Transcript
This is proxy countdown. Welcome to the Big Show for the week of March, 25th, 2024 alongside my tag team partner. Matt moscati I'm Damian Robles on today's countdown, a big voluntary board shake-up at Boeing more foolishness from the Disney proxy cage match. Antiquated proxy voting policies at photronics. A very busy Dunkin' door at keysight Technologies and on the big boat, a cruise company so annoying that it's listed in two different countries. Let's go to our trade War, trade wire. Our top stories. Let's start with the big news at Boeing CEO, Dave Calhoun. Has decided himself to step down. At the end of 2024, there are no further details about his role in the board or his severance package. Board chair. Larry Kellner also decided on his own, not to stand for re-election of the company's 2024 meeting. And connection with this decision. Steve Mullen has been tagged to replace Kellner as chair of the board. And third, the board elected Stephanie. Pope, she was EVP and Chief Operating Officer to replace. Stanley deal as CEO of Boeing commercial airplane. That's all we know so far. Edward Edwards, Life Sciences announced that board chair Michael Muslim. Will be stepping down at the company's annual meeting of shareholders. This is important because Musselman muscle Alum, controls 35% of board influence the company expects to appoint director, Nicholas valeriani Who currently has 8% of influence to succeed, Mike as chair of the board. Additionally, Martha Marsh. Has reached the retirement age and we'll step down on the board at the meeting. So, Martin Martha has 13% of influence. So 48% of board influence about the step down at Edwards, life sciences. And finally, App company match group appoints two app, gurus to its board. Laura Jones, Chief marketing officer instacart formally with Uber and Zillow, co-founder and former CEO, Spencer rascoff. So very happy board ads, at match group. Let's get back to let's go over our proxy cage matches. Let's get back to the greatest proxy cage match. Ever the Activist investor fight at Disney at Walt Disney Company. Let's start all three have been filing, like crazy this week. So many filings and never seen. So many filings in my life. Let's start with Nelson, pelts. Pelts was quoted this week in an interview saying, why do I have to have a Marvel? That's all women. Not that I have anything against women. But why do I have to do that? I mean I hear you laughing when you say not that I have anything against women that means you have. That, is that that's what you say. After you said, I've never said, I've never ever ever said that he also said, why can't I have Marvel's that are both referring to the fact that having both men and women and he said and referring to Black Panther one of Walt Disney's, most successful franchise. He said, why do I need an all black cast? Yeah, this guy completely out of it. He also said in a filing, That ISS agrees to restore the magic but they don't really agree. Matt Wright. The ISS is actually only supporting Pelt to the board, not rasulo. So I'm gonna call this false ISS kind of agrees. Nelson. Peltz also said, our nominees will work constructively with the Disney board. This isn't a filing, but we learned this week that Nelson Pelt has withheld votes from Disney CEO, Bob, Iger saying, Earlier that he's not trying to fire Bob Oger and that they only recommended vote against Roman and laga miseno. So, all over the map here, clearly is looking for fights. They also posted this map. I know you'll enjoy this. Which makes me believe that Nelson's to our show. They created their own skills Matrix and posted on a filing. They listed Nelson Peltz as having media and entertainment expertise. I saw that I don't know that. I don't know that there's any proof of that. They also oddly for Nelson, for for they are really pushing to for Disney to move forward, you know, to move forward and do great things. They listed Nelson, pellets and Jay Russell as having no. Technology Innovation and expertise. Not look. I like it seems like the backing of pelts is not actually backing. Pelts as useful for Disney. Everything that says back. Pelts is shake up, Disney. Check up the just shake up. Support the Black Walls, stir the pot, but the fact is, if you vote in any other board member that Disney didn't choose, you sent a message to Disney Board, of course. So so having someone who says a Marvel doesn't need, why does it have to be all the women and why do you need an all black cast? Seems antithetical to actually what you're trying to achieve if you're just trying to achieve a shake-up that is regressive and not regressive in that way, that is bringing back restoring the magic of profits at Disney, which is still a profitable company or going forward and proving streaming at Disney or anything that you're talking about changing Disney. So that it grows faster is not regret. That's not the regressive that we're talking about. We're just shaking it up to say, why can't we just have more white heterosexual men in movies at this point? That's not a shake-up. That's not a shape speculated. We speculated about this phrase, restore the magic. And unpass shows that did it have some reference to go? Because Maga the phrase make America great again. All. So similar, connotations, I think when you're calling out an all black cast and again, one of the top 20 most successful movies in the history of movies. Yeah, of movies 1.3 billion dollars, the history of movies. Then it does suggest the restore. The magic means something a little nefarious. Why point out, one of their most successful and line to anyone who's, who's thought process here is. We need to shake up the board at Disney. There's something wrong. It is not maximizing. His potential shareholder returns. I've been great. I want to shake it up. The answer is not an 80 year old billionaire who has no history, demonstrable history of continual Improvement of companies when he's on the board, that's not shaking it up. Shaking it up is sending a message to Disney board that they cannot choose their friends to put on the board anymore. You could put Jessica shell on the board. You could put anyone from the Blackwell's slate on the board. You can even just put J Russo on them. You could put jail on the board. If you really wanted to the point is, you haven't voted against directors for the last decade because no one cares now, you care. Because Nelson Peltz is making a lot of noise but Nelson Peltz is not the answer. A shake up. Doesn't have to be to mention of aggressive shake up with a billionaire baby. You can do it with anybody else and here's why I point out the details of this. And here's why I point them out, weak to week is that, he's, he's already contradicting himself. He they targeted two Disney directors. They didn't Target Eiger, but he's Holding against tiger, it's a mess. There's, there's no cohesion to his theories. Other than that, he just wants to be a part of the show Disney. On the other hand, some of their filings this week, one was just called, oh, Nelson. The another one. Oh, Nelson part two. They also slammed. Of course Nelson Peltz for his remarks about the casting of Black Panther and the Marvel saying, this is exactly why Nelson Peltz should not be anywhere, near a creatively driven company. They also had a filing basically saying that their friends are cooler than Nelson's friends because they listed supporters such as our very own El Nino. Who said vote no to keep pelts and trying out of the Disney boardroom and Star Wars director, George Lucas, James eyes and George or Jamie Diamond, who's not the Paragon of progressive culture wars like these? I mean, it's the patron saint of the show. Sure. Let's not forget the queen at the queen of corporate governance. Know, no. So It and Blackwell's also, with several filings, really mostly to attack Nelson, Pelt. Some of the highlights, this week include this statement when it comes to the 1.3 billion dollar box office, hit black panther Nelson. Peltz asks why do I need an all-black cast? They also said Nelson, Pelt says what sense is being a billionaire if you're not a bully and they also said in our view Mr. Pelts not only lacks critical expertise, but appears to boast about his shortcomings. So in any case, that's just a sum up of all their filings, going against Nelson, pelts, that's the proxy. The contest at the Walt Disney Company. This Boat is happening next Wednesday at April 3rd, we will be covering that vote either on this show or our sister Show. Business pants stage. Stay tuned for more information about that. Over to our vote results table. We have several votes to report on a start with our small cap companies at full Tronics. 42% of the vote. Nation chair. Mitchell Tyson. Why Most likely because there is only one woman on the board but then why not vote Out Chair and founder and three-time former CEO Constantine macro costis who controls 46% of board influence and his son George also on the board with 18% influence. The reason because proxy advisory guidelines are old-fashioned in toothless. They they merely Target one chair of one committee who may or may not have any influence over whether there are women on the board or not. At bridgford Foods. Is Sherlock proposal asking to return? A minimum of 20% of annual, net earnings to shareholders? Was soundly defeated because at bridgford Foods the bridgeford family controls over 80% of the voting power. How about that for cheeky, Charlotte proposal? There's a but there, there is a pattern here in which I don't understand why we see vote's. Why would anyone vote for the family at all? Maybe there. That's a good question. I mean, I don't have the answer to that and the three-time returning CEO like you're angry about the composition of the board. Oh, we're gonna take it out on the nominating chat, the reason why I pointed out because the proxy advisory guidelines have have remained, pretty much stagnant since 2005. I want to say so that this is just a very simple trigger that one when a certain threshold hit to certain thing, that's a certain other thing happened and you vote against that other thing, they don't actually look at the composition of the board, which to me is ridiculous. And let's talk about that when we get to the big vote because these these arbitrary thresholds matter Moving over to large cap companies at the Cooper companies board chair. Robert Weiss Who are the company actually considers independent despite the fact that he has been on the board since the 1990s. Served as a CEO from 2007, to 2018. And earned half a million dollars annually for his board servers. Received the support of 94% of shareholders, I would think shareholders alone would vote him out just for the audacity of calling this man independent and he cite Technologies. over 21% of the vote was against audit committee chair, Charles dockendorf, I'm reporting on this because it should be way higher because he currently serves on the audit Committee of four public companies. So he serves on kiso, keysight Technologies on the audit committee where his chair that's 18 total meetings Boston Scientific. He's also on the risk committee. That's 21 meetings a logic. He's an audit chair. That's 15 total meetings and how many He's on a chair and on the nominee committee, that's another 18 meetings. That's a total of 706 meetings, Charles dockendorf is attending but who's counting? I guess, I am. But so, I, I'm, I point that one out because I can't believe that 79% of Voters would support such a busy audit committee chair. If you recognize the name too, you might have heard on this show because he's at whole logic and we covered a whole lot of logic. That's all for the vote results table. Let's move over to the big vote this week. We are covering Matt's favorite company. Favorite industry, the cruise industry. The company is well, we can start with this. Matt is the company. The carnival Corporation, or is it the carnival PLC? Because there is it both. Is it both this? Company is a dual listed company, which means that the businesses of the corporation and the PLC are combined. And they function as a single economic entity through contractual agreements between separate legal entities. I don't know why, I don't I have No real on how having been in this business for a while. Having covered dualistic companies aren't many of them. I still don't know why Matt why are these allowed to exist? Look I know probably there is some tax reason. Okay, 20 years ago or maybe there's some economic reason that you wanted to do it, but it is 2024. And there's only one reason that occurs to me. And and it has to do with the fact that Mickey Harrison Owns. 10.9% of the shares and 9.6% of the vote. Here's what gets. Okay, here's where it gets weird. So, Mickey Erickson. He is the former CEO. He is the son of the founder. That's the most important part, right? This is the nepo founder. This is the family run company Erin's. He owns 10.8% of the carnival Corporation stock, but none of the PLC shares and has combined voting power of just under 10% 9.6 percent. So can we just Dive Right In to this right now? Yeah, go ahead. I mean, look the so the company if you don't know does cruises, I can think of no worse thing and there's no real point for this company other than to distract people from their horrible. Existence as I mean, look, they The. Mark is that the analysts are saying it's an overvalued stock, but they're saying buy it. Anyway, the year to date, they're down almost 12%, but in one year, in one year time span, they're up 75% because it's all pandemic recovery, right? Like it's all they got totally grounded from the pandemic. Yeah, they're amazing and remarkable. And resilient thing about this company. And about the cruise is that we many of us speculated, would this be the end of the cruise industry? Who the hell would want to get back on a cruise after the pandemic? But there are doing better than ever. They had a record setting year 21.6 billion in Revenue. They crawled out from pandemic debt, there's still losing money for. They've had their first like money-making quarter, but but there, it's in the five of their five year history stock, history. They're down more than two thirds, right? Like they're getting crushed everywhere, except for this year, which well looking good. Here's, who else is getting crushed is basically all stake. Older get crushed by a cruise companies, right? And, and their, and their performance, their their, according to us, their performance rating. Reflects this a little bit. They overall they hit 189, which is terrible, that's really bad. And it's, it's bad across the board simply. I mean, you know, Carbon total shareholder return controversies is just a train wreck. Well, the there is this. Post-pandemic sag and the SAG isn't just, they got grounded, right? It wasn't just because they were super spreaders and they had to stop doing cruises. There are multiple lawsuits still outstanding about what happened during covid how they treated people, how they couldn't contain spreads, how they didn't communicate, there are safety improvements that have lagged for years decades. Even in fact we covered on business pants in 2019 and 2020. The fact that this is a company that didn't, you know, even have health. Experts on the board. During you know, one of the biggest health issues in the entire world and the future state of the cruise industry to your point. Do we really need to spend environmental Capital going for short trips in the water on massively polluting tankers is that something that in the future? 50 years from now is going to be an important industry to maintain a viable industry to maintain. The answer's still isn't clear but I want to come back to the definitions, right? Yeah. Why you do a list, we don't really know. But here's one reason. One thing I'm going to speculate Mickey Iverson, you said owns 10.8% of the carnival. Corporation but 0 of PLC and his aggregate as a result, voting power is 9.6% or 9.9%. It's just under 10% There is an arbitrary and magical threshold. That is 10%. This is what most if not all of the proxy advisors and data you know the ESG data gatherers think is the important number. If you are a 10% or more and a family members on the board and they own that 10% then you're considered a family firm the rules are slightly different for a family, you look at governance differently, you expect it to be run by family members, you expect more entrenchment. It's not that those things are good. It's that you the expectations change, right? Right. Well, somehow because Aaron is Mickey Harrison is just below that 10%? Well, no point six, nine point, nine percent, it is no longer designated as well. Here's the thing, he's 74 years old, and if you look at the last, you know, several proxy statement, he is there is some automatic off. Loading of shares going on. He's selling shares at a regular pace. So that's why that number dip has nothing to do with his actual control, the company, which is considerable, right? She's just selling shares, that's all. Which is what the begs? The question the context, right? Like is a family firm. A magic number of 10% is that is your designated the designation to use for a some magic arbitrary line. The check the box threshold or is it some sort of context in which Arison is still the single largest shareholder bigger than BlackRock and Vanguard, he's the largest shareholder in the corporation. Been the chair since 1990, former, he's been the chair since 1990. He's been, he was that he was named the CEO. Ted Arison started the company in 1972. He was named the CEO in 1979 so 1979 so it's not exactly like this is like, you know, nobody knows Mick Harris. And no one's gonna listen to that guy because he's got nine point, six eight percent. Well shared, is that a 10? I will tell you anecdotally. The I was in on these conversations at msci. Debating this very point. I remember specifically being on the side of no, we're not going to stick to some arbitrary threshold, but that, the family firm designation should last, as long as that family members on the board. So I don't care. That's, I don't because because we do, Get in these situations where we do cross an arbitrary threshold. And then suddenly, Msci. Designates the company as being wildly held but that does change things, right? It changes it changes how an investor might look at this company but here's the problem, even with that, right? Because the family members often, we have that, we've covered companies that have third or fourth generation family members who show up for a check. They're not there, they're not actually managing the company at all. It's a long mature firms that they're almost like an honorary board member because their name is the name of the company context, is what matters, right? If Harrison is the largest single shareholder, that matters more than he crosses a 10% threshold. If Harrison treats the company like a family firm in as much as there are material transactions, between Carnival, if you're a shareholder of Carnival, this should bother you. There are material transactions between Carnival and arsons. Other Ventures, like the Miami Heat where he's the owner Carnival paid for a patch on their jerseys. Carnival paid for Location advertising that the Heat and heat where Affiliated things own. Where he's the owner and where his son is the CEO and his son is the CEO of heat. And, you know, Carnival provides aircraft services to like they pay for aircraft services to another company. That Harrison is a trustee of. Like, well, that again, these are, these are the actions of a family firm, which is why. When, when, as an example, when an msci changes, the designation this year, now calls it widely dispersed, the ownership, it it's important, right? I think what we need is a new designation, and I'm going to propose it right now. Go ahead and I'm gonna pull it from some Hawaiian concept, it's called the Ohana form. A farm Ohana is a is just a Hawaiian term for extended family. That includes Aunts, Uncles, friends, people that you've lived with for a really long time and in fact that's how I want to designate this company for the purposes at least of this show makes sense because it is a cruise company and cruise is do like to Go to Hawaii. They do. Yeah. That's why it's I don't think for Hawaiian people like that very much. So let's get into the board members. You want to do a rundown of the board members before I get into it. This is again we're right back to this conversation that we we cross frequently, which is does it matter, you know, because our data shows that Mickey erasin, Again, cherish since 1990 became the CEO 1979, his father, founder of the company controls 71% of board influence. So what are we really if we're not targeting him? If you want to do a board chick up and we're not targeting him? What are we doing? I mean I look I think they're, I think you're you're easy. Sort of vote Target is the family. If you want, if you want. This is a one share, one vote company, which is important thing to remember. He's still gonna have 9.6% of the voting power. He still will have access to all the bathrooms in the headquarters so it's not like his voice is gonna leave that boardroom, right? I mean I don't change anything in that but I don't mind him having a seat at the board of giving that he owns that many shares, right? Like what you can't vote against him being a chair. It's too bad. You can't be that new ones. No. But I think what you want is to break up the old Hannah family, right? Like the Like that even help. So who are you targeting? So here's who we have like, it's important to know who you actually have on the board, right? Mccarrison is surrounded by a core group of longtime board members who basically have lived through it being a family firm to this point, right? Stuart Sabbat, Nick 36 year tenure 82 years old here at some point. Don't you age out of you know 10 year like he joined during the Reagan Administration. Um, Laura Wildlife has been there for 17 years. Randall, weisenberger has been there for 15 years and one of his his The Firm he runs which is a hedge fund owns 1.3 million shares on his own. Well, it's interesting to point out that both wild and wise and burger both received 13% votes against their reelection last year. So shareholders, are paying attention to them. At least, the reason why they've received votes again last year and BlackRock was one of the votes against was their compensation committee. Numbers. Are they not? And they're all the votes were against the compensation committee because we have the same problem where we're not analyzing the actual board members were analyzing, are you on the composition committee and you paid a lot, right? Like and that's it at least we're voting about against members, that's good thing. But you also have Jonathan band who's been there for 13 years. It's four board members there for 13 or more years. And then, and then when you add in the fact, that Helen diebel who was a lobbyist for cruises in the UK is on this board and Katie, Leigh, he was an executive at carnival for seven years and now she's considered independent because it was long enough ago. But she worked for Mickey Harrison at carnival. I will tell you two according to our data, the 42% of the board consists of women and they but they represent a total of seven percent of Ford influence. I mean, look, the thing you can do the voting Pieces, I would have here is that you want to break up this, Ohana family, this extended family that were still don't know how this helps counteract the power of Mercy. I don't think you're trying to counteract the power of Mickey Mouse. I think you're trying to bring up Jets newness into the company. I think if you want it, I think Mickey Harrison is actually timing himself off of this board anyway for yeah, I mean, I think clearly he didn't make his son, the CEO of Carnival, he made him to CEO of the Miami Heat. I think there's a movie sickness. That's why I think there's a movers into to be basically focused on Legacy stuff like fun stuff. I will say this new CEO. Josh Weinstein, who is I have to say, I have to laugh at this. He's also called Chief climate officer. I don't know that a troll to the environmentalist, it is a troll because that's a terrible joke. But you have to like I think actually this is what our son is basically step. Being his way out of right because in the last three years, Carnival has a 44% increase in their nox. Emissions, their in 18%, increase in non-hazardous, waste discharge a 67% increase in hazardous waste. Well, it might I remind you the last three years or the years they weren't doing cruises. I'll tell you this though, with all the pushback against ESG and all the companies turning their back on their climate pledges, it's only going to get worse. I mean they have set multiple carbon reduction targets and the only reason why they hit them is because they had to stop losing cruises. That's how they hit them. Well, the reason why I mentioned Josh wines seen is that he he's a new CEO. He's only been around for a couple years. I believe he is only 49 so he might be The Heir Apparent I suppose, right to when Mickey Harrison steps down, I mean it's seems unlikely to me but possible, but I was a member of the board by far. I'm just I'm pointing that I mean, I do think that you have like a problem that Arison doesn't want to have to deal with, which is the future of cruises are legitimately in doubt. How long this can last is an industry is legitimately in doubt and I'm sorry if everyone listening loves cruises but like there's a there's a future in which cruises we can't dump stuff into the ocean and ride around in the most polluting machines that we can think of for fun anymore. Like it's just for fun. So I think actually if you want to break up this this Ohana family your targeting two things you want the most insular members and you want to think about the future and which the environmental issues actually matter, get regulated change. You can't do that anymore. So my my recommendations. You ready for recommendations here. Let's get to it. Let's vote again. Just Lahey and banned now Lahey was a both of Of them are actually on the environmental Committee of the board band was a part of the British Navy. He was like an admiral in the British Navy. He might have some level of jurisdiction or understanding over environmental issues but I'm going to say in targeting Lahey who was an executive at carnival and oversaw. Not good performance environmental issues and they're both long tenure to part of sort of the family of arasin. I think you're killing two birds with one stone. And the other vote recommendation I would have is against the botnick Mostly because I know you want to let him choose his retirement date gracefully over 30 years. Why do we want to let that happen? But come on. Like if One's paying attention. There is no way you can continue to vote. For a member of the board who's been there for over 30 years, it's completely related to the founder. They doesn't own shares in this company. What do we do doing? Because if you're looking for institutional knowledge, you have the son of the founder, who was eight years younger, at 74, which was already there. So you don't need anymore. He's 79. You don't need any Straight institutional knowledge. So Lahey band and Sabbat, Nick are my votes again. And what is that knowledge? By the way, is it that the ocean used to be a little bit cleaner back in the day? I think that's what they remember. That's what they. Okay, that's your recommendation for the board. Do you want to wrap? Do you want to sum that up? Who was it? I already forgot. It was a vote against Lahey vote against band and vote against sabbatic. Moving over to say on pay. I don't know that as much of a story here, so what happened was that in during the pandemic, the the company decided that there were gonna there were gonna just pay the executives, what they felt like paying them. They were gonna adhere to actual performance targets, actual quantitative measures. So they just decided, Well, they still need to make a lot of money, right? Because these are the executives at an American company. So here you go. Here's we're going to make something up. Throw it out. You sure holders warranty with that 36% said, no and 2022. Last year, they implemented some of the feedback there heard from shareholders. They stopped, they because the pandemic was over. They went back to quantifiable targets and still 17% of the vote was against Sam pace. So, what do you think about this year's policies? Matt, look. I think that like I, I think you should continue to the right. There's not, this is really hard to assess this because it's like for the same one. Oh yeah, against pay two years ago because it's still egregious. Like, they just said they don't care for the sake of all stakeholders at companies, like Cruise companies. Just vote against pay every year. I would say, in this case, though you what you you're voting against the pay committee. Because now, you're, you're retina registering anger against pay this year, and the fact that investors were mildly Less in different in 2022 and voted 36% no on pay, which still is a passing non-binding vote, right. And then last year they were like, well we still have some vague uncomfortable, yes, with last year's vote. So we're gonna vote against pay this year, but all of the members can continue to get reelected All of them. Says to me that if you're angry about the way they set pay arbitrarily two years ago, three years ago and all the members are still there. Then you're not doing your job, you vote against the members He was saber carnival. Look like I want to say that. I don't understand dual listing. I don't, I don't get it. I don't know why you do it. I don't. It seems like I don't think anybody understands. In fact, I noticed that the corporate secretary for has been the same corporate secretary for, at least 20 years. I imagine that that is the maybe one of the highest paid jobs inside a carnival, trying to figure out the two jurisdictions of what you have to, you know, the the note taking and the and the communicating and the organizing. It seems like the worst thing you could possibly have to do. Maybe it's yeah, I don't know. Maybe it's a yeah, another troll because there really is there is there's not more of a pointless company. A portless industry then the cruising industry, right? So maybe they're just it's a troll that we're just gonna pointlessly list and two different jurisdictions on two different exchanges. I just extra work for somebody. If there was anything that's trolling, it is the CEO being the chief climate officer and then noticing that his signature, which is an under analyzed piece of information. The signal ahead. Yeah, I try to do a handwriting analysis online of his signature. It was very hard to find it, why? Yeah. But there is signature, if I made describe it are no J's W's. There's no discernible letters. It's basically an up-down and then a couple of sideways Loops. This is suggesting that you've run out of analysis. I'm just saying at some point. You know, like if you if a guy is going to sign his name that way, he was the general counsel of the company is no background in environmental issues, and they called him Chief climate officer. We just making fun of everything, we don't care about our signatures, we don't care about our titles, it's just get paid because Mickey runs this company. That's what it feels like. That's the Proxy content for the week of March 25th 2024. Join us next week, when we jump back into the alternative democracy pool Forever on the lookout for sure holder. Sharks, floating Band-Aids and Wayward directors.