ISS flips on Disney, plus CEO pay tweaks, Starbucks results, and low CEO pay ratios
This is Proxy Countdown. Welcome to the big show for the week of March 10, 2025 alongside my tag team partner Matt Moscardi. I'm Damion Rallis. On today’s countdown:
CEOs getting raises for doing their jobs
Glass Lewis’ Nominating Committee conundrum
Starbucks Lead Director can’t decide his favorite coffee
A targeted vote against women at Mitek Systems
And on The big Vote, Matt waxes poetic in ISS and Walt Disney
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Trade Wire - BUY/SELL
Top Stories:
The ‘secret CEO raise for no particular reason’ problem of 2025?
New compensation targets were established for Robert Sulentic at CBRE Group:
In a nutshell: he is eligible for $7M more in compensation for no particular reason at all.
The magic bullshit:
Base salary from $1.25M to $1.35M
Annual target from $2.5M to $2.7M
175%: $4.375M to $4.725M
(with discretion up to 200%): $5M to $5.4M
Equity target from $14.75M to $17.95M
200%: $29.5M to $35.9M
An extra possible $6.85M ($7.35M)
Despite missed annual target (43% of financial performance): missed Core EPS equity target (0% payout); 70% of target TSR equity award
Nasdaq Chair and CEO Adena Friedman entered into yet another employment agreement: this one goes to 2030; the previous one covered 2022 to 2027. Similar to the shenanigans at CBRE Group, she will suddenly be eligible for several more million dollars each year simply by creating small increases in her compensation elements.
As an example. Her target equity award “will not be less than $15,000,000.” This is up from $12M last year, meaning her maximum award has also gone from $24M to $30M
All of this while also receiving a one-time stock option grant worth $10M as part of her prior employment agreement.
Last year’s proxy:
“Ms. Friedman’s employment agreement, effective as of January 1, 2022, has a five-year term from January 1, 2022 to January 1, 2027”
“On January 3, 2022, the Management Compensation Committee and Board granted Ms. Friedman a one-time, performance-based stock option award with a value of $10 million associated with the renewal of her employment agreement for another five years.”
$1,250,000/$3,750,000/$12,000,000
Now: $1,400,000/$4,200,000/$15,000,000
The female director purge of 2025?:
Julia Brown is retiring at Molson Coors Beverage Company “to devote more time to her global philanthropic work.” You don’t see that director flex very often. But then again I too might be a bit embarrassed if I got rich selling cheap beer. After she (2%) steps down there will be 10M/3W (with 3% total influence)
Tina Hunt leaving the Veeva Systems board: Down to 2F with 7% total influence.
Likewise at Emerson Electric: Director Leticia Gonçalves Lourenco tendered her resignation Down to 2F with 7% total influence
The ongoing ‘why do they always stay around and mess up clear lines of leadership’ problem?
Procore Technologies announced that Founder and CEO Tooey Courtemanche will stick around as the company’s Executive Chair.
Monster Beverage co-CEO and board Chair Rodney Sacks will step down as co-CEO but continue to serve as Board Chair until the end of 2026 with a slight reduction in salary ($1.1M to $900K) while maintaining all of his annual cash and equity bonuses. In 2027, he will no longer be an employee but will remain on the board.
The ongoing ‘why do we need a pay plan when we start them off outside the pay plan’ problem?
Fortive Corporation’s new CFO Mark Okerstrom will receive a golden hello package consisting of a one-time sign-on cash award in the amount of $2.5M and a one-time sign-on equity award with a target value of $10M
$10,000 annual cash stipend for financial services and counseling
Personal use of corporate aircraft with an annual compensation value of up to $50,000
And lastly, The Glass Lewis Nominating Committee problem
Las Vegas Sands added Muktesh “Micky” Pant as a new member of the Board. Micky will immediately start serving on the Board’s Nominating and Governance Committee.
Glass Lewis announced that they trust all Nominating Committees when it comes to diversity, which means they implicitly trust Micky and the Las Vegas Sands' Nominating Committee that has managed to appoint a single woman with 6% This is the second new director they have added since January 27th so I guess it’s a bad winter to find talented women in Las Vegas
8M/1F: One woman with 6% influence
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PROXY CAGE MATCH
Whetstone Capital Advisors intends to nominate two candidates for election to the OptimizeRx Board of Directors at the company's 2025 Annual Meeting of Stockholders. Who? Nobody knows. Does it matter?
Shortly after Starboard Value pitched four nominees for Kenvue's board of directors, a "cooperation agreement" was signed that added Starboard CEO Jeffrey Smith to Kenvue’s board.
Kenvue also added Sarah Hofstetter and Erica Mann to the board last week.
Under the Kenvue/Starboard agreement, Kenvue’s board will temporarily grow from 11 to 14 directors but then be reduced to 13 at the company's annual shareholder meeting. Starboard will withdraw its proposed board member candidates, instead voting all of its roughly 22,000 shares in favor of each of Kenvue’s nominees.
Last year there were 1,726,699,574 votes cast. 22,000 represents about .001% of all votes cast.
Not sure what they are drinking at Kenvue but there is a strong commitment to gender diversity on the board: 46% female even before Starboard got involved: up to full parity now with 7/7. And of the proposed Starboard nominees: 3 of 4 were women.
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VOTE RESULTS TABLE
Here are the highlights from annual meetings over the past week:
Only one director more than 10% votes against: Lead independent director Jørgen Vig Knudstorp. Perhaps it’s because he keeps changing his coffee order?
Latte Macchiato
Pike Place special reserve
Pike Place Roast Americano
Pike Place Special Reserve with coffee press
Caramel Macchiato
14% said No on Pay, which probably should have been higher considering CEO Brian Niccol’s oft-discussed $96M golden hello package
And the only one of five shareholder proposals taken somewhat seriously by shareholders was one asking for an independent board chair: 15% Yes. The others failed miserably, including all the greatest hits of anti-woke political theater.
Analog Devices: shareholders approved the amendments to the Company's Articles of Organization lowering the voting requirement for certain matters from a supermajority to a simple majority standard: over 99% Yes
39% against Joanna Coles: not quite sure why? Only two women and she’s on the nominating committee??
44% NO on Pay but Pay Committee Chair Karen Boone 94% Yes
But why? Because they haven’t found a real CEO yet?
Say on Pay 42% NO
Maybe they hated the 36:1 CEO pay ratio? Too low??
It was 36% NO in 2024 so they apparently learned nothing from their shareholder feedback.
While the Compensation Committee members weren’t targeted by shareholders for crappy pay policies, the three female board directors were: Susan Repo, Kim Stevenson, and Donna Wells were the only directors with more than 10% votes against their reelection.
At Citius Pharmaceuticals and Hepion Pharmaceuticals: high votes against almost everything: due to bad share prices. Does this mean Tesla’s board will be rejected? Why does this only seem to happen at small cap companies and at pharmaceuticals?
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THE BIG VOTE PICKS
MATT
Disney
2024 Disney board:
Robert A. Iger
Maria Elena Lagomasino
Mark G. Parker
Mary T. Barra
Safra A. Catz
Francis A. deSouza
Michael B.G. Froman
Derica W. Rice
Amy L. Chang
Calvin R. McDonald
Carolyn N. Everson
2024, ISS rewind:
As the longest-serving independent member of the board, Lagomasino bears more responsibility than any other serving nominee for the failure of the Staggs/Rasulo "bakeoff," the failure to cultivate a readily apparent successor to Iger following Staggs' departure, and again following Iger's re-entry
During her time on the board, Lagomasino has chosen to support four extensions of Iger's tenure as CEO, yet along with her shorter-tenured independent fellow directors, has not yet named a CEO successor. As a member of the compensation committee since joining the company (and as chair of the committee since 2019), Lagomasino oversaw consecutive years of problematic compensation decisions, resulting in significant shareholder opposition, which the committee failed to promptly address
Lagomasino also served as a member of the compensation committees at Coca-Cola and Avon, where shareholder discontent with executive compensation was also evident at times.
As DIS' longest tenured independent director and a member of the nomination and governance committee since 2019, she arguably bears more accountability than most for the failed succession process prior to Iger's decision to step down in 2020
Shareholders are recommended to vote FOR Nelson Peltz on Trian's proxy card, and WITHHOLD votes from Trian nominee Jay Rasulo, Blackwells nominees Craig Hatkoff, Jessica Schell, and Leah Solivan, and WITHHOLD votes from management nominee Maria Elena Lagomasino.
2025 Disney Board:
Mary T. Barra Chair
Amy L. Chang
D. Jeremy Darroch
Carolyn N. Everson
Michael B.G. Froman
James P. Gorman
Robert A. Iger
Maria Elena Lagomasino
Calvin R. McDonald
Derica W. Rice
2025, ISS:
It’s worth doing the work for ISS here…
For ISS, ostensibly Gorman means “succession is taken care of” and Lagomasino can’t do any more damage and therefore doesn’t matter if you vote for her
Free Float data take: Gorman is a succession smoke screen - it’s still Iger picking, Gorman is a friendly, not a dissenter
Gorman is now THE SINGLE MOST INTERCONNECTED DIRECTOR on the board
He’s involved in 42 distinct loops to other directors on the board, outpacing Mary Barra’s 40 loops
While we know the board is “hand picked” by Iger, Iger has fewer traceable connections than Gorman, even through non profit boards
Without non profit boards, 6 of the 10 board members are connected in some way
WITH the non profit boards… 9 of the 10 are connected
But actually, Froman makes sense when you consider he’s the President of the Council on Foreign Relations, but he wasn’t hired until March 2023, and the group hasn’t filed taxes for 2023 yet, so he’s NOT in the system (even though he’s been with the council since 2017)... he’s in our board system at Mastercard Impact Fund, but he’s highly interconnected both politically and through corporates
Succession
Now under the purview of Gorman… but does that mean nom gov doesn’t matter?
Froman is chair of the nom committee, and Gorman’s not even on it
Lagomasino STILL on the nom committee, and has been since at least 2019 when Chapek was chosen and fired
Derica Rice also was on the nom committee for Chapek, now chairs audit, but no vote against Rice by ISS
Is ISS recommending voting against ALL nom members for poor succession everywhere there isn’t James Gorman (ie, Starbucks over the last 4 years)?
For ISS, the original justification for withholding on Lagomasino is tenure (9 years now, 8 years at the time), underperformance, and succession - but none of that matters now, vote for her
Free Float data take: Not only does Lagamasino warrant a vote against, so does almost the entire board by those justifications
Tenure
Lagomasino still longest tenured, but Iger is the real longest tenured - does he need to be on the board after 24 collective years?
The 1:2 of influence is Iger (22%) and Lagamasino (17%) - Gorman even as chair comes in fourth at 12%
Also 9 years tenure doesn’t even hit the UK standard of losing independence yet - is ISS recommending voting against all directors at 8+ years tenure on underperforming boards?
Underperformance
I updated Peltz’s director performance chart - every director’s new SP500 relative performance is actually 12% WORSE - and Lagomasino is technically worst after Iger
In fact, across all boards, the bottom three TSR performers aren’t just Disney… Froman, Darroch, and Barra are the worst for TSR, Iger/Barra/Froman are the worst for earnings
If you vote underperformance, is ISS recommending you vote for underperformance everywhere across all boards, one board at a time, or just when someone pays attention to an activist?
Egregious pay
Iger just got a 30% INCREASE in summary comp after underperforming the SP500 again
In fact, according to our data as of the end of 2023, NONE of the Disney directors have ever paid a CEO on ANY board below average pay
In fact, all of Barra’s boards the CEOs are paid in the highest 98% of all peer CEO
The best is Safra Catz who has only paid CEOs the 72th percentile
Lagomasino is head of comp committee still, replaced by Barra (!!) after the AGM
If a company underperforms the SP500 and the CEO gets a raise, is ISS recommending voting against comp chairs?
Free Float take
Not only does EVERY ISS JUSTIFICATION still apply today, it’s actually MUCH WIDER of an issue on the board
This is a broadly underperforming board - it was before Peltz and is after - if you bought at all what Peltz said (not about black people in movies), you should STILL repudiate this board
VOTE NO ON EVERY DIRECTOR, and demand a better director pipeline that includes media people
DAMION
March 18
The Toro Company $8B
CEO pay ratio: 110:1
Qualcomm $169B
SHP: John Chevedden; Shareholders request Qualcomm publish a report disclosing if and how the Company is protecting retirement plan beneficiaries — especially those with a longer investment time horizon — from increased future portfolio risk created by present-day investments in high-carbon companies
CEO pay ratio: 261:1
March 20
Fleming (44%)/Owens show (40%); 1 woman (1%)
CEO pay ratio: 64.6 to 1
SHP: John Chevedden; Elect Each Director Annually YES
CEO pay ratio: 111:1
Walt Disney $178B
CEO pay ratio: 746:1: NO
SHPs
Report on Climate Risks to Retirement Plan Beneficiaries; James McRitchie/As You Sow
Consideration of Participation in the Human Rights Campaign’s Corporate Equality Index; National Center for Public Policy Research
Report on Risks Related to Selection of Ad Buyers and Sellers; Bowyer Research
DAMION:
That’s the Proxy Countdown for the week of March 10, 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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