them will have to cover them in a different, like, in retrospective. But, but that's what we've got for today. That's the proxy countdown for the week of May 13th. 2024 join us next week when we jump back into the alternative democracy pool. Forever on the lookout for shareholder sharks floating Band-Aids in Wayward directors.