Transcript
This is Proxy Countdown. Welcome to the big show for the week of October 12th, 2026. Alongside my tag team partner, Matt Muscarty. I'm Damian Rollis on today's countdown. Bobby Kotik fails up again. David Ellison has a new friend and a new pile of money. Two big wins for the I already I already screwed up the name. Hold on. Have to edit me out. I'm gonna start over. Where's the fucking name of the the accountability board? Yeah, board. Fuck. So I don't think I've ever made a mistake before, fucking losers. Alright, start over. Yeah, start over. Just put that in and start over. Board? I know, I know. I don't feel I'm trying not to be too jazz hand. This is Proxy Countdown. Welcome to the big show for the week of October 12th, 2026. Alongside my tag team partner Matt Muscarty, I'm Damien Rawlis. On today's countdown, Bobby Kotik fails up again. David Ellison has a new friend and a new pile of money. Two big wins for the accountability board. Activist investors hate Doritos. And on the big vote, Matt talks about the latest at the SEC. Do I have that right? You have more than that? What God, you make it sound so sexy. Okay. All right. I've that's probably the only section people actually want to listen to. Let's start with our trade wire, our top stories. So the headlines are dominated by Sky Dance. This is the new entity created by Larry Ellison and his son David Ellison, involving the merger of Paramount Global and Warner Brothers Discovery. Is that it? Am I do I have it right? Sky Dance. It's it's the merger of of Skydance to Paramount Global to Warner Brothers to HBO to Discovery. Yeah. All of it. Skydance CEO David Ellison is scared to do the job himself. So he steals Enon Kreitz from Mattel and names him co CEO. David David Ellison will continue, of course, as executive chair and co CEO. I I I don't really get I d why not just be executive chair and then have Kreitz be CEO. I don't really understand the distinction here. Co. good. Look. But is isn't this Nepo governance structure? Isn't Larry Ellison executive chair and co co executive no, he's executive chair with two co vice executive chairs on his board and co co CEOs at Oracle? Well that's a good you actually raise a good point. So at Oracle, Daddy's company, that's how they do things. They confuse you with co-titles. And at Netflix, really probably one of the most important competitors of Skydance, they too have a co CEO structure. So I wonder if he's just like doing that. He's just doing it. And then a week or two later, Skydance adds Bobby Kotik and Lorraine Powell jobs to the board. it's sh Yeah, just doing the thing. Yeah. They're also adding Tony Blair as an advisor, although I will say that was not in the AK filing, but that's in all the news reports. I mean, he's not advisor is not a real thing. I don't know what it is. It's not a We'll find out. We'll find out. so before I get to Bobby, let's just talk a little bit about Lorraine Powell Jobs. So she's the widow of Apple Steve Jobs. And then, of course, Tony Blair is the former UK Prime Minister. Both seem to represent Does he sit in the back of the room and get the free coffee but doesn't vote? Yeah. channels to power, right? And and maybe a a conduit to a liberal world as a counterattack to to the press has been pretty upset at the Ellisons and s this merger because of their relationship with Trump. That you know, they they've been upset about the the redo at sixty minutes. I'm wondering if this is just like a political move, like a gesture to the left. Yeah. I think it's a it's a it's the it's the balance gaslight. It's the the optics of balance, yeah. Alright, let's get to Bobby Kotik. So to sum up, Bobby, after presiding over a toxic workplace scandal at Activision Blizzard, he faced explosive revelations that he personally shielded accused abusers, concealed sexual assault allegations, threatened an assistant's life, and instead of being fired, he walked away with a golden parachute worth over four hundred million dollars when Microsoft basically bailed him and his company out and bought Activision Blizzard for sixty-nine billion dollars. Now I I just wanted to to to list here, is my this will take a few minutes, but in case you're wondering why I'm focusing on Bobby Kotik, he represents actual risk. This is actual long term risk. I wanna I I'm gonna give you a summary of some of the legal actions against Activision and Bobby. So I I got five here. The California Civil Rights Department sued over a pervasive frat boy culture, that's their term. Marked by constant sexual harassment, unequal pay, and retaliation against female employees. They settled Activision settled this in 2023 for $54 million. Okay, that's the first one. the Equal Employment Opportunity Commission targeted widespread sexual harassment and pregnancy discrimination across Activision Blizzards gaming studios. The company settled creating an $18 million compensation fund for impacted workers. Then the SNC the SEC got involved. They charged leadership with failing to track workplace misconduct complaints and using restrictive separation agreements that muzzled potential whistleblowers. Another case that Activision settled, this time paying thirty five million dollars in a civil penalty, w of course without admitting wrongdoing. Yeah. Yeah. They they already did wrong like eighteen times. Why would they admit it at any point? Then the family of a 32-year-old Blizzard finance manager sued, alleging severe workplace sexual harassment drove her to suicide during a 2017 company retreat. Now, this case was dismissed, and there was an out-of-court settlement, but it's confidential. We don't know how much Activision paid off the family. And finally, this Microsoft fire sale, right? There was a shareholder lawsuit. A s Swedish pension fund and other investors claimed that. Bobby Kotik rushed a discounted $69 billion buyout to Microsoft at $95 per share to secure a massive golden parachute and dodge personal liability, all things that he did do, right? The case settled just this year, actually, for $250 million. So yeah, this is the guy that David Ellison needed on his board. if, you know, again, if you don't if investors need Something to wake them up? How about this? How about just vote against Bobby? It won't really matter though, 'cause i y the the board is insulated given it's a controlled company, is it not? Is it it's not it's not gonna be a like a s a a single class share company where where they're not you know, not afraid of shareholders and yeah. Investors don't have a say. Then vote against everyone in protests. Vote against everything. let's move on to some stupid money filings. I was just looking at filings since October 1st. There were 68k filings involving the biggest market cap companies. Live Nation CEO Michael Rapino. This is a weird one. He received several new equity retention grants to keep him in Yeah, to keep him in I it took me a while to parse this. Several. To keep him interested in being a a CEO, I guess. Here's the easiest way to explain this. He used to get an annual equity grant worth $10 million. Okay. S starting in 2027 in a few months, he will get he will again get that $10 million, right? But then he will also get fifteen million dollars in annual time-based restricted stock units, another fifteen million dollars in annual performance stock units. Okay. okay. Okay. And then as a cherry on top, twenty million dollars in upfront restricted stock just as like kind of a bonus. So he's overall it's fifty million dollars in equity. And again, he was already CEO. Didn't d didn't he beat the the the antitrust lawsuit that they faced? He beat or the government had there was a I mean, isn't this what the payment's for? It's like congratulations, you are you are a monopoly, but you beat an antitrust lawsuit, good for you. Sure. Well, the board did add, we reported on the proxy content last year. They or sometime this year, they remember they added a former Trump administration person to their board, I think for that very reason. Yeah. the new CFO at Pinterest is named James Debo. He's getting a golden hello award worth $32 million in equity. That's for Pinterest. I didn't know people still use Pinterest. But yeah, see FO Now here's the bigger point to me. Yeah, for that reason. To win, yeah. For CFO. The previous CFO, Julia Brough Donnelly, she only served for three years. on the Pinterest board, there are three board members who have experience as being a CFO. Now, this is just a failure of of hiring and retention, right? I mean, they had to pay thirty two extra million dollars of shareholder cash because they qu' can't quite hire or retain, right? They don't know what to look for in a CFO. I it it just sounds like a mess to me. I I don't know. Of course. did do you know if Julia Brow Donnelly got the same size, you know, golden hello when she joined or? Originally. I I didn't look it up, but this is the pattern now in CFO hiring and by far the the the biggest trend in any movement is CFO. They're the CFO movement is out of control. It's like they last for two or three years now. The the fun news is that she joined Sierra AI as their CFO. Sierra AI is owned and run by one Brett Taylor. Do you know Brett Taylor? You remember Brett Taylor? Yeah, there there you go. there go. Britt Taylor OpenAI, yeah. and then finally, here's a new term Golden Handcuffs. We d we never use this term. I don't use this. This is new to me. I'm gonna start using it. So back to Skydance. Four named executive offers, including Nepo Baby David, he's getting involved, are set to haul in an additional $50 million in the annual bonus compensation. So they're all getting That's not that new. We don't use it that much, but it's a it it's not new. Raises on their annual bonus. So four of them are getting fifty million dollars total. That's a new way of kind of doing it, right? New retention award. You would you would think you don't need to retain executives who just got the new job at the new place with the big merger. At like the biggest media company in the on the globe. Yeah. so a couple of other stories here. so COO this is this is a CE CEO movement. COO Spencer Styles is being promoted to CEO and director at Stryker, while former CEO Kevin Lobo will transition to executive chair. This is the this is the only way now, right? This is now accepted governance practice. And the planet, yeah. Yeah, finally. An executive chair. It's the all it's the only thing we see. Yeah, it's the only thing we see. See, this is the thing in this world that you notice very quickly. Once you establish a a pattern in governance and investors or media or whoever don't push back, that's it. Everyone does it. It That's it. Everyone does it. Yeah. It now now it's retent its retention bonus the new normal is excessive retention bonuses. It is moonshot pay packages. And it is executive chair. Move to executive chair. Ma maybe some friends of the show like Nell and Jim McRitchie, if they're listening, they can they can help us understand. There used to be pushback about so many different things, but now th nothing. Like just just no no pushback. Just nothing. explain it to me. same thing at General Dynamics. President and board member Danny Deep will succeed Phoebe No no Novokovich as CEO, and then she will transition to executive chair. Mm-hmm. Novakovic, yes, long time CEO. And then one other data point. this is the trend that I'm noticing every time we do this show. So there were forty-four director changes in these large market cap companies. Of the new directors, 25% were women. Of the outgoing directors, 35% were women. So we are seeing this just a slow drip, yeah, of women leaving the board. That's it for the the trade wire. Let's move to ooh, proxy cage matches. The attrition. Yeah. Six Flags. Jenna Partners wants a sale and a and a big board shakeup. And they're using Mr. Taylor Swift to help them with that. The Taylor Swift's husband is helping with this, although this week there was a there was a very notable death at a Six Flags Park on a roller coaster. So I don't know. Does that help Jenna Partners? Does that hurt them? I I can't believe I'm using a death in this situation, but Mr. Taylor Swift, yeah. You know it's gonna be part of the story going forward. Look, if you've been to a six flags any time in the last twenty five years, you know that it doesn't help them. It doesn't matter. Sanderson at Sanderson Design Group, activist fund LBV, which owns fourteen percent of shares, is mostly upset about high pay and low performance. That's kind of things that we get upset about a lot. Sanderson director Patrick Lewis is upset. He's threatening to sue the founder of LBV for defamation over the campaign's aggressive claims. That's is that that's kind of a new one, right? I w yeah, well isn't high pay and low performance numerical things that you're upset about? It's very hard to call them aggressive claims when there's a number that you can point to and say, Look, that number's high and that number's low Absolutely. this is a new one to me, although maybe it happens a lot and they just don't publicize it. DGB Investments, which owns five percent of Ethan Allen. They want to blow up the board completely. They just want a new board, which I'm all I'm here for. I I'm here for you, DGB. but what they're doing is they're they're trying to entice Farouk Kathwari, the the current CEO and chair. They're trying to get him on their side by offering him a participation trophy in the form of chair emeritus title. So they're they're kind of floating this carrot stick of like, hey, help us out here. Fire everybody, but we'll keep you along with an honorary title. They call it an honorary title. Like, is is this gonna work? Yeah, tell me. But do you know what I like about this? But but like this is so we saw Rupert Murdoch do this at at Fox. He stepped into a chair emeritus role, right? of course it was his choice. But the point is it it codifies the idea that the emeritus chair actually has power. If you are enticed to take this, doesn't it mean that chair emeritus is a meaningful enough title that you would take it? Cause they're in the boardroom. That was his choice though. Yeah. That's true. That's true. They're in the boardroom. They're gonna get paid like a board member. They're not j they have a say. They don't have a technical vote. But if you're the person that everyone listens to, what difference does it make? They have a say, they just don't have a vote. They can threaten. They can stare. Yeah. Whitbread, which owns Premier Inn, which is a a a hotel chain in the UK. Whitbread, really? I mean, it's just too close to white bread for me. I'm sorry. Cor so Corvex management is demanding board representation. they're they're alleging a chronic misallocation of capital. But I'd kind of like to just like this fight because Whitbread came back and called Corvix's proposals a complete waste of time and money. I just like how they said a complete waste of time and money. And they also said a complete waste of company and shareholder resources. So I just kinda like how complete they think they of a failure they think. It's complete. It's just everything you've done is a complete waste, yeah. Corvex is Keith Meister, who is a Carl Icon protege. So that's that's who Corvex is. Yeah, it's a thing, I guess. And finally at Pepsi, Elliot Investment Management is targeting Doritos and Cheetos, and they're blaming Ozempik. Well, I mean, what a world, right? So they want Pepsi to sell the Doritos brand, the Frito-Lay unit, which makes all the the really crappy stuff that gets stuck on your fingers, you know. Is that a thing? That's a thing. Protege? Okay. And they're blaming weight loss drugs. I what a world. I don't know. I just But what but but doesn't the whole companies sell crap? I don't I mean, isn't that part of it? Can we just shut down Pepsi? I don't think humanity needs it anymore. that's it for the proxy c the proxy cage matches. Moving over to the vote vote results table. Now there's not a lot of votes coming in, so I look back to September first. Wow. I thought sugar drinks were also is a part of the thing. Did find 18 meetings of companies with at least a billion dollars in market cap. Here's the top story from my perspective, which is all I care about. The accountability board is my new hero. That's my top story. I love you, the accountability board. So th they I I feel like they have to be listening to my constant complaining because they put up a shared proposal that I am so fully in support of and I think is so right on. at Darden Restaurants, they asked for a policy providing that if any director fails to receive at least eighty percent of the votes cast in an uncontested election, they wanna know why. They wanna they want the board to to tell them what is going on. 'Cause we have said over and over and over basically if you hit twenty percent threshold, that's a failure. Y you're gone. You're you're you're a bad director. And I Wow. That's a fail. Yeah, you yeah. I just love the accountability board for for proposing this. Unfortunately, I'll g I'll let you guess. What do you think this shared proposal? What do you think the vote was on this one? No, well, I will say no, zero is reserved for the for all the like boyer research proposals. This one only got three percent. I I don't know. I don't get I don't get investors. What's the pr why don't you want more disclosure? What's the problem here? Zero percent. Zero percent yeah. Look at Can I make a request of any investors who are listening to this who who file shareholder proposals? This is the last year to do shareholder proposals in the United States anyway. So, like that now let's take some chances. I have been I have I have been tinkering with the idea of a proposal, which is disclose every connection between every board member, and you know, produce a report that basically says I love you, accountability board. That's true, that's true. this hurts. All the places that, you know, not foundations and nonprofits and like local community events that they that board members go to together in order to understand a sort of the broy connective n tissue of directors. Can w can accountability board. You've now s like given credence to Damien's favor proposal. Can you do mine? Do mine next. I want I wanna see mine. Yeah, I love it. and then another win for the accountability board. I mean they're on a hot streak. I don't even know how they won this one. at General Mills, they had a proposal, a policy requiring shareholder approval before distributing blank check preferred stock. They won. Sixty three percent said yes. How? How how did they win? Tell me. How? I I I think I think if an investor sees the word blank check, I feel I feel like they they f that feels really risky to them, yeah. They don't like blank check. accountability board, if you have any like swag, you know, like tote bags, umbrellas, whatever, send them my way. I live in Maine, just send them to Maine. some near winds, independent board chair proposal at FedEx 40 about 40% yes. I mean, I don't know why that one doesn't pass everywhere, but that's not bad. And then a special meeting rights proposal at Casey General Store got 39% yes. I I I peeked in at some of the hate proposals. Like PBS. That's pretty good. I don't either. No. Boyer Research. Th they always they seem to hate the human rights report. Like they really hate the human imagine hating the human rights report. The human right to anything. Imagine hating that. Well, the human rights report does include rights of gay people and black people and women and Okay, say no more. That they put one up at Nike, a charitable support report report and they've of course less than one percent. Yes. I mean I it's a joke already. I'm sorry, it's a joke. that's about it for shareholders proposals. say on pay, only one notable mark at Nike, which is getting a lot of negative sentiment in generally. They got thirty-two percent no there. Let's move over to directors, because I have a couple of strange Cases for you. So speaking of the accountability board, I could only find two directors out of those 18 meetings that were over 20%. So to the to the accountability boards to their credit, that's just that's statistically significant, right? I mean only two out of like 200, basically. So that's meaningful, I think. Here's the one that really gets me. Nike. Three class B directors were up for vote. Monica Gill. And Robert Swan. They got way over 90% support. But then there's a woman named Thasunder Ducket. She got 38% no. And and I would love to know why. Just like the accountability board like to know. Because here's all I can find. So they all three directors serve for under a decade. So tenure is not a problem. Robert Swan, he comes from Andrees and Horowitz. He sits on two other boards. Monica Gill, she's a member of the pay committee. And remember, this is a company that they got 32% no on San Pay, so she could also be a target, right? But the Sunda Ducket, why? She's a CEO of the Teachers Insurance and Annuity Association of America. That's T I A A. She's on no other boards. The really the only distinguishing mark against the Sunda that she's a black woman. Dare I say it? But that That can't be the reason. I mean what Y you're sure this isn't an attendance d vote? I I didn't see anything about attendance in the proxy. I looked for that. All directors. So yeah, reach out to me if anyone knows. I I I like that people I like that investors took their time to vote against Thusunda Ducket and not Mark Parker, who's been there for twenty years. No, Mark well, he was not up for vote, I don't think, right? It was a class there's only class B. Yeah. But they could have targeted someone from Andrees and Horowitz who's on two other boards. I I mean that could have been a target. Or or the woman who's on the pay committee that made the pay that you hate, that you voted thirty two. Yeah, anyway. the only other and then there's again, RBC Barings, the second director with more than twenty percent no. She got twenty three percent no. Her name is Dolores Anico. it's it classified? He's a different class? that would explain it. That that you voted it yeah, you didn't like that, yeah. only two members up for a vote because of a stupid classified board. Why Dolores? is it because she used to be chief human resources officer at Olin Corporation? I mean probably not why they targeted her. Maybe she's just too old. She's seventy three, right? That yeah, there you go. Yeah. Yeah, there are no seventy three year old male directors anywhere. the other director up for vote was CEO chair Michael Hartnett. He got ninety-seven percent yes. He's eighty-one years old, so I don't I don't know. So again, what is it? What is it about Dolores? There's nothing about Dolores that warrants that that's why the accountability board is so right. Like, just tell us. Like, what's do it do your research board, talk to the investors, ask them like why do you hate these women? Like what are we doing here? What's happening? Not too not too old. That's nuts to me. Alright, that's that's all I got. That's let's I'm gonna hand it over to you for the big vote. All right, you ready for this? I'm going to this is gonna be riveting podcastery. I I've I I've separated my discussion of the SEC into two sections. One, the SEC is a joke part one, and the SEC is a joke part two. part one part one is protect the oil. so I don't know if you saw this, but the the I'm always ready. Podcaster. Yeah. Wow. Clever. Yeah. Well The SEC released Paul I should just say Paul Atkins because basically the SEC is two people now. It's Well, a actually no now it really only has to be one person, right? 'Cause they Right, so it it really can't just be Paul Atkins. Yeah, which it is, which it is. Yeah. What has to be a quorum of one is what they passed. Yeah. It can be just Paul. It's just Paul. So Paul Atkins conducted a quote unquote investigation of the the engine number one versus Exxon Mobil dissident slate in twenty twenty one. So we're doing an investigation of something that happened five years ago, to f I wanna see that. I wanna see the papers. Yeah. Well it was embarrass it was embarrassing to Darren Woods and Exxon. He's sticking up for his buddy. It w not only was it embarrassing, it was c clearly dim like emasculating to them because it the minute they lost, so Exxon Mobil, yeah, engine number one puts up a slate of directors, they put up four directors, three of them won, and unseeded three of Darren Woods' choices for directors. Yeah, exactly. That's the the more important point, yeah. The next year, ExxonMobil expands the board and puts on its own directors to dilute the power of anybody added by engine number one. The following year, ExxonMobil sues Arjuna Capital, its own investor, for a a shareholder proposal that they were legally within their rights to to file. And the SEC didn't even bother going through the no action process at the SEC. They just sued Arjuna. They just sued them. And Arjuna had to. Crazy. Yeah. Caved and basically said, We'll never file another proposal again. They basically said, just please leave us alone. we're just doing what we're we're rightfully allowed to do. And now ExxonMobil has their man, Paul Atkins, in the SEC. Paul Atkins was actually Exxon was his client at Potomac Advisor. So literally their man. Like this is somebody they worked with. Yeah, that's a big cave. Yeah. Yeah, he he ca he comes from the oil man's administration, George W. Bush. He was also served in the SEC under the oil the oil dude. Yeah. So A lot of overlap here. investigated the engine number one slate to see if investors who voted for the dissidents were simultaneously coerced and had formed a group. Th they had to form a group. If they formed a group, forming a group means that you are an activist investor. Coerced, yeah. I love that term. That you need to file 13D filings. It's a massive amount of paperwork and legal hassle. It costs a lot of money. Act every activist investor will tell you Mike Levin, who's a friend of the show, who does the shareholder primacy podcast, he'll tell you these are not cheap. It's a takes a long time. It takes a lot of effort and a lot of money. So the investigation, here's what he said. I'm I'll read you this and then I'll summarize. Quote: The investigation considered evidence as to whether investors and asset managers, including BlackRock State Street and Vanguard, joined. Mm-hmm. A group of ExxonMobil investors, including after BlackRock and State Street became members of the CA100. CA100 is the Climate Action 100. this evidence included BlackRock and State Street after becoming CA100 members, engaging in certain communications regarding ExxonMobil with Ceres, a Boston-based nonprofit that serves as the North American investor network supporting CA 100. The evidence also suggested CA one hundred and its members pressured BlackRock and State Street to support CA one hundred flagged matters submitted to shareholder vote, including the May twenty one election of dissident directors XOMobile. Summarizing Is there th is there proof of like the the pressure and the coercion? Just summarize summarize it. Go ahead. Yes. Just here's the here's the summary of his opening sa his opening salvo. BlackRock State Street Vanguard form a group for the purposes of activism. They that group is coordinated by the Climate Action 100 and convened and pressured by nonprofit series. And the point of the group is to put directors on Exxon's board. That's the investigation in a nutshell, okay? And it's all to figure out whether or not they illegally formed a group and didn't file. Now, meanwhile, d Elon Musk is. i i illegally d d he neg neglected to actually disclose his Twitter stake, right? Like a massive black letter law. There's no there's no finding here, right? Like that's just he he just didn't do the filing. That's w w one of many things that he that the SEC's been upset about him in the past. He paid $1.5 million for it. He paid he spent $300 million on this election cycle, but paid $1.5 million for violating a black letter law, very simple black letter law. on the other hand, we're investigating a two nonprofits and some asset managers from five years ago for putting directors on Exxon's board. All right. And here is his file the next sentence in literally the next section. Yeah. Pesky New England non profits, yeah. sentence of his investigation. He says, quote, on the other hand, Vanguard never became a member of CA100. And the investigation did not develop evidence that BlackRock or State Street agreed to vote proxies in certain manners or shared their proxy voting intentions with investors or others associated with the CA100. In the next line, he admits, no, there is no evidence Yeah. Yeah, n no coercion. Yeah. Vanguard didn't even join, and BlackRock and State Street, there's no evidence that they even discussed this with anybody else. Then, while most attorneys would stop there in their quote unquote investigation, and there'd be no document because there's no evidence. He spent twenty-two pages disclosing everything that he thought looked suspicious in order to get to a point. my god. Right. Mm-hmm. Where at the end of the document, their recommendation is we will consider if you are a signatory to anything, we will consider you as part of a group now. The goal Wow. A c a signatory. Just a sign just a okay. Just a s just a signing something, a pledge. He in fact, his ta his takeaway is even though Vanguard doesn't even join and they still vote for the descendant directors, his takeaway somehow is still that be if you become even a signatory of these things, that you are at risk of being of forming a group. So I mean At this point, you have to ask what's the point of this, other than to protect his buddies at Exxon, right? And crush non the non profits, right? Like like the who do environmental activism of any kind, right? Like that's it. Eve Or or yeah, protect management in general at corporations. Yeah. Any share it sounds like any shareholder who ha has a a point he's trying to crush. He he actually he actually says in the document that he will consider you a group anyway, even if there's no evidence saying that the act of joining any quote signing statements doesn't shield you from the SEC determining even determining that you're part of a group, even if you quote, didn't technically form a legal group. So he's basically saying he didn't even if you don't form a group Yeah. We might consider you to have formed a group. I mean there they must be f someone must be fighting back against this in the court of law, no? There's nothing to fight against because they didn't take any action against Black Rock State Street series combat action. It's a threat for all future dissidents and of any kind who are part of a it's basically a threat to environmental non prof non profits. just throw no it's a g is like a veiled threat? They're on notice. It's a it's a check by their name like in sixth grade on the chalkboard, like Yeah. He has made it toxic for any asset manager to join any group that represents investors or works with investors on on ERS issues. So this I mean if there's if there's anyone colluding, it's him and Exxon, right? 'Cause isn't this a direct isn't this a direct step from what Darren Woods did? He he sued the shareholders, basically scaring the hell out of everyone. Yeah, and then and then the following years their shareholder proposal plummeted. Yeah, it's there it sounds like he's doing their work for them. Yes, absolutely. Yeah. That yeah. Correct. That's correct. I mean the This is the collusion. That's the c the only actual collusion. In fact, when he points to he points to like as part of the evidence that he like expounds on as this is really d you know, you know, not good, is he he points to this internal document, because they subpoenaed internal documents from all these groups, internal document from Ceres, it says, quote, the minutes also detailed discussion between BlackRock and Ceres regarding ExxonMobil board refresh campaign. The the minutes said talked about scoping good board candidates for Exxon campaign. BlackRock said there was no chance that they would ever help us with that. So in the minutes of the subpoena documentation, BlackRock is fully exonerated. They basically are like, We're not helping you with anything. This is nuts. And then this is all because engine number one put on the board Greg Goff. Yeah. The CEO of an oil company, Kaisa Haitala, who worked at renewables as an executive at an oil company, and Alex Karsner, who was a government guy working on energy efficiency, and got rid of the incumbent Doug Oberhelman, who is the ex CEO of Caterpillar. He's actually less qualified than the new directors. Sam Palmas Palmasano, who's the ex CEO of IBM. Yeah, I was gonna say. Which is completely unrelated. Yeah. Which is not even related to what they do. And then the nominee th who wasn't even on the board, Wan Zol Kilfi, who was an ex CEO of a Malaysian oil company, he was appointed in March by Darren Woods and he voted out in June. So he didn't even get to really be part of the board. Yeah, I mean this is again, you're I think you're right to point out the the emasculation of CEO, right? Taking his power away. That's all that was. That's all that was. So that's part one. Part one is protect the oil. Part two is protect the mediocre. So this is from a paper, Bram Vandercroft, who's an MIT professor, doctorate, just like the Uber smart dude. He reached out to me, he wrote this paper called The Value of Corporate Ballot Access. that was just part one. All right. Let's do part two. Okay. And he gave it to me because SEC has rescinded Rule 14A-8. We've already talked about this. no more shareholder proposals, right? Everybody in the space already knows this. So let's pretend for a minute. I I'm gonna drop some clips of what Bram said. because I asked him, I read the paper, it was awesome and super interesting, and I have some takeaways, but I wanted I got some audio clips from Bram. Let's pretend we're in a pre-Paul Atkins world where everyone is happily filing shareholder proposals. the the shareholder proposals cover everything governance, ESG, anti-ESG. The SEC is like a competent place full of lawyers and commissioners who do their jobs. It's it's a regular kind of like pre-Paul Atkins world. Bram's paper, The Value of Corporate Ballot Access, it came out last week or earlier this week. They focus actually, and this I love. On specific lawyers at the SEC. What he wanted to do is look at proposals that came in and say which of the proposals are sort of borderline proposals? Like should be on a ballot, maybe shouldn't be on a ballot, where one lawyer would get rid of that proposal and another lawyer would let it in. Those proposals By using specific lawyers at the SEC, their sign signatures on the no action letters, he can figure out which ballot items were borderline. So which ones maybe should be thrown out, but also maybe are interesting. By focusing on that, I I already love this. Here's Bram decided are are talking about exactly how they did this focus. All right, so they actually this isn't you know paying attention to the substance of the proposal yet. It's just it's just a person. These margin cases, which he called the margin of shareholder control rights, they're they're borderline cases. the finding that he has is that effectively, a borderline proposal that makes it to the ballot reduces firm value the day after the month after, even two years after, reduces the value of the company by one point one nine percent on average. It lasts a really long time. Here's him talking about the the f the main finding. But that's actually the thing he says there at the end is not is like almost the worst part because when he looked at the topic of the proposals, it's entirely driven by environmental and social proposals. So here's what's happening. Because I can see in your face that you're not entirely sure what I'm talking about. All right. The lawyers at the SEC are are basically on the fence about these proposals. Bram identifies which ones they're on the fence about when they go to the ballot. Okay. I'm there, I'm with you. The average effect is the firm loses 1.19% of their value. So these are the ones that like are like they're not legally ironclad, but there's clearly investor interest. Those proposals are actually entirely driven by just environmental and social proposals. Those lose firm value worth 2.56%. And it's persistent loss of value. So when you see an environmental proposal from as you sew on the ballot that is right on the border, and you can't tell which is a border proposal, but when you saw that, the average effect was the firm loses two point five six percent of its value. When investors are the effectively what we're seeing is environmental activists were hurting Exxon. They were hurting the value of Exxon in some way. Because Exxon's one of gonna have Okay. Huh. Yeah. Sure. Well, as you so would say that X Men was hurting itself, but go ahead. Yes. Like they had so many proposals, many would be on the the border. But the the subplot here is because it seems like, all right, Atkins is right. Atkins is saying that like these shareholder proposals are hurting firm value and they're they'll re and it's environmental activists doing it. But the subplot here is when management is entrenched, when they're dual class shares or a controlled company or whatever, there is no pain There is no it's already priced in. There actually is no drop in firm value. There's no damage to the firm if a borderline proposal makes it. It's only when the CEO is not they're vulnerable, when they're firable, when they're like a CEO who's mediocre, like it's your average CEO. When they lose the battle to keep something off the ballot, their firms lose the money. I actually read this. As investors are confirming that the CEO is vulnerable and doing a mediocre or bad job, and they reprice the company. Because the ballot basically, if it makes it to the ballot, the SEC is saying there's a legal, you know, there this is this is a legal request from a shareholder. And those things that are making it to the ballot are generally environmental and social proposals. And those proposals are basically saying, we're finding problems, we want more data. So they're Interesting. Right. Yeah. Well, they're pointing out long term risk. They're pointing out long-term risks and investors may not be aware of those long-term risks and those these borderline, these borderline ballots are basically showing at at vulnerable CEOs are basically showing the CEOs not doing their job in dealing with these long-term risks. Yeah, I was gonna say that and I should add that they're not necessarily even pointing out long term risk. They're suggesting are are you paying attention to the possibility of long term risk? Right. Yeah. Are you looking? Exactly. So Atkins killing shareholder proposals does two things. Number one, he does reduce the damage to share price by p by his politicizing the SEC and blocking everything that's environmental and social, those firms will retain their value, right? Like they won't see these proposals anymore. But number two, he's actually artificially inflating the share price for bad CEOs. Interesting. Yeah. Who are trying to block ENS proposals that are on the margin, and he's basically showing the market a happy face when the CEOs are a real risk. They're not actually that good. And Bram actually warns about this in his you know, he hears Bram talking about it. You know, yeah, go ahead. Yeah. But yeah, so basically now managers are incentivized to kill proposals and yeah, we protected mediocre CEOs and oil. That's that's that's where this lands. L let me add something quickly here. And I know the study can't possibly account for this 'cause it never has existed. But but what if there were a universe where management did not fight back against everything they did they didn't take a a constant contrarian position and they didn't see these as negatives. They they actually saw them as the shareholders contributing valuable insight. I mean, you know, like dealing with the long term risk is never a bad thing. but but instead they they di Paul Atkins Is he's really instrumental in in this official view that these are political, these are combative, these are bad. Like, how do we know that that's not also contributing to the decrease in firm value, right? I mean, if they just embraced the shareholders, because again, none of this is really like binding stuff, and and a lot of it really is just asking for reports. It's not necessarily asking because you cause the proposals can't They can't really get involved with day to day operations. So h how do you know that that management not constantly pushing back isn't creating this sort of setting to destroy their own firm value by just being obstinate? I'm just throwing that out there. Honestly, like I I think actually the the grand coup here, when you take everything the SEC has done in the last two years, the grand coup, and we talked about this many times, is the transfer of power from the minority shareholders and shareholders to management, right? But the biggest winners with the last couple things that they that Atkins has done, which is the protecting the oil companies, which effectively insulates The worst actors for environmental issues, long term risk from any sort of action, and protecting purely mediocre CE CEOs from environmental and social proposals at this point is all meant to artificially inflate the value of firms at the expense of the long term. It isn't actually a transfer of power, it's a transfer of time. Everything now is about short-termism. And if they enact court like the biannual reporting instead of quarterly reporting, right? We are actually masking it even further. The number of short-term decisions that CEOs can make, because there is no accountability mechanism, there is no convening, there is no discussion with investors, there is no, I mean, it it basically says. Mm-hmm. Not only do managers have the power, but they have the power to enrich themselves in shorter and shorter periods of time with no disclosure or pushback. Because firm value drops two percent, right? With an environmental and social proposal on the border. That's two percent off of your options. That's two percent off of your pay. That cuts directly against you. Well, I gonna say there's it it's not a coincidence that we're seeing so many short term r retention bonuses outside of the pay plans, too. Short term management in the short term. Anything else? Exactly. Exactly. Yeah. do you need more? That's all I got. You done? No. That's the proxy countdown for the week of October twelfth, twenty twenty six. Join us next week when we jump back into the alternative democracy pool. Forever on the lookout for shareholder shenanigans, dopey directors, scandalous CEO pay ratios, and wayward band-aids.