Director “party line” voting, plus nom committee failures and Disney investors are asleep
PROXY COUNTDOWN SCRIPT
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This is Proxy Countdown. Welcome to the big show for the week of March 24, 2025 alongside my tag team partner Matt Moscardi. I'm Damion Rallis. On today’s countdown:
Tight lips but open wallets at Kroger
It’s Groundhogs Day again for Verizon CEO Hans Vestberg
Halfmoon Capital seeks the impossible at Dropbox
Maleficent curses Disney investors by pricking their fingers on a spindle and causing them to fall into a death-like sleep. Only a kiss from their true love Nelson Peltz can awaken them from their slumber.
And on the Big Vote, Matt talks director political parties
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Trade Wire - BUY/SELL
Top Stories:
For no particular reason, the Human Resources Committee of the Board of Directors of Verizon Communications approved an increase to CEO and Chair Hans Vestberg’s long-term bonus target. Two years ago it was $14.5M, last year it was $18M and now it’s $25M. Last year, Verizon’s TSR ranked 92nd among the S&P 100, resulting in only 25% being subtracted from the final award.
Hyatt Hotels Corporation found its third woman! Tracey T. Travis. Hyatt Hotels is led by father and son duo Thomas and Jason Pritzker. The Pritzker Organization itself is impressively manly: the team consists of 28 people: of the 11 women, 9 are either executive assistants, the receptionist, or the chef. The only ranking executive is Andrea Palombit, the Chief Administrative Officer, or the head of the executive assistants and the receptionist.
The Hormel Foods board has given up on its CEO succession planning duties after CEO James Snee announced his retirement. Former CEO Jeffrey Ettinger has boomeranged back to the board to pick the next CEO, joining both the Board’s Governance Committee and a new ad-hoc CEO Search Committee
While The Kroger Co. has still not divulged why it fired longtime CEO and Chair Rodney McMullen, other than unhelpfully labeling his dismissal due to foul “personal conduct,” we now how expensive interim CEO and Chair Ronald Sargent will be: he will receive an annual base salary of $4,350,000, annualized for the duration of his service, and a stock grant valued at roughly $4M that will fully vest in one year. Maybe Rodney could increase his Personal Conduct rating and pay for this?
The board at U.S. Bancorp is down to only four women with an aggregate 4% of total influence after Kimberly Harris (11%) announced she was stepping down due to medical issues.
Crown Castle announced that Dan Schlanger will become interim CEO after the termination of CEO Steven Moskowitz. Dan tried to retire a few months ago but the company is throwing almost $10M to stay as interim CEO: including a monthly stipend of $100,000 and over $9M in equity.
The number of boards who suddenly have only two female directors continues to increase: Molly Joseph is stepping down at First Solar, leaving only two women with 3% total influence.
And lastly, at Intel, new CEO Lip-Bu Tan has a bizarre golden hello package which could be worth as much as $400M if he hits all his performance targets. In addition, Tan will have to personally invest $25 million of his own money in the stock during his first 30 days on the job, and hold it for the next five years, meaning he could potentially lose money if he sucks at his job.
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PROXY CAGE MATCH
Dropbox is facing pressure from activist investor Half Moon Capital to end founder control of the company. A shareholder proposal submitted by Half Moon seeks to remove Dropbox’s dual-class share structure, which gives CEO and co-founder Drew Houston a voting supermajority. Unfortunately, the proposal would require a majority vote for approval, meaning Houston’s support would be needed for it to pass. Houston currently has a roughly 77% voting stake because of his Class B shares, which have 10 times the voting rights of Class A shares.
Outdoor goods company Yeti Holdings is adding two new directors–Magnus Welander, former CEO of outdoor company Thule, and Arne Arens, former CEO of footwear brand Boardriders–after months of discussions with activist investor Engaged Capital.
Engine Capital Management has nominated two director candidates for Lyft’s board, signalling a potential proxy battle. A key point of contention for investors has been Lyft’s dual-class share structure
Activist investor Keith Meister of Corvex Management will join the board of directors of Illumina. Current board member Scott Gottlieb will become board chair.
Carl Icahn and Caesars Entertainment reached an agreement in which two of Carl’s buddies have been added to the board: Jesse Lynn (general counsel of Icahn Enterprises) and Ted Papapostolou (CFO of Icahn Enterprises).
Cybersecurity firm Rapid7 added three new members to its board of directors on Monday as part of its settlement with activist investor Jana Partners: they are Wael Mohamed, Mike Burns and Kevin Galligan.
And finally, at a very confusing proxy battle between Phillips 66 and Elliott Investment Management, Phillips has now nominated four directors to the board after Elliott filed a lawsuit against Phillips seeking to have four directors stand for election. Earlier this year, Elliott nominated seven directors to the board.
Meanwhile, there’s no turmoil in the CEO’s office as Phillips 66 CEO Mark Lashier is happy: the company said its CEO was paid $23M in 2024, up 16% from 2023.
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VOTE RESULTS TABLE
Here are the highlights from annual meetings over the past week:
Leslie's shareholders are mysteriously pissed off with Nomination Committee chair Yolanda Daniel as 34% say NO. This is not a gender thing as the Leslie's board is 5 women and 3 men. Maybe it’s too many women?
At Sanmina Corporation, John Chevedden’s shareholder proposal to give the owners of a combined 10% of common stock the power to call a special shareholder meeting passed with 56% saying YES. Hopefully the board makes the changes as currently, Sanmina Corporation shareholders can only call a special shareholder meeting if all the Sanmina directors are dead and/or have otherwise left the Board.
At Heico, the only two members of the board’s Nomination Committee received high votes against: Mark Hildebrandt 38% NO and Alan Schriesheim 28% NO.
And finally, at The Walt Disney Company, shareholders have decided that everything is good again now that Nelson Peltz has left the building:
Maria Elena Lagomasino
Michael B.G. Froman
2025: 99% YES
2024: 87% YES
2023: 96% YES
Say on Pay
2025: 89% YES
2024: 78% YES
2023: 88% YES
SHPs
Report on climate risks to retirement plan beneficiaries 7% YES
Participation in the Human Rights Campaign’s Corporate Equality Index 1% YES
Report on risks related to selection of ad buyers and sellers <1% YES
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THE BIG VOTE PICKS
MATT
Up front note: in the last week, we’ve seen 83 announcements of director appointments
Those are 83 unelected representatives of investors, chosen by management teams
Director “Party” System
If you wanted to vote a “slate” of directors across companies like a political party, how would you do it?
Testing party system:
Hands On Party
Is/Was a CEO
Has core knowledge of the industry
Has been through a global recession
Elite Party
Has an advanced degree OR went to an elite school
Has been on more than one board in the last 10 years
Has a powerful network of friends
Pro Business Party
Has core knowledge of finance/economics
Sits on boards of high earner companies
STEM Party
Has core knowledge of STEM
Has an advanced degree
Network Party
Has a powerful network of friends
CEO Party
Is/Was a CEO
Core Knowers
Has core knowledge of the industry
Unaffiliated
Generation by age (Boomers, Gen X, etc)
Only ONE new director on any of the five boards in this week’s sample: TD Synnex, Cooper Companies, HP, Photronics, Schlumberger
Ken Lamneck at TD Synnex
Jones Boomer, director through just one recession
Business and Safety/Security/Transportation core knowledge
.570 TSR on two other boards, .229 earnings
Hands On Party
Party Voters
Most balance: Photronics
Hands On, Pro Business, STEM, CEO, Core Knowledge, and Unaffiliated
Only company with STEM contingent
Most Elitist
Schlumberger, 60% elitist
HP is 50% elitist as well
Most friends of friends
TD Synnex: 55% networker party
Most hands on
Cooper Companies, equally hands on (38%) as elite
Vote recommendations
If balance is the answer between “parties”
Schlumberger break up elites
Vote NO on Jim Hackett and Leupold
Weakest performers of the group
Hackett on 4 boards, plenty to do
Hackett is oldest of the elites
No STEM knowledge, redundant technical skills
14% influence recouped, suggest finding STEM or Core Knowledge party replacements
HP governance is a master class in rule gaming - break up Elites
No one over 10 year tenure, 6 longest tenured directors are split 50/50 male female
⅔ of the board has paper core knowledge, and 50% are business backgrounds to boot
SUPER connected board - average director is 26% connected, with Pat Russo and Ann Livermore being the OG of connections
Vote NO on Russo (Hands On), and NO on Noski (connected and elite, no overlap in necessary skill), and NO on Pamela Carter (75 years old, Elite party, no retirement age by going to hit 10 year tenure anyway)
TD Synnax - break up Networker Party
Hau Lee and Dennis Polk at 13 years each
Lee is 71 and Networker Party - vote NO
Where is the STEM at a software/IT company?
Kathy Crusco is Networker party on 2 other boards, she can stick with those - vote NO
Photronics is a vote YES all the way across
Cooper is a vote YES all the way across, with the caveat that stem party is missing
DAMION
April 2
TD Synnex $11B
Cooper Companies $17B
Worst pay ratio of the week: 394:1–Albert G. White III (CEO)
Worst Gender influence gap of the week: -30%!!
Despite 50% being women: only 21% influence
Board dominated by Chair and former CEO RObert Weiss (38%)
Only 1 of 7 executive management team too
Vice Chairman and Lead Director William (Bill) A. Kozy stepping down
Photronics $1B
Schlumberger $58B
Shareholder proponent of the week (the only one actually): John Chevedden at Hewlett Packard and TD Synnex: SHPs for Transparency in Lobbying and Shareholder Ability to Call for a Special Shareholder Meeting, respectively
DAMION:
That’s the Proxy Countdown for the week of March 24, 2025. Join us next week when we jump back into the Alternative Democracy pool... forever on the lookout for shareholder shenanigans, dopey directors, and scandalous CEO pay ratios
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