Transcript
I I my jaw. Live from the footnotes of a toasted coconut scope two emissions report. Nobody talks about those reports anymore. The toasted coconut ones for sure. No one talks about those. It's an all new terrific Tuesday edition of Business Pants joined by analyst whole Matt Muscardy. Yeah, right. Yeah. On today's nomination committee chair scented golf balls. Wait, what? Nomination chair. okay. It's a person. Not the chair, but the the chairperson of that committee. Their sent. Called July seventh, twenty twenty six. The boardroom buy-in and things we missed game. Yeah, I'm here. it's the person smells like a golf ball. Got it. so many things are happening at one time. boy. Yeah. Our show today is being sponsored by Freeflow Analytics, Freeflow Analytics dot com and the new beta platform. The only platform measuring everything. Is that the new copy? Yeah. Ever everything. I think that's the new copy, yeah. All the things. What is it what are these games? Did you remind me what the game is? Okay. We're y you went you went on a nice vacay, which you deserved, I suppose. And so we missed a bunch of stuff. So I I I I required you and myself to just go and pick a few stories that we missed that we thought were important. We'll share with our listening audience because we're here to educate them for free. We don't know why. And then secondly I I mean, I tell myself that, yeah. We're gonna play the boardroom buy-in game where we pick some headlines and then we try to convince each other to to invest or not. I don't understand this that game yet. I I I don't know why we're doing both, but we're kind of just cramming a bunch in the summer is is difficult. It's odd. It's hard. I honestly everything's hard. It doesn't matter. It's all hard. So let's just do this. Let's just we start with things we missed. Alright, well. Okay. Let's both start with things we missed. I'll d w we can go how many do you have? Alright, we'll go back and forth and then we'll get to our boardroom buy-in game. in no particular order, I'm gonna start with one that you're gonna hate. In fact I'll do I'll do two. I'll do two you're gonna hate. First, I just wanted to reiterate I've only got two big things that we missed. Yeah, that works. All right. Okay. Well I'm glad I missed it then. That the meritocracy is still a lie. l not alive a lie. Got it. Okay. Okay. Lies. It's not a real thing. It's a lie. So if you're looking for talking points during during your barbecues or dinner parties, I picked this headline 'cause I just want to keep re reemphasizing this point. The headline was don't look at the resume. Elon Musk admits he's fallen prey to flashy credentials and says conversation matters most when hiring. He says quote generally what I tell people, I tell myself, I guess, aspirationally, is I even that I don't know what he's talking about, is don't look at the resume, just believe your interaction. The resume may seem very impressive, but if the conversation after twenty minutes is not wow, you should believe the conversation, not the paper. Yeah. Yeah, I know. We d I mean, things that are written on paper w we we should really just get rid of paper, I feel like. That's the problem. So So w what is the merit so what is the meritocracy? What is it? The meritocracy is what a tech bro decides with their gut when they're standing in front of somebody. What is it? Someone reach out to us and tell Matt at freeflow.lc or Damien at FreeFlow LLC and tell us what the meritocracy is. All the next actually two more headlines I wanted to add on to this one. this is from the Washington Post, a depressing feature called four black women, nine degrees, not one steady paycheck. So they're talking about the overeducated I guess they are. I guess they're overeducated because they're there are all their good stuff's on their resume, right? That's not where it's supposed to be. So all so all the black women and and black people in general suffering and they and they tied it to Doge. So there's a higher a higher percentage of black Americans working in the government based on the population. Like it's a it's I think it's like thirteen percent of America's black, but it's like almost a quarter of government employees were black. And Doge did a pretty good job in firing a lot of those people. So they tied that story to Musk. and finally this other headline, there's a new study out that women are more likely to get hired after taking GLP ones, which is the weight loss drugs. Well, whew. That's not shocking. I mean the dudes are doing all the hiring, ar isn't it? I'm not saying it's shocking. I'm just kind of reporting on some of the things we missed. It is shocking, actually. So take it back. Right. Look, that's the no, that's merit. That's what merit looks like. It looks slim and has fun conversations. That's what merit is. Yeah. Okay, well that okay, and I'll just do one more before I hand it off to you and then I'll I'll I have a couple more serious ones. I just wanted I just wanted to reiterate too that Zuck still sucks. Okay? In case in case you're you're you're still debating whether you should be deleting Instagram. Mark Zuckerberg, here's the headline Mark Zuckerberg sure sounds eager to get young people hooked on online gambling. So he is Did that needed reiteration? The CEO of meta platforms, the founder, the controller, the dictator, is developing a social network betting market app. This guy has not come up with a single idea in t twenty years. But our I mean, like i like i you pulled a bunch of stories this week about how he's now saying their AI isn't moving fast enough and they're failing at doing AI that But this is bottom of the barrel. I mean this is They're not really at the top of their game except for th they they were smart to buy WhatsApp and Instagram. That's it. End of story, I guess. I I g well, again, an another couple things he didn't come up with that he just bought. So he didn't do anything with that except buy them, right? Like he he did inspire a new Aaron Sorkin movie coming out, called The Social Reckoning. Have you heard of this movie? But still that's it. That's all can think of. Yeah. Yeah, which I I read that Jesse Eisenberg is not he does not want to play Mark again. Yeah, because he is so associated with that role that he played originally that he feels gross about like being Marxist. I mean, what what an amazing run of 20 years where you can simultaneously thwart and destroy democracy, thwart and destroy truth, call yourself a s a free speech absolutist, but censor anyone who doesn't agree with you, buy everything that Right. Yeah. Yeah, he agrees with he agrees with me that Zuck still sucks. Yeah. I th I love that. I love that. Ugh. that's successful and somehow ruin it and everything you try, like lest we forget the metaverse, which they renamed the company for and lost billions of dollars, like everything he does is shit. He's actually not that good. Yeah. Oops. Do you think he's pissed do you think he's pissed that the company's not called AI platforms? That'd be better, right? I'm just I just think he's not the I think we we venerate these d dopey s tech bros CEOs because they broke some rules to get like b become billionaires. I think they s kind of suck. They're not actually that good at the things they do. But thank you for reminding me that they suck. You, you venerate them, I don't. Yeah. Well, w what's worse with Zuckerberg's Empire what's worse is that the just the addiction angle of it. You know, first social media now betting. I mean this guy he's he's bottom he's gutter guy. This is a gutter dude. All right. This ma I I I'm really hoping Dana White on the board stops him. I'm really Give me a few of your things we missed and then I I have a few serious ones. I only have two big things we miss, so I'll do one and they're bigger. the and neither of mine are are funny at all. the the one I pulled that I think is the biggest thing we miss is the story DOL's replacement, DOL being Department of Labor, replacement ESG rule reaches White House. Okay, so the Biden administration put in place Go, go. Yeah. The Department of Labor is the one that oversees ERISA. Those are like every retirement fund in the United States has to follow ERISA rules about how they are allowed to put their retirees' money to work for them in the stock market. they set the ERISA rules. And during the first Trump administration, they said ESG can't be used unless it's financially material. And then Biden said ESG can be used. And by ESG, I mean data. I'm just talking about data. Yeah. Can be used as a tiebreaker. So if you have two investments that are substantially equal, you look at ESG data and you say, like, well, this one's better off than that one when it comes to the long-term data. The Trump administration obviously wants to roll that back to what they had the first time. But the interesting part this time around, Trump signed an executive order in December where he was attacking, you know, ISS and Glass through List. You remember that order he did, or he's like, Tiebreaker. Yeah. he he had an order attacking somebody. I just that's a shock. Yeah. I do remember this one though. I it's it's shocking. I know it's hard to remember all these things. But the DOL, as part of a follow-up to that order, they issued a technical release this April warning that proxy advisory firms may be subject to ERISA fiduciary standards. Now, what that means is effectively what they're saying is that if an investor Is taking the if the proxy advisor, anybody who sells advice to an investor may also be a fiduciary. They may also be acting on the ben to the benefit of the the clients with the money. That is the biggest legal stretch because ISS and Glass Lewis don't have the people with the money. They just have opinions. They get some data, they have an opinion. It would mean that. Okay. Yeah, because it's advice. Yeah. And they don't and again, like let's f th th th I know they're referred to as like a cartel. They don't th there's there's no world where they're forcing you to follow their advice. Correct. No, you no one has to do anything that they say. Let's not mandated anywhere. but it would the the technical release suggests they may be fiduciaries themselves, and therefore that this is their way of trying to s kill them from doing any ESG or governance related work at all. But the the stretch here is like, okay, well, if ISS and Glass Lewis are fiduciaries, that means Right. I mean it's just yeah. Yeah. They may be. Right. Everyone selling research of any kind to someone who makes an investment decision should also be a fiduciary, right? Like Well, wouldn't that include like the shows on C N B C? It would include Jim Kramer spouting off. Yeah. It would include everybody. Anybody who says buy this thing 'cause it's great or w I love this stock. Like Right, as I'm saying. Right. Right. Yeah. 'Cause you are pa you are buying that. I mean it's part of a cable package, it's not a free network. It would mean that we free float our fiduciaries 'cause 'cause w this show we're doing in and out. We're doing buying and selling. While we are. This is their understanding of this world is the equivalent of like remember the the movie reviewers? I'm dating myself, Siskel and Eber. I one of them is not even alive anymore, but maybe they're both actually not alive anymore. But but but stay with me here. Th this would be like them saying, when a movie reviewer gives you a positive what gives a movie a positive review, you have to go see it. And when they say two times out, you cannot see it. Like yeah, yeah. Two thumbs up, baby. They're both dead. Yeah. No, it w That's what they think's going on with ISS in Glass Lewis. It's it's almost worse because it says if you give a movie two thumbs up and suggest going see it, that that you are responsible if I don't like that movie, right? Like like like I I should sue you for giving that opinion. Like that's that's th that what they're enabling. So from the technical release in April, they actually stated that proxy voting Yes. yeah. In order to get to the place where they say proxy advisors may be quote functional fiduciaries under Arista Section 321A two by providing investment advice for a fee to plans with respect to property of that plan. In order to get to that place, they had to say that proxy voting, this is their language, proxy voting is a fiduciary duty. Well, if that's the case then then how come all the votes aren't binding? Okay, now we're opening up a can of worms that I love. This is why I'm glad I I'm sad we missed this. Right, but why th then they should be then everything should be a binding vote. So if you define proxy voting as a fiduciary act, which means that Mike Levin, who on the shareholder primacy, you know Mike, we have a crossover episode coming out. He mentions rational apathy. He mentions rational apathy, which is not, you know, just siding with management and proxy voting because it's in your economic interest to do that, right? Like it's too hard and too you you're indifferent to the outcomes, it doesn't Mm-hmm. I know Mike. Yeah. that's where I know Mike from. Okay. Doesn't make sense to you, you just kind of ignore it. You rational, I don't k it's rational to not care is what all it means. It means definitionally that you can't have rational apathy because your fiduciary duty is to care. You you actually have to care. It's one of the three parts of fiduciary duty, like caring, right? Okay. Yes, is to care. Yes. A r irrational caring. Yeah. It also means that if you vote ninety nine percent in favor of management, which is what we see, you are ignoring your fiduciary duty entirely. Yes. Yeah, 'cause that's Yeah, 'cause there is no there is no measurable thing in the universe that is that is correct and and right in in just that much p of the time, right? Well, half of companies underperform every single year, right? That's that because that's the by definition. Like half of them are just below average. So you could argue that n we don't the vote for 99% in favor of management is because we don't think in one year terms. We think in longer terms. In which case, you also need to say we need to use long term data, which would mean environmental and social data. So then you're saying. Course. By definition of of a of of average. Yeah. Yeah. Environmental and social data has to matter because we vote in more than one year at a time. Or you're saying we only vote one year at a time, environmental social data doesn't matter, and therefore you should be voting against nearly half of management every single year. So thank you, Department of Labor, for going twisting yourself in a legal pretzel to get rid of ESG only to make ESG and voting against management. Yeah, absolutely. mandatory in some ways. So I think what I think what you're saying is that when Hi Hunter Biden wins the presidency, he can kinda use this precedent to kinda right, to to s to do what you're saying. All right. I don't know what I'm saying, but I love it. I love that I love the act of it. That's that's one of the big things we missed. We didn't talk about it from April. We missed it like a f month ago. That's all right. We we still we still missed it. I have one more. I'm gonna I'm gonna I'm gonna cut cut one away 'cause I know in the interest of time today. Delaware Court of Chancery interprets new section one hundred forty four and applies heightened presumption of director independence. I don't like this. So this this and I think, you know, we talked to Ann Lipton yesterday and I and she was talking about how it with this with the Dexit going on in Texas that the Delaware was kind of busy lowering its standards, right, to appeal to all the the Dexit Dexiteers, right? So this came up in a in a the common context of this is like a just a stockholder litigation case, right? So Yeah, yeah. D What w what heightened presumption means is that they are now reco of requiring the plaintiff to to come up with some substantial facts to to argue against this idea that the that there's a heightened presumption of independence with directors, right? So so the the you're presuming they're independent. They're presuming their innocence before what is it, you're presumed innocent before P presumed innocent before guilty? Yeah. So now the the court concluded in in this case that the plaintiff's allegations of various overlapping board positions, overlapping investment, and other quote business ties, end quote, with the company's founder and non-executive chair were not sufficiently material. So what they're doing no. So what they're doing is putting a a massive burden on on pr proving now that directors are not independent. That's not material? So th they and they call that they're calling that that type of of evidence a collection of trivial facts. What Do the directors have to be having sex together? Do they have to like live in an orgy director house? Well, but you didn't you d there wasn't there some law that you some some rule that you pointed out years ago where it was okay if it was your sibling or like there was some weird rules like they had to live with you in order to be d to be connected, right? They had to be from the same address. They so the yes. I'm saying this but you're you're you're staring at me frozen. My my internet keeps cycling. Are you there? I'm back. Yeah, my internet cycled. So you you're asking about like the the rule, the New York Stock Exchange rule for what is independent, right? It's You back? Right. Well there you y you raised a case where you you essentially you had to be living together, right? To be considered a relative. Yes. It's not just that you're living together. You have to be related to and living together in order to be. Right. So Kimball Musk and Elon Musk there could be a case where Kimball Musk is independent of Elon. Yeah, there there could be, because he I he presumably has his own house, but I I don't know that that's the case, right? But they did they the SEC is confusing now because they ruled just two years ago that there was an executive who was on a board who was vacationing with and personal friend had a personal relationship with another board member who was you know, are the management team and There could be. Yeah so Yeah. The in the filing they said they were independent, but they had a lack of social independence and therefore he was barred from being on a board. So now we don't care about that. We don't care about that. Well, I I it that's where it's not clear. I mean, they're saying that that that the the evidence has to be a a matter of quality and not quantity. that you have to that but they're not really clear what that means. I I I don't you know, I don't know who determines what when a director is no longer independent. I that's where it's unclear to me. And again, this is Delaware. This is not the SEC. Like how much money needs to be involved between two people before they're not independent? Like you know, like Well that I don't know too, because don't forget the proxy statement doesn't have to declare certain amount like certain business dealings under a certain amount either. So I don't I guess that would yeah. Go ahead. So here's the thing. If you're an investor, you just have to vote against directors that have these trivial lack of independence. Like you just Well that's where you can that's where you can make your own determination. Well they clearly Delaware is going to say everyone's independent and clearly humanity doesn't exist like that. Well there's a hi a heightened there's a heightened presumption of director independence. I read the list again. It it was the Well, as an example, the court concluded that allegations of various overlapping board positions, overlapping investments, and other quote unquote quote business ties with the company's founder and non-executive chair were not sufficiently material. Business ties. So I mean what what else do you need? Business size investments and board positions. Like okay, so what's left? You you st you sleep together, right? Like you you Alright, I hate that. I have one more this one's a shorter one. thing we missed. This this report by ISS, governance chairs remain under pressure as investor scrutiny rises. I think you ha basically have to be married, yeah. I think that's about it. Yeah. Alright, that's mine. Do you have any more f for things we missed? Okay. Go ahead. Despite rising support for directors, research shows. That's a a headline I can't quite grip I can't get a grip of intellectually. Help help me out here. Well, let me spare you, I guess spare you having to read the report. Everyone wins at more than ninety percent rates, right? Like they just so like even the headline makes it sound like there's some pressure on a governance chair. They found ISS found that the median support for a director for the Russell 3000 has hit ninety eight percent. The median support. Well that we know. We cover these proxy votes every week. Is that right? Yeah, actually that is right, I think. Yeah. I think I be 'cause I think usually the the average support you see for boards is about ninety five percent. So that would suggest that there's a lot that are over ninety five percent. Yes, a lot. they found they found that governance chairs and by governance chairs they mean nom chairs, nominating committee chairs. The median is ninety eight percent. Got it. No they mean nominating, yeah. I in the US that's that's the the the committee's often called the nominating and corporate governance committee. Those chairs, specifically the nominating chairs, get a median support of ninety four percent. Yeah, because we see instances where there's some kind of a trigger where maybe there's not enough women on the board or maybe there's some other th maybe the lead independent director is doing something or whatever, they they tend to target the chair of the nomination committee for that. But the write up of from this article was like, you know, nom chairs have more to consider as they're under pressure. And it's like, how much pressure are you under that you got ninety-four percent support? Like, who's pressuring you? they they also said pay chairs got ninety-seven percent support. They're under a little bit of pressure, but not as much pressure because it went from ninety eight to ninety seven percent. So there's some pressure there. It it's just so dumb. Under pressure, yeah. Yeah, I'd say zero percent pressure. Yeah, nobody. so they're under pressure too, right? A little bit of pressure. Jeez. Yeah. Like we were literally talking about the difference between ninety eight percent and ninety seven percent. We're talking about it like it's a big deal. It is dumb. And I and you made this point a while ago that that that there is a a part of our culture and and our especially in this in the business world where where that many people are considered doing their job well is just incredible. But we don't bat we don't really bat our eyes when w you know, what ten per you know, a company lays out ten percent of workers because they call it the natural attrition of you know, of like employment and people are just like, Yeah, right, there's there's at least ten percent of bottom feeders, right? They're dope, so we get rid of them. But in this field, they're all geniuses. I don't know how you can definitionally in the first story, the Arissa story, half of companies underperform every single year. Definitionally. But not half of directors underperform every single year. Like I don't understand that. Like I this it's math. Yeah. Yeah, we c we're trying to figure it out. All right. W you wanna move on? Do we have a do we have music for the boardroom buy in game? we can do some intense game show music. Do you wanna do that? Here we go. Yeah. Sure, fine. okay. I don't know how much we'll see how much we have time for here. Yeah, we got a little bit of time left. So so this is kind of a new feature. We're trying to work out the kinks, although we did have some listeners tell us that they kind of they kind of liked where we were going with this, so we're gonna stick with it. Okay, whatever. Shut up. No, actually no, it was it was more than one. I have proof of that. Yeah. Yeah, we got a little time. We got time. I think we had aw listener tell us that, yeah. really? Yeah. so we pick headlines and we kinda we we we s we kinda ask each other whether this is an actionable moment based on the headline. Like do we should we invest? Should we should we sell? You know? I guess now we're fiduciary, right? We're f Yeah, we're fiduciaries. All here my first one is this one. The Taser CEO who says AI is the future of policing. I mean I'm already scared by the headline, but We're now we're being fiduciaries, yeah. I don't like anything that's said. So this is about Taser CEO Rick Smith. And they're talking about his pay package. I don't really know why they talked about his pay package in the article, but really the article is about he made a lot of money. Yeah. So his his pay package l last year value it was all equities, about 164 million dollars. his those shares now, because the stock price has gone up so much, are worth up to four hundred million dollars. 'Cause he made a lot of money. this is again Rick Smith. He has sixty-six percent influence at this company. So based on this headline, I'm gonna ask you and I'm gonna give you some some things, some in and out details, and you can just I don't how do we I don't even know what we're doing here. You're gonna pick all right. I like this because I think we gotta work out the kinks here. Cause I think we need to work out the kinks. So okay. Are are you in? I did it a different way than you did, but we'll g we're just gonna do your way and then we'll do one my way and we'll confuse everybody while we do this. Yeah, we don't know how this works. Yeah. Because And this is the in on buying taser? Okay. Buying buying this Hazer stock. Are you in? Because I I I am shocked. I did the research. This is not a dictatorship. This is a one share, one vote company. You know, you have your your Black Rocks and your vanguards. And yes, the CEO Patrick Smith does control sixty six percent of influence according to Free Flow. But but he has but he has three percent of shareholdings, but again, not a dictatorship. Yeah. don't like that. The the shareholder class, the the directors, they have a they have an absolute say in the running of Taser, which we talk a lot about, you know, Facebook and Mark Zuckerberg. So this seems important. So are you so how do we do this? Should I give you all my ins and outs and then you can pick one to land on? Or are you out are you out because Patrick Smith dominates this company according to Free Floor Analytics with sixty six percent influence? In fact Yeah, give me all your ins and outs and I wanna I wanna I wanna make a decision at the end. He's on the board with Chair Michael Garnreiter, who's been on the board for 20 years, alongside Patrick Smith. And also the compensation committee chair who wrote the policy that gave Patrick Smith that huge equity package has been on the board since 2010. His name is Hadi Partovi. And and and I don't know how the Delaware would feel about this, but both Smith and Partovi graduated from Harvard in the 90s. they overlapped and they're a Both members of the Theta Ada chapter of the Sigma Chi at Harvard, and they both have gone on to do consistent work with that fraternity. They've been cited by the fraternity as being important members. So clearly there is a n not only that have they sat on this board together for sixteen years, but there's clearly an important social connection there. But no, not not according to Delaware. Are they sleeping together? no no no no no. You need are they s are they having sex? Are they having sex? I then you don't know, you don't know. That's all I'm saying. Well, they could be. I don't I don't know the answer to that. So are you out are you a out based on that one? Or how about this one? Are you out based on the fact that there's actually a record of Patrick Smith ignoring the board members? So after the twenty twenty two school shooting in Ivaldi, Texas, Smith announced that Axon would be developing taser equipped drones that could fly into classrooms to inc incapacitate active shooters. How about that? What kind world are we living in? Yeah. I mean what a great idea to you know, have a robot fly into a room with children with a a device that will electrocute them on it. So when he made this decision, he made it on his own. He bypassed Axon's own independent AI ethics board. And in fact, the the board itself actually vocally came out to rebuke Smith and accused him of trading on the tragedy. And then and then they actually stood up and made a statement. Nine of the twelve ethics board members resigned in protest. And then Smith was forced to publicly back down and and scrap the project. So how about that little so This is a guy who maybe because of his outsized influence doesn't necessarily listen to the mechanisms he has set in place to kinda provide checks and balances. Yeah. Is there any more ins? That was a lot of outs. I know. The and the other end was that I I will say, to be fair, the CEO performance award was specifically voted on in 2024. It was there was a say on payo vote, and there was a vote to vote specifically on this, and it passed shareholder vote okay barely. It had fifty point one percent yes. But it did pass. It did pass. Okay. That's not a f that That's not a pass. You said everything less than thir yo, with thirty percent or more against should just be a a n against. I'm hard out on this. I mean I'm trying to find ends. I'm trying to find buys for this company. Bo okay, but why are you a hard out? Is it because he ignored this actual record of him ignoring his board or is it because of the inf the influence? Right? You're absolutely right. Absolutely right. It that just confirms that the the number that Free Flow Analytics has, right? Like if you have like the the number that Free Flow Analytics has is he has 66% influence. In fact, it says on the beta platform that the board is structurally deferential to him. They just defer to him in perpetuity. Multiple board members have been there for more than 10 years. No one has more than 8% influence outside of Smith. there's under multiple scenarios on the platform, they have a weak board, you know, like I Well, b here's why that's important, because this isn't the the the AI ethics board is separate from that board, but what you had here is an instance where the board that you're talking about, which is highly deferential to Smith, let him get away with ignoring his II IA ethics board, right? They did not stand in his way. They they let him do this and and it really does show you too that these people had to resign in protest in order for for him to actually like recognize that that they were pissed off. I mean we talk about this all the time. Like how come board members at certain companies don't do a thing? Well this year it worked. I I'm look, I also don't I don't buy the idea that Rick Smith and Axon, which is the owner of Taser, i are like innovating or building things like well or new so much as they are benefiting from an administration and a culture shift that like enjoys tasering each other. You pulled on the platform there is a story Yeah. Yeah, there was a Yeah. Underneath cause now the platform auto-tags the stories to the companies and there is a there is a there's a story at the bottom of the the company page that's Trump bought as much as five million in axon stock before Ice sought a two hundred and twenty million dollar taser deal. I love this. Hey. Can I tell you this is why I love this platform because this new platform? Because I actually I had written up that story to add to this, but I cut it because of time. And I'm glad that it exists on the platform. Because that that kind of context really does help because you're right, 'cause Taser's been is pushing to to make a lot of money off of ice. So that might be an important part of your d investment decision if you don't wanna, you know, invest in companies that are that are profiting off ice. Yeah. I mean, we also have it linked to po multiple podcasts where we mentioned Axon as getting big no votes for a variety of things. yeah, there's there's a lot of reasons. I'm out. It's a hard out. It's out. I'm out. I'm out. I'm out. I'm out. I'm out. I'm All right, here's how I did it, okay? I I picked the headline, and this headline is JP Morgan built a pipeline of female CEO candidates that was the envy of Wall Street. How did it fall apart? All right, so Really. Alright, so you're out. Alright, let's move on. I wanna see I wanna hear how you constructed the game. Go ahead. Yeah. Yeah, where'd they go? Yeah, how did it? Well, Jamie Diamond, that's how. So look, if you're buying JP Morgan, you're buying Diamond, but Diamond's not gonna be there forever. If you're a long term investor, he can't be there for more than ten more years, right? Like that. So you're buying the n the successor. So are you in or out on this board finding a successor to Diamond? It'll be less than that, yeah. Okay, so you you're playing this game a bit different, but that's fine. Let's do it. Let's go. You mean you mean they're both you mean they're both confusing? Is that what you mean? Okay. Yeah, it's it's sort of the same because you're buying when you buy the stock, you're buying the management team. You I mean that none of this makes sense at all. All right, here's your here's your nominating committee. And I know nominating chairs are under pressure according to ISS. Nominating chair Ginny Rometti, you know Ginny, ex IBM CEO, retired in twenty twenty. She was an IBM lifer. Yeah. Let's do it. Yeah, I know that name, that for sure. That's right, yeah. Since 1981, she basically has only been at the one company, Council, Foreign Relations, Business Roundtable. She is massively connected. She's connected to 82% of the JP Morgan board alone. JP Morgan, according to Free Flow Analytics data, there's really kind of two types of boards. There's the boards that are deferential to the CEO or deferential to each other. There's not very many boards that are just strictly independent. And by deferential to each other, I mean these are professionalized boards. Wow. These these are like people who like they go to board meetings, they know each other from other boards. I mean, th they're all just gonna be like, Jamie, you do whatever the hell you want. We're just gonna like pick each other, we'll make sure you're friends with all of us, but you know, we're we're here for you. But you know, we're professional board members. All we do is sit on boards. That's all we do. We know each other. Remedi's one of them. She's a v highly connected board member. D these are Jamie's trusted friends, buddies. Well yeah. So do you do you want me to say right now if I'm in or out on geni? Well, here's the problem I have with with boards constructed this way, and we see this a lot at these some of these larger cap companies, is that w when you have these these big time former CEOs on boards with other big time CEOs, big egos like Jamie Diamond, my sense is is that Genie is really there to do his bidding, right? So start in or out on Ginny. Are you like how And that he she's kinda gonna get out of the way and and j and make Jamie's gonna be responsible for finding his own successor. I don't think the board's gonna play any role in this, just like she probably was responsible at IBM the same way. I mean, so this is the problem I have with this, is that your your your board really should be shouldn't just be blocking for you like their offensive linemen in the in the football league. You know what I mean? Like they should be coming up with things. So I just don't I just don't I don't know. I don't trust these these types of of o of also f powerful CEOs that hang around other powerful CEOs. Especially when they're chairs of things like compensation committees and the nominating committees. That's that's my take. I'm out on genie. So yeah, I I just to add to that, Remedi's also on the Cargill board. and I tagged CEOs that these people have replaced. This is remember this nominated committee of JP Morgan because I wanted to know have they actually replaced the CEO ever? The CEOs that Ginny Remedi has replaced is herself with Arvind K Krishna at IBM, who was at IBM for thirty years. And she was on the board of Cargill when they replaced their CEO in 2023. She had been there for one year, and Cargill's privately held, right? Like so it's a controlled company. So she didn't really do anything. So basically, none. None CEO's replaced. And she's the nom chair in charge of replacing Jamie Diamond. So I think you're right without. how about Michelle Buck? She's on the nominating committee. She joined in 2025, so she's Basically brand new. She's ex CEO of Hershey. Hershey is a controlled company. Hershey, a controlled company, Hershey for twenty years, seventeen years at Kraft Nabisco before that. So all of her experience is food, not banking. Yeah, everybody likes a good Hershey bar on a gram cracker made by Kraft, right? Well, I like food. No, actually I well, yeah, I don't mind that, but but i if it's over a fire I'll eat it, but a normal Hershey port actually I think is disgusting. They're pretty horrible. They're pretty horrible. she's also on the board of New York Life. CEO's replaced zero. It's a dictatorship at Hershey, so she's never replaced anybody. Yeah, I don't I don't really get this one either. I don't I don't especially I would think that that newly appointed directors, especially once put on nomination committees, w would be for a strategic reason, because this is one of the most important successions in by far, right? In the S P five hundred. And ta again, this clearly is an indication that this is gonna be J Jamie well, you know, Jamie himself sort of famously said recently that he can't be fired. So he doesn't really take his board seriously because the board Yeah, and then yeah, without a doubt. He said he hasn't had a boss in twenty five years. Yeah. Yeah, so the board can't so th so ma so he understands his his role, which is that he's king, and the board probably understands their role, which is they d defer to the king and I I don't know, I just don't see her value, so I'm just gonna say out. Yeah, that's probably s a strong out indicator. How about there's two more members of the nom committee, so you just got a chance for a tie here. Steven Burke, board member since 2004. He is the lead independent director because there cannot be a lead independent director that hasn't been there for at least 10 years, right? This guy's been there for 22 years. Yeah, 16% influence, 22-year tenure. Maybe if she's from a bank I'd I'd give her a pass. Go ahead. Go ahead. wow. That's a long time. Of course he is. Yeah. Yeah. He's ba he he must be the second most important person on this board, right? I mean by influence? Okay. he was at Comcast since 1998. Another dictatorship. He he was at Disney ABC in nineteen eighty-six. He's a director at Berkshire Hathaway, another dictatorship. CEO's replaced zero. This guy has never replaced a CEO either. He's he's simply fr and he comes from media. He's simply friends with Jamie Diamond. That's really he's been there for 22 years. Gross. Right. yeah. Speaking of dictatorships, yeah. The most famous, yeah. And nor would anyone listen to him, right? Well, I'm sure I'm sure he's a great confidant. I'm sure he has like interesting thoughts and he's a he's a good right hand man and and you wanna keep him around because he backs you up, right? But he he he probably you know, he he probably goes down to the the you know in New York City where you go get your car from the parking garage and you gotta get you gotta give him a tip and you're waiting and it's it's hot, it's smelly and and people are spitting on your shoes. He probably goes and gets Jamie's car for him and Jamie probably loves that, right? I mean Yes, he's the lead driver and independent director. But I don't think is I don't see any like value for him anymore. I and and what I don't know why he what influence could he possibly have on a succession other than just sort of backing up Jamie at this point. I I here here's here's the real question. Would you be in or out on a long term buy of a company who is very strongly led by their CEO when three of the four nominating committee members have no experience replacing a CEO, have only deferred to the, you know, dictators in charge of those companies? What are we doing? Like w w what you you're are you investing in a team? What are you doing? I I'll give you the last one. G Alex Gorsky. I don't know. I'm out on Burke. Who else? I know this name. This Apple? Okay. Yeah. Ex CEO of Johnson Johnson. He's everywhere. He's everywhere. He's on the board of Apple. He's on the board of IBM. Of course, he's on the board of IBM. In fact, he replaced Ginny Rometti. That's right. He's he he no, he's not the CEO of IBM. Arvin Kirshner is, but he was on the board of IBM when they replaced Ginny. He also is and Tim Cook. He just replaced Tim Cook. And he replaced himself, obviously, as CEO of Johnson Johnson. So he was there while Jean Genie was CEO? he's the new CEO. Okay. Well Okay. Okay, well he's got some experience. and Apple. Right. Okay. You know what? Just because he was adjacent to things happening, high high profile successions, I'll let him stay. Okay. Yeah, he's in. Well yeah, I think that's right. But you're so we've got out, out, out, in. Are you overall in or out on this board finding a successor, Jamie Diamond? Yeah. Well cong congratulation, Alex Gorsey's the new sh should be the new nominating committee chair. I like it. Yeah. I yeah, that that's the only takeaway, right? They should fire the rest of the committee. All right, who you what do you got? I'm gonna I I'm gonna do one more just for the sake of time. I'll give you the choice. No, maybe I shouldn't give you the okay, would you rather have a Japanese gaming company? I'll give you the headlines and then you pick the one you want me to play with. Nintendo boss to give sweeping ten percent salary raise to retain employees or co part CEO Jeff Law to step down, former CEO Jay Adair to return. Ooh, okay. Jay Adair's back No, I I'm out on I'm not buying Copart for any money any ever. You wanna do that one, don't you? Yeah, because believe me, i you would have hated this board. I mean th this board I okay. I will do Nintendo, but let me just quickly do Copart for a second. we're not doing we're not doing an In and Out You're Out completely, but they this is the only board I've ever seen that has a chair and an executive chair. No, no. They have a they have a chair and an executive chair. Where have you seen that before? Yeah, 'cause Copart's horrible. It's really horrible. I t it's no, that's not true. No, no, you've s you've you've seen it worse at Oracle, which has an executive chair and two vice chairs. Okay, but this is a chair and an executive chair. What does that mean? And and you know who they are? The chair is the founder, Willis Johnson, and the executive chair is his son in law, Jay Adair. Not only that, but they but the board currently includes the current CEO, the former COO, and a former executive. Okay, let's move on. Nintendo. Yeah. Yeah. They're all connec they're all related, yeah. Yeah, that's a lot. I hate them. I'm out. I wouldn't buy them for all the money. No, it's it Nintendo. This is interesting. Yeah, it's interesting because it's a positive story, and I we don't highlight a lot of these. So, they recently announced a ten percent increase to base salaries for all of its employees. this is CEO Shuntaro Furukawa made the announcement at a recent shareholder meeting. so I got a few in and outs for you. First of all, Furukawa, the CEO, has a sort of a democratically okay influence eighteen percent, which suggests that. Okay, he's in charge, but he's not dominating this board, okay? Sounds very Japanese almost, yeah. And his for one of the most famous companies in the world his his pay hovers around he usually makes around two and a half million dollars, which sounds still sounds like a lot, but it it sounds reasonable. That doesn't sound like a lot. That sounds like nothing. For one of again, for one of the world's most famous brands ever. So that's an in. out is that sixty three percent of shares are held by in institutional investors. And I gotta ask you, what the hell do those suits know about video games? Do you think they understand video games? Sixty three percent. I like that, yeah. I t they don't they don't step in and talk about that. I that that just means there's it's a stable company to me. I I don't think that's an out. That's not phasing me. Okay, all right. So you're not okay. My next in this is defying Japanese custom of six outside directors. Three of them are women. Half of them are women. How did that happen? Well, how many inside directors are there? Well, let's just stick with the outside directors. I gotta tell ya I gotta tell ya, I didn't I I should I haven't checked FreeFlow the new platform yet 'cause I actually spent time in their corporate governance report and I I gotta tell ya, I don't spend a lot of time in some of these Japanese reports and it's a little it's a little confusing. I'll just say that. I I th I would turn the in two out. Holy moly, this board is gigantic. It's a little confusing how it works. They have things called outside directors. They had things called independent directors. They I I I don't really know what's happening. So but l let's just say this. There are There's so many executives that rolls into two lines on the free flow analytics like graphic. It's really it's So let's just say this. They at least have women, which is unusual for Japan. And and finally, this final in, or maybe you could say that that that the huge board in confusing structure, maybe that's an out for you. Maybe 'cause, you know, I don't know, maybe you don't like that. But this final in is because and again I I checked it there, I looking at their filings about the last annual meeting. It's a lot. There's a lot going on. Because they literally have questions like this at their annual meeting. In fact, it was the first question listed. They okay. I I I mean, I don't know if this is custom in Japan, but doesn't matter. It's still great disclosure. They in America you get an AK filing, you get a five seven, right? And they they tell you what was voted on, the percentages of the vote actually they don't even tell you the percentages, you have to do the math yourself. They tell you the the for and against, right? That's what they tell you about the meetings. That's it. Yeah, yeah, that's enough. Sometimes a vote sometimes a voter gets directed out, sometimes a sharehold proposal passes. They don't tell you even what happened. What they don't tell you the actions. In Japan, they listed every question asked by shareholders and then an answer. That was in the filing. And this is the kind of answer you get at Nintendo, this kind question you get. Quote With the release of Splatoon Raiders approaching, how does Nintendo evaluate the previous title Splatoon 3? Yeah. Some players experienced communication errors and discrepancies in hit detection in that title. I feel that Nintendo's response to these issues may not have been consistent with sincerity, one of the values in the Nintendo DNA. No, okay. That's an actual question. I don't care what you think about the question. It's amazing. And they actually published this, and they published the answer, and I just That's a question they got. I think it's an amazing question. I've been thinking about it. I gotta take my hat off for n for Nintendo for doing this. This is disclosure. So w are are you in or out and what are you in on? Yeah. Alright, so I'm gonna say I'm hard in. I in fact I'm looking at Nintendo stock now, like because I I like all the arguments you've made. I Asa Shinkawa is the second most influential board member according to Free Flow Analytics, 12% influence. She is on she is independent. She is on the audit nom and pay committee. She basically is the You like it so much. Hey, I convinced you of something. Ooh she like the independent version of the CEO and she's only been there for five years. So this is not like someone who's been there for 20 years and is compromised by long term relationships. I like the board structures bananas. There are a lot of directors egg who are executives who've been there for 30 years. I don't like that, but they don't have much influence. It's really a two person buy. You're buying the CEO who gets paid less than three million a year and this woman, Asa Shinkawa Who is a strong performer? Eight twenty-four on St. Well And she's not according to Free Float, she's not deferential to the CEO. I love all of this. I'm I I'm a bye. I'm in. Total package bye. Okay. So you total package by I mean, how about just a headline like giving s a pro for stakeholders? Like I mean, that's just even that is rare this day. I mean, you know, I don't remember the actual figures. and it and it probably wouldn't be tagged in a Nintendo, obviously, but at the same time, you know, Xbox owned by Microsoft is laying off thousands of workers. Yeah. I yeah. They just cut everybody. Yeah. Yeah, they're cutting everybody. This is one of the the the most powerful companies in the world is just firing people because they can't figure the shit out. But all right. One more. Yeah. all right, let's end on this one. This one's light and easy. Here's the headline. Jensen Huang's iconic leather jacket is going up for auction. Is that fair to say it it's iconic? I mean, I I know when you say that I c I kinda remember he wears a leather jacket, but are we really calling it iconic? Okay. Here's the question. Are you in or out on iconic founder clothes? Are you in or out? What I mean, the only iconic dress I think that is relevant in this field because it's been talked about so much is the way that Steve Jobs used to dress. Yeah, so that's the qu like, so should you Yeah, you're breaking up again. Are you back? Yeah, I'm back. So now here's the question. Would you, if you consider a CEO or founder's clothes to be iconic, like they dress away and you recognize it, would would you be willing to buy the stock simply because it's an iconic piece of clothes? Like, is it is it isn't it kind of like if I think that person's an icon, I would buy the stock or not? So here you go. In or out. Yes, okay. I'm with ya. I like this. Perfect. Perfect. This is perfect. This is how the game should be played. Yeah. Let's do it. I'm excited. Do are Jamie Diamonds are his kneeling pads on this? No, but we'll start with Steve Jobs' turtleneck, enabled by Arthur Levinson, who's been on the board since Jobs He's a lead independent director and he was the one who like, you know, was on the board with Jobs and they kept him on the whole time through Cook because they were worried they'd lose the Jobsian thing, I guess. Like Okay. Steve Jobs. What do you mean enabled by Arthur Levinson? But he didn't But he didn't outfit him. Okay. I'm definitely in on the turtleneck. So then second sub question here, in or out on Elizabeth Holmes's turtleneck, also iconic, but she's in prison. Yeah. Well, but she but you know, if you see any of the documentaries about that, she intentionally ripped ripped it off, right? Because she wanted to exude something, an intelligence, control. And so it's a definite course out. I mean, so bad that it it led her to go to jail. I mean, she misled everyone, including her own board. Right. She wanted to seem jobsy. But now now it's a gray zone, right? Because you've got iconic clothes like so how about Zuck's hoodie? All right, keep going. Well, it's clearly an out. I mean well, I you know what? You know what? Wait, actually, you know what? We complain all the time that it's a bunch of like emotionally stunted middle school dropouts, right? So I think in a sense, he's at least he's showing you who he is, which is just a child. And I'm and and I'm a pro hoodie guy, believe me. Like I I love a hoodie. In fact, we went to the CII conference and you know, I was th by far the most underdressed there. Wait a minute, is it? That's true, yeah. Yeah. I guess that's true. I got I had plenty of older white gentlemen in the el elevator give me a a look, a sneer. So I I so I understand I I understand a good hoodie, but I'm also not like actively trying to ruin the culture of the world by addicting them on garbage and and disrupting the democracy. So I I'm in. Yeah. I was one, yeah. So but just based on the fact that he had iconic clothes, those iconic wow. So you sh you would buy the stock based on the iconicness of the clothes. All right, how about Bill Gates' glasses? I'm in 'cause he's honest. It's honest. He's a schmuck. Yes. Cause he's a schmuck. That's another interesting one. Because the the the the you know what? That's a tough one because he got a lot of f flack back in the day. This is going back this is getting a little nerdy now. The the Yeah. So that we never do that. We just spent I spent half an hour talking about the Department of Labor's ERISA rules. Yeah, that's true. The stereotype back in the day was essentially that he ripped off everything that that that Apple came up with and and figured out how to sell it better. That he actually wasn't he wasn't a great coder like Waz. He really wasn't like a a a he just he just was good at like forcing people to buy Microsoft. So I'm gonna say out because I think the glasses were used in a nefarious way. I think that he Yeah, he's the he's the original Zuck. Wow. Not the hoodie though. And and let's catch and and and and okay, sorry to get here, but let's catch up to the present. This dude is completely implicated on the Epstein Island bullshit. I mean, this guy is a creep. And in fact, so much that there's a headline this week that even Warren Buffett is decided he is not d he has not decided yet whether he wants to give to Bill Gates' charities this year because he's he's reviewing the Epstein case more. He's he's spending time looking at so I'm out on Bill for for those glasses. That that's good for Warren. He can give the rest to his kids' foundations, which will definitely get spent. How about Jack Dorsey's love hat? Yes. Yes. yeah, see, unlike where I give Zuck credit for being the the the mostly stunted, you know, middle school dropout that he is, Jack i is constantly trying to confuse people. He's he's constantly trying to be something he's not. He's he's trying to be like an everyman, like a good guy, like a a non-sell out, like a he's trying to be like the, you know, like the pixies or something, you know what I mean? But he's he's clearly just a sellout douchey. But he's definitely he he's defin he's he's trying He's cold play. He's really he's I really but he's but I I I I don't and that's okay. I mean he's allowed to be those things, but don't pretend. Yeah, nickel back. He just don't pretend, Jack. That's your that's your biggest problem. You're just you're just you're greedy. You're I'm out. Isn't he more nickelback than cold play? He's more nickelback. Alright, so Out, you're out. How about Musk's chainsaw? Isn't that what he is? It's what he is. Like Look again, it was honest. It was honest. I mean, I'll give him credit for the sense that he is just a complete honest asshole. He ha he's hailing Hitler. He's he's getting Trump elected. He's bringing a chainsaw out in in a gleeful, boyish way of saying, I'm about to fire about thousands, tens of thousands of government employees who now we know are mostly black, or a lot of them are black. So I guess I'll give him credit for the honesty. Yeah. Yeah. I don't know if I'm playing this right, but I'm trying. I like we're giving him credit. All right. So sub question. And to end this, I th I l so you would basically to summarize, you would buy Apple stock, you'd buy Metastok, you're out on Microsoft, you're out on Theranos, which you couldn't buy anyway, you're out on Block and Twitter, and you're in on Tesla and SpaceX. Base that's that's based on iconic clothing alone. sub question, and then we'll end it. Authenticity. I'm buying authenticity. Block. Yeah. God, this is terrible, but yeah. Yes. Yeah, please. Let's end it. If a board member has been on the board as long as the founder, did they get credit for the iconic founder clothing? Do they get so like at so remember that yeah, the headline here is Jensen Wang's iconic leather jacket. It's it the the the they're expecting it to close for around forty thousand bucks, which who the fuck is paying forty thousand dollars for a leather jacket worn once by Jensen Wang? I don't even know. absolutely. They should, they should. 'Cause they've had to they've had to stay with it for y that smelly leather jacket, yeah. But Tench Cox, 32 years on the NVIDIA board. Harvey Jones, also 32 years on the NVIDIA board. Brooke Seawell and Mark Stevens, 28 and 17 years, all four of them have been on the NVIDIA board since it just made dopey video cards. That's what NVIDIA was for 30 years. That's all it did. Is that right? Wow. I'll give credit to the first three, but Mark Mark's like a baby. So only seventeen years. Three three decades says it all. Three decades says everything. Only seventeen. I mean, so then Tench Cox, Harvey Jones, and Brooke Seawell of the NVIDIA board, you also get y should get iconic whatever you're wearing right now is probably iconic. That's that's what that's what we're gonna say. That's all we got. That's Damian Hazelnut Rollis. I am your analyst, Tom Matt Miscardi. We are free float. Come back on Wednesday. Ooh, I like this. Yeah, I like this. Alright. I what a confusing ending, but I still enjoyed it. We drop a shareholder primacy. It's a crossover episode. It's us and Mike and Ann all talking about the proxy season that was in 2025, 2026. And then we're going to replay it also on our show, Proxy Countdown for Thursday. You should probably listen to both. Just because. Just listen to both. It's the same show, but you should listen to both. And then on Friday, we'll wrap up the week until then. Good. Yeah.