Transcript
This is proxy countdown. Welcome to the Big Show for the week of January, 15th 2024 alongside my tag team partner. Matt mascardi. I'm Damian roles on today's Countdown, the end of an error at the company formerly known as Facebook BP picks boring and familiar for its new CEO and update on the ongoing proxy cage. Match at Disney common stockholders, pretending their votes matter at UniFirst and on our big vote There is a Big Sean pay chicken at the big chicken company. After let's go to our trade wire after our top stories after 12 years, As a director in 14 years, a CEO Sheryl. Sandberg is stepping down from the board of meta platforms. At the company's upcoming annual meeting of shareholders because of Mark's absurdly despotic grip on the company. He controls 72% of influence and 61% voting power. Her resignation, won't really affect the leadership structure at the company. To be fair, though, I have always considered Cheryl to be the true CEO of Facebook. And according to our metrics, she is stepping down as an All-Star. Performer batting 603 overall including 877 in earnings and 900 in carbon So we're clear too. That's not just met a Facebook performance. She was on the board of Disney who we're gonna foreshadow coming up. But She made, she made some made some bones at Disney and had strong performance throughout and maybe this is why she's retiring. Now, I was an All-Star in case those numbers dipped in case Nelson, pelts decides, maybe Sheryl Sandberg should be back on the board to Disney to restore the magic. BP has finally found its new CEO and that's current in terms CEO and CFO, Murray ocean. Oh, that's boring. Murray became interim, CEO, four months ago, after Bernard Looney's, suddenly resigned after failing to reveal relationships with Khali's, BP said it carried out a search process to appoint the new CEO. But I guess that search was a waste of time and money because Murray was already keeping the seat warm. In a strange Twist of BP. Love Murray himself is also in a relationship with a BP colleague, but this courtship has been properly disclosed I two things about this. First of all, it could we get any more boring? I remember when my dad worked at a small local bank, they hired a big outside firm and spent, you know, six figures on a consultant to tell them how to merge their tiny bank with another tiny bank and what they should call it how to Rebrand it and the rebranding was the same name as my dad's bank. That was, that was what they came to and they told them they got that suggestion from a secretary in the bank. Here's another situation which you're spending hundreds of thousands of dollars of shareholder, money to confirm that you're just going to pick the guy who's already working there and all. So as a relationship with somebody there, speaking of new CEOs, the Goodyear Tire and Rubber Company announced that Mark Stewart will become CEO and director. Following a pressure campaign by shareholder activist Elliot Investment Management, Mark succeeds, Richard Kramer who will become senior advisor to the CEO Mark comes from stellantis where he was CEO of North America and where he oversaw the car makers. Recent labor. Negotiations, this past fall Mark's golden. Hello package comes to just under 20 million dollars including about 4 million dollars, in Cash, 4 million dollars in fully vested stock and 11 million dollars in additional Equity, but Matt, why are exactly are they giving him 19.975 million dollars? Is this the corporate equivalent of selling a shovel for 1999? Isn't this also hiring the guy who just unsuccessfully negotiated the union problem at stellantis, he was the CEO of North America. For stellantis, from 2018 to 2024 that suggests to me that he was directly involved with the Union efforts, the efforts to basically increase their their participation. And that's the guy that Elliot thought, oh, this will be perfect, let's give him 20 million dollars, including a fully vested cash and stock plan of 8.5 million. It does not seem like the best choice. Finally in notable board changes, former Ernst & Young CEO and chair, Mark, Weinberger joins, JP Morgan Chase. Linda Gooden will be stepping down with the Home Depot and All-Star Freeman, her Browski. The third batting 719 overall with 11% influence is stepping down at McCormick & Company. That's actually, he was one of my draft picks. If you listen to the business pants show, when we did a board draft, he was one of my draft picks. That's sad news that he stepping down, it's set to lose and All Star. Let's get to our Disney, our proxy cage matches. Let's go to our Disney proxy cage. Match update that we seem to do every week. The company has just released its preliminary proxy. Statement ahead of the upcoming director battle. Most notably an unsurprisingly Disney has rejected Nelson. Peltz's push for a board seat a quote from the filing and deciding not to recommend Mr. Peltz. The directors considered a number of factors including that in a two-year quest for a seat on the Disney board. Mr. Pelts had not actually presented a single strategic idea for Disney. Disney is also rejecting tree and other board nominee former Disney CFO. Jay rasulo also contrary to earlier reports Disney is, in fact rejecting the three board nominees put forward by investment firm Blackwell's capital. despite the fact that Blackwell said it's candidates would support CEO Bob Iger, Disney cited the block walls nominees lack of experience, as directors of large public companies, those those three nominees are Former Warner Brothers, executive, Jessica, shell real estate investment, executive Craig hatkoff, who co-founded the Tribeca film, festival with Robert De Niro and taskrabbit founder and former CEO Leah, Sullivan. First of all those nominees that don't have any large board experience Mike Froman is on the Disney board when he joined in 2018, he had not served on a large cap board, he was a government, he worked in government and he'd worked it in Investment Banking, but was not on a board. But second of all, when it comes to Tree in, I love the argument. That trian is making that Disney has not. We want to restore the magic and when Disney says that they have not come up with a single strategic solution to anything. Here's what they mean. This is from a filing that posted last night. This is what tree in is saying. They're saying Disney. as not set in ambitious targets for anything like Disney says focused on achieving significant and sustained profitability for streaming. Tree in says, Target and Achieve Netflix like margins. So, That's the Strategic. Like, the future of ESPN Disney has said, build ESPN into the preeminent, digital Sports platform and tree, and says, what tree and we'll do is commit to a reasonable defined payback period in return profile for ESPN and communicate it. Oh, they didn't set a number, they didn't set a strategy, they said the same thing. Disney said with more words and think that that's going to sell this is one of the gonna be one of the best votes I think in the history of proxy cage matches. If for no other reason then investors are going to. If they're buying what tree in is selling here, they just like lots of extra adjectives. Sounds like Harvard has Bill Ackman. And Disney has Nelson Peltz pesky billionaires. Exerting influence. Moving over to our vote results table Z scaler. 17% of shareholders voted against co-founder CEO chair. Jay Chaudhry, which is saying something since he controls 38% of company, voting power. On top of that, 28% of shareholders rejected, his pay which was a big fat 58 million dollars last year. It's nice to have power and to put number on his power, J controls 74% of board of influence at zscaler. Similarly, at UniFirst corporation. Where the Croatia family controls 53% of the company's voting power. Common stockholders voted out director Michael ion doli, but he will return to the board because the Croatia family and their pesky Class B shares like him. And lastly, at Lindsay, Corporation 14% of Voters are against the re-election of board chair, Bob Brunner, who controls 14% of board influence. On the other hand, shareholders voted 99% in support of CEO, Randy wood and his 31% bored influence. All right, Matt, that's our news for the day. Let's move on to our well. Let's go to our big vote. Where we are talking about Tyson Foods, the chicken factory, the big chicken Heaven here in the United States of America. Their annual meeting is coming up February 8th 2024. Before I hand it off to you and before we talked to your recommendations for their board, at least we'll start with the board, a few notes, a few General observations, first of all, this company. Yes, is in fact controlled by the Tyson family. They control 71% of the voting power because of their class B shares, which in fact give them 10 votes per share. Usually see this in big Tech but now we're seeing it a big chicken. Also. Performance. According to our metrics, the this board is batting a woeful 2:13 overall, in fact, Matt, everybody basically sucks at this board except for two directors Cheryl Miller hitting 677 and Kevin McNamara hitting 623. Otherwise just poor performers across the board. Also. The board waived the retirement age by law for two of its directors. Mike Beebe and no surprise Barbara Tyson And lastly there's a bit of a quirk with their say on pay this year that I will get to when we talk about say on pay later. So let's start with those let's go right to the board of directors. Matt there are electing 14 directors to the board, including two Tyson family board members. That's chair and former CEO. John H Tyson and former VP Barbara Tyson. They control a combined 71% of board influence. Look, before we even get to the vote itself, it's worth saying here. Controlling 701, 702% of the vote. Should disqualify you immediately from being on the Russell, 1000 S&P 500. Russell 3000, the msci world. The msci USA. They're on every index because there are large companies are it's a private company, it's fake public, which means every recommendation, I'm about to give you and everything. I'm about to say is almost irrelevant because you have no control. You are along for the ride and you are paying the family money out of your pocket. That's all you're doing and and I'll have some more details about that when we talk about Sam pay because the not only the payback could but who the CFO is, will prove Matt's Point, very precisely. So go ahead even beyond that, this is an egregious sport. Okay, so we've established the family firm with multiple family members on the board. We got that It's Executive. Vice chair was the ex CEO. All right. Good. So we got two family members and an Executive, Vice chair, who was the CEO of the company, not a family member but there. Okay. We got that the company family Council also on the board. Okay. All right, we got another person who works for Tyson is the council. Okay, there's a second Vise, chair on this board. I've never seen a gummy with two Vice chairs and we're not even really in corporate governance terms. We're not even really sure what advice chair is. It's an undefined World. Everybody's Vice. Who's not a vice chair, but the second Vise chair, Is quote on quote, independent turns out. He's the longest tenured, who's not a family member, he's been there for 16 years. Yeah, he also sits on the executive committee, a committee that consists of three people. And that the two other people are the Tyson family members and him this so-called independent director. You want to know how many other times. I could see two family members and two Vice chairs on a board and any company globally. None, none. None times. I went looking, I went, I went to try to find, maybe they have different names, But multiple family members and multiple X CEOs. How many EX CEOs do you need on a board? Because right now, there are two x CEOs on this board, and the current CEO and to family members. Well, I'll tell you where this helps is because one of those directors you're talking about that's former CEO Knoll white, who is currently the Executive Vice chair, or whatever. That means he is responsible for two. Yes, two nepo babies at this company. There are two of his family members are employed by Tyson Foods, including his son-in-law who makes roughly 300,000 dollars and his son who makes 200,000 dollars. I wonder how that works at this. The son in law actually makes more than the Sun. That doesn't even count the CFO, the company who was Tyson, right? John R Tyson, I'll get to him when we talk about pay. Yes John. I'm just saying that already just by if you have a napkin handy and you've been keeping a count at least six of the 14 directors are not independent at all. And it wouldn't be a napkin, it would be a, probably, a wet nap know for a company. It might be, well, it probably be a buffalo sauce covered, wet nap, I'm thinking of free, I'm thinking of fried chicken and greasy chicken wings. So, um, that's before I even get into the eight other directors and how they might be compromised, which includes, yeah, Mickle Dunham. Who is an independent director, she is a CEO of a fish company and turns out. She's a supplier of fish to Tyson. She's also she's also the winner of the best footnote in a proxy. I've ever read with this footnote. Ms Dunham. What are Durham was not sorry, Durham was not an independent director between October 2nd, 2021 and August 11th. 2022. On August 11th, 2022. The board determined that Ms. Durham to be in independent directors and appointed Ms, Durham to serve as a member of the audit committee effective as of the same date. So, for some reason, yeah, in an 11 month or 10 month period, She was not independent. And then she became independent. It's like Monopoly. Rules that she's still a supplier of fish to Tyson. Yeah. Tyson also has two directors, Jeff, schaumburger and Dave brancheck who are both chairs. Oddly of the United Way, one for the United Way in the southwest, in one for United Way out of Florida. But both United Way, chairs And Mike Beebe, who is a director is the ex-governor of Arkansas where the Tyson family is originally from right and their family sits on the board of the Northwest Arkansas council with the Walmart family and they all have very deep ties to Arkansas. So Mike Beebe, not exactly going to be independent given that the Tyson family and Arkansas are basically the same thing. Going back in their history, might be one of two directors that they've decided to ignore their retirement age and keeping him on the board. And I, and I will. Can I add this to? The? There aren't a lot of minority shareholders at this company. There's the, you know, the Tyson family controls 71% of the vote, but I will say this they they are they sound as angry as you do, Matt. 8% of those of the of the total shareholders. So this this is not just a subset of the, of the, the minority. But 8% total voted against chair. John H. Tyson, 10%, voted against less Bellaire. Who's a? He's a, he didn't even mention him. He's the former he's Executive Vice President in general counsel at Tyson. Yeah. 7% against Mike BB's 8% 7% against Barbara Tyson. It goes on from there. So there the minority shareholders agree with you. Matt well they do. Are Baseline is a normal director vote, which we see at 95.96% on average, right? The adjusted votes for Less ballads. Who was the lowest vote getter? From an adjusted vote standpoint, and when I say adjust to vote, I mean, excluding, the Tyson family vote. I mean, just the minority shareholders, was still 63% for Less Babbage. And that's a significant number, though. I will say, that's a significant number, but you can't even vote out the one of the two x CEOs, or the council, I will say this, it's kind of like voting for the president in a state like New York for instance, where you feel like your vote doesn't really matter. So maybe you just stay home and watch the game and you don't go vote. So I I I'm thinking that there are plenty of showers like, ah, what does it matter if I vote against that? I don't, I don't disagree. But here's what you get by. Not registering your displeasure, here's a short list of controversies. That Tyson is currently dealing with number one. They just settled 21 million dollars class action lawsuit. Over collusion to fix chicken farmer Wages. That's that's outside of the Act that they actually had a class action lawsuit for anti-competitive, practices in Beef Processing and the Department of Justice is alleging price fixing of chickens themselves. Their Core Business. All they do is monopolize price, fix and collude, that's like, Baseline for them. That ignores the fact that there's an outstanding lawsuit or several outstanding lawsuits about how they fail to protect workers during covid-19. Because we covered on our business pants, show that they would put out signs in their facilities. In English saying where a mask when they knew that more than 60% of the employees. There did not speak English. They only spoke Spanish, they had no like actual safety protocols for covid-19 at the time and they were deaths linked to people getting covid at their facilities, right? This is beyond On the fact that this the CFO which I know you're going to talk about, John R, Tyson got in trouble himself. I won't even talk about that. I'll let you talk about that. My vote recommendation. Here is if you are an investor in this company. The only thing you can do is vote against everything, everything vote against every single director because there's no way you're going to compromise. Yeah, they're all compromised, but you are effectively staking. Right now. What you're doing is you're forced to make an investment. If you're a universal investor in this company because they're on the index and you force to own the index most of the time, which means you have it, right? So now you're along for the ride. But what you get for that ride is nipple, babies class action, lawsuits price fixing collusion, and every family member that ever touched the Tysons sitting on the board or working for the company. All of the directors or almost without fail or somehow compromised. Well, there's Is we know there's no point to your vote, but the only thing you could should see here, is a 0% 4 vote for every single one of them. They should only ever get capped at 71% of the vote, because that's what the Tyson Zone. And to your point, the chair of the nomination committee is a former executive of the company. I don't remember the last time I seen that his name is that's less badge. We talked about the former General console of Tyson Foods, the member of former executive of the company is also on the audit committee, which is like when you give the financial like, state of the company and their, and they're basically have to say yes or no to how you do the accounting to someone who worked at the company. What do you think the incentives are a specialty when they're going to report to the guy whose family owns the company? The whole thing is compromised. I don't know why. If you are an investor, you're forced to hold this. I don't know why you would ever see above a 0% 4 vote for every single, one of them just to say, this is some of the worst corporate governance you could ask for, in a publicly traded company. This is a fake public company. Register your displeasure with a 0, 0% for vote. Okay. Moving on to the say, on Pavo a little bit of a Twist here. So, last year, Matt 98% of Voters, said, yes, on Sam paid. That was in 2023, but they also had a vote on the frequency of future say, on Pavo vote. And here's a little twist, Matt. So the the Tyson from family controls roughly 74 million votes. Okay? So, 719 for to vote on, Sam pay every three years. So that thanks to the Tyson family, they have the term that for all shareholders. They're only allowed to vote on pay every three years, which to your point earlier should not be allowed for any Russell 3000 company. I mean, you shareholders should have a say, on an annual vote. The most amazing thing about that vote is it puts in stark contrast, the concept here, which is your vote as an investor doesn't matter. It should always be against the entire thing. In fact, our recommendations on this show which will not be sexy for dual class companies where family control or founder controlled companies. Well always be vote against them all because there is no way they should be on an index in the first place. But since they are, there is no way in investor should have any confidence that one person or one family should be making their governance decisions for them there. You should not have that confidence. That's why you have a vote, a few highlights from the PayPal package that you cannot vote. On this year, I want to focus on two Tyson filming Members, First, executive chair, and former CEO. John H Tyson Matt, one of his perks is the personal use of company owned jet for up to 275 hours per year, a chicken man. Needs 275 hours of private jet use and that bill for that jet. Last year was just over 1 million dollars. So I did some populist math. Okay. Yeah. The the national average cost of a coach flight doing a one way across the entire United States flight is 382 dollars. If you add 1,000 for that for first class because, you know, fly first class, why not? That's 1382 per flight. That means with the million dollars, they spent on flights that 779 flights or 389 round trip flights, which means he would cross the country round trip 1.07 times per day. 365 days a year. Other misuses of shareholder. Money include affected his. He gets benefits, he gets the use of company, security Personnel. He gets Security Services of up to 50,000 dollars, annually, on top of that. And he gets a payment of an annual premium on 7. 5, 9 4. He also on top of that, any tax liability, that might have incurred through these benefits. The company will pay for and here's an odd odd transaction. I also saw on the proxy executive chair, John H Tyson made purchases of protein from the company in the amount of 150,000 dollars last year 15000 is all about well here you go. Yeah Sam's Club sells Tyson chicken nuggets. The biggest bag you can get for 15 dollars and sixty eight cents. That is 9,600 bags of chicken nuggets or what's going on. Six chicken nuggets bags, a day that John H Tyson spent on a company shareholder money on protein from the company. And finally, let's talk about CFO. John R Tyson one of our famous favorite, I guess, nepo babies in her entire database. So we talked a lot about him in the past. In November 2022, the CFO of Tyson Foods. John, our Tyson was found to sleep in the home of a woman in Fayetteville. Arkansas. He again, Matt he was found asleep and a strange woman's bed. Yes, CFO. The CFO Tyson Foods. He was arrested and charged with criminal trespassing and public intoxication. And he and in fact, he pleaded guilty to these charges in January 2023. This is the man that kept his job as CFO and still gets three million dollars in total pay the CFO of Tyson Foods, 3 million dollars, minus the 440 charge for the criminal trespass. That's where I helped it helps to have friends in the Arkansas, police departments, because that's the total fine for falling asleep and a woman's bed. A strange woman's bed is less. If first of all, if if nepo Tyson John R Tyson was black man who fell asleep in a Fayetteville woman's house. This would be a totally different story and it helps that might be the X Arkansas governor on your board. You can go fall asleep in everyone's house, it only costs 400 bucks. It's a good night out. You know, it helps with your church is and it also helps with the fact that you keep your job as the CFO of S&P 500 company. All right, finally, let's wrap up the the big vote with shareholder proposals. There are in fact, four shareholder proposals up for a vote this year. They are they are ever won requesting report on corporate climate lobbying for do it okay. One a report regarding deforestation free Supply chains one a report on a circular economy for packaging. And finally the one I want to focus on a proposal regarding the company's labor practices. So this these I'll say this before I get into this proposal is that Tyson Foods does something very obnoxious and they don't list the shareholder proponents on any of these proposals. I don't know why they're adding the names of these. Proponents is a rare practice. I thought it was a sec requirement, but they don't tell you who puts these up, probably because they want to hide the identity of the nice sisters. The nice nuns who are probably asking for these things, but this proposal is asking for an independent third, party audit assessing the effectiveness of the company's policies and practices in preventing illegal, child labor throughout the company's value chain. And one of the reasons for this proposal Matt is that in March 2023, a Department of Labor investigation, found the use of illegal child, labor in Tyson's, Arkansas, and Tennessee facilities. So there you go. So this sounds like a home run Grand Slam slam dunk of a Chevrolet proposal at Tyson Foods, of course, the board, a Tyson Foods is urging for you to vote against. I will add that the Department of Labor investigation into illegal child, labor also, include 600 ongoing investigations at Tyson Foods and one of the reasons why Tyson Foods says vote against this one is that it already has a no-tolerance policy for the use of illegal child labor. Despite The fact that an investigation found the use of illegal child labor. So this is a, this is a head scratcher that's all but that's the, that's the I'm Gonna Leave You on that one, Matt. Yeah, I mean, this is obviously a vote for because it if you've already found it to be there, you need to know how widespread it is. But Tundra ongoing investigation 600 but Tyson the best part about this is the self-justification, which is we already said it's it child, laborers illegal and we've already said you not allowed to so we don't know why you're having no. They, they claim because they fired the subcontractor. Who is cleaning the facility, who that the, there was some investigation and they had were using some child labor because then it's, it's fine. But Tyson Mrs. The obvious point that there are multiple like investigations about this and they just said it goes against our policy. This is vote for and you can watch it lose when the 71.7% of the Tyson Family Trust votes votes against it. I will say this to end the show is that we talked about how the former Governor of Arkansas is on this board. Arkansas is one of the states within this past year. The introduced a bill to roll back, child, labor protections. I, I would say that's a coincidence, but it does not feel that coincidental that's that. So, that's the recommendations for Tyson Foods. I think is pretty clear for Matt, although you don't have a vote on saying, pay. Unfortunately, this year, Matt is saying vote against everything else. Yeah, vote against vote for the shareholder, proposals and vote against. The only way you can register your constant displeasure with this company. A company that has wolfly underperformed has spent hundreds of millions of dollars on investigations class action lawsuits and has tremendous problems and is seeing their CEO flip and join the board at least three times and like because we still have three CEOs on the board. This is a company that the only way to register your just pleasure is vote for every shareholder proposal, regardless of what it asks for, even if I agree or not, and vote against everything management asked, That's the way you registered were just pleasure. I will say this and there's no anti-woke, no anti-esg proposal at this comes to that. That says something in itself, that's the proxy countdown for the week of January 1524, join us next week. We jump back into the alternative democracy pool Forever on the lookout for shareholder, sharks floating Band-Aids and Wayward directors.