The Big Vote at Becton Dickinson, plus Starbucks board growth on the trade wire and investor policy votes at RingCentral

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This is Proxy Countdown. Welcome to the big show for the week of January 8th, 2024  alongside my tag team partner Matt Moscardi. I'm Damion Rallis. On today’s countdown:

1. The Starbucks board is playing defense

2. A new nepo-baby director at Carrier Global

3. An update at the Disney proxy cage match

4. On our Vote Results table, a bunch of confused shareholders at RingCentral

5. And finally, on the big vote, at Becton, Dickinson, where the board likes to ignore shareholder votes

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Trade Wire - BUY/SELL

Top Story from our largest cap companies:

1. On Tuesday, Starbucks increased its board size from 8 to 11 and appointed three new dude directors to its board:

1. Neal Mohan: the CEO of YouTube

1. Stitch Fix and 23andMe

2. Daniel Servitje: the CEO of Grupo Bimbo, the international food brand responsible for Latin Wonder Bread: Bimbo Blanco

1. Coca-Cola FEMSA (Mexican Coke)

3. Mike Sievert: the CEO of T-Mobile

1. Shaw Communications

4. In October, Wei Zhang, previously of Alibaba Pictures Group, joined the board.

5. With the new directors: Starbucks board has moved from 38% to 27% female.

6. We reported last month that a coalition of North American labor unions called The Strategic Organizing Center–formerly known as the Change to Win Federation–had nominated three directors to the Starbucks board:

1. Maria Echaveste, a former senior White House official;

2. ESG pro Joshua Gotbaum, an advocate for reforming pension law/regulation and expanding retirement saving & investment options; and

3. Wilma Liebman, former chair of the National Labor Relations Board

2. At Intel Corporation, Sandra L. Rivera has assumed the role of CEO of Programmable Solutions Group (“PSG”), an Intel standalone business.

1. If PSG eventually IPOs, she has the potential to be the 3rd ever Latina CEO of a Fortune 500 company.

3. Carrier Global added Maximilian Viessmann to its board.

1. Max is a nepo-baby: he is CEO of Viessmann Group, a German heating company founded by his great-grandfather.

4. McKesson Corporation has appointed former McDonald’s CFO Kevin Ozan as a director.

1. The connection between McDonald’s and a healthcare company should be obvious

5. And at Simon Property Group: Nina P. Jones appointed to the Board

1. CEO and Chair David Simon said, “She brings a unique perspective … as a former institutional real estate investment professional.”

2. According to the company’s latest proxy, this unique perspective is shared by 9 other board members

3. 77% of the Simon Property board is controlled by Simon family members, so her other unique perspective is likely to be the back of the driver’s seat headrest.

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PROXY CAGE MATCH

1. Let’s start with Disney…. Where there is nothing new

1. There are already three heavy-hitting activists involved. We’re still waiting for BIll Ackman to swoop in and scream “DEI” in a crowded theater while accusing the cast of Hamilton of being a bunch of talentless Inclusion hires. 

2. AIM ImmunoTech

1. 63% reject Say on Pay

2. Stewart L. Appelrouth and William M. Mitchell nearly fail

1. A proxy contest led by Ted Kellner, Todd Deutsch, and Robert Chioini

3. Also in the news: The FT is reporting that Activist investors mount a record number of attacks against companies last year

1. There were 252 new campaigns globally, a 7% increase on the previous year;

2. More than 40% of activists launching campaigns did so for the first time;

3. Universal proxy rules introduced in 2022, which guarantee that all board nominees will appear on the company’s ballot, have had little effect on the number of board seats won by activists

4. 37% of campaigns that ended with winning a board seat lasted more than 90 days and 34% settled within one week; and finally,

5. There has been a resurgence in multiple hedge funds swarming around the same target: at one point Salesforce had seven activists on its shareholder register,  including ValueAct, Elliott and Third Point. 

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VOTE RESULTS TABLE 

1. At RingCentral, Nomination Committee chair Kenneth Goldman, Lead Director Robert Theis, Compensation Committee chair Allan Thygesen all received roughly 20% against their reelection. At the same time, co-founder/CEO/chair Vlad Shmunis, who controls 30% of the voting power, received only 2% votes against his reelection.

1. Shmunis boomeranged back into his role as CEO last month after his replacement, Varek Robbiati, gave up after only 3 months. 

2. After Robbiati’s disastrous stint, which saw him leaving his role as CFO at Hewlett Packard Enterprise, RingCentral said Robbiati’s resignation is “not a result of any disagreement with the company or the board, or any matter relating to the company’s operations, policies, or practices”. 

1. What they left out was that it was because their ants-in-the-pants founder/chair/former CEO couldn’t handle giving up total and complete power.

3. Shareholders at RingCentral also nearly voted down Say on Pay, with 36% saying NO

1. Their irritation might be focused on co-founder/CEO/chair Vlad Shmunis, who received nearly $20 million in stock, despite his already considerable shareholdings.

4. In summary, there are a bunch of confused shareholders at RingCentral.

2. At Assure Holdings, 27% of shareholders voted against Christopher Rumana, Steven Summer, and John Flood. But like RingCentral, the CEO/Chair John Farlinger was spared from this negative investor sentiment.

3. Same story at Eastside Distilling, between 14% and 25% of the vote was against Elizabeth Levy-Navarro, Eric Finnsson, Robert Grammen, Stephanie Kilkenny (who combine to control 38% of stock), but nothing notable against CEO Geoffrey Gwin.

4. And finally, at United States Antimony Corporation, Blaise Aguirre nearly fails with 49% against his reelection. Why? Nobody knows?

1. ??

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THE BIG VOTE

Becton, Dickinson Company

AGM Date: January 23, 2024

2023 Proxy

2022 Proxy

2023 Voting results

2022 Voting results

General Observations

1. Ownership

1. Institutional

1. Vanguard 9%

2. BlackRock 8%

2. Performance outliers:

1. Overall: .401

1. Carrie L. Byington .291

2. Thomas E. Polen .321

2. EBITDA .542

1. Carrie L. Byington .376

2. Thomas E. Polen .383

3. Carbon .448

1. Catherine M. Burzik .631

4. TSR .455

1. R. Andrew Eckert .353

5. Controversies .335

1. William M. Brown .888/Catherine M. Burzik .842

2. Carrie L. Byington .111/Thomas E. Polen .117

3. Wokeness

1. ID&E policy

2. The analysis revealed that we achieved base pay equity with our female associates in 2023 earning $1 for every $1 earned by male associates globally. In the U.S., we found that female associates earned an average of 99 cents for every $1 earned by male associates.

4. Considerable female power gap: 33%/18%

5. SHP passed but company waffled

Proposal 1: Election of 11 Directors

Annual Elections for ALL directors? YES

Director Slate

1. William M. Brown 61/2022 cn 6%

1. Known for: Former Chair/CEO, L3Harris Technologies

2. Other Public Company Directorships: Celanese (Lead Director)

1. Previously: L3Harris Technologies; Harris Corporation

3. Votes Against Last AGM: 2%

1. Catherine M. Burzik 73/2013 n 3%

1. Known for: former CEO Kinetic Concepts; former President of Ortho-Clinical Diagnostics, a Johnson & Johnson company

2. Other Public Company Directorships: Orthofix Medical (Chair/Interim CEO)

1. Previously: Haemonetics Corporation

3. Votes Against Last AGM: 4%

1. Carrie L. Byington 60/2021 a 5%

1. Known for: Special Adviser to the President, University of California Health

2. Other Public Company Directorships: none

3. Votes Against Last AGM: 1%

1. R. Andrew Eckert 62/2016 aC 4%

1. Known for: former CEO, Zelis

2. Other Public Company Directorships: 

1. Previously: Varian Medical Systems

3. Votes Against Last AGM: 2%

1. Claire M. Fraser 68/2006 cn 7%

1. Known for: Founding Director, Institute for Genome Sciences

2. Other Public Company Directorships: Seres Therapeutics

1. Previously: Ohana Biosciences

3. Votes Against Last AGM: 3%

1. Jeffrey W. Henderson 59/2018 Ac 11%

1. Known for: former CFO Cardinal Health

2. Other Public Company Directorships: Qualcomm; FibroGen, Inc.; Halozyme Therapeutics (Chair of the Board)

3. Votes Against Last AGM: 13%

1. Christopher Jones 68/2010 aN 7%

1. Known for: former CEO JWT Worldwide

2. Other Public Company Directorships: Newrotex Ltd (Chair)

3. Votes Against Last AGM: 11%

1. Thomas E. Polen 50/2020 18%

1. Known for: Chair/CEO

2. Other Public Company Directorships: Walgreens Boots Alliance

3. Votes Against Last AGM: 7%

2. Timothy M. Ring 66/2017 a 9%

1. Known for: former Chair/CEO, C. R. Bard

2. Other Public Company Directorships: Quest Diagnostics (Lead Director)

3. Votes Against Last AGM: 1%

1. Bertram L. Scott 72/2002 c 16%

1. Known for: Lead Director; former CEO Affinity Health Plan and TIAA-CREF Life Insurance Company

2. Other Public Company Directorships: Dollar Tree; Equitable Holdings; Lowe’s Companies

1. Previously: AllianceBernstein L.P./AllianceBernstein Holding L.P.

3. Votes Against Last AGM: 12%

1. Joanne Waldstreicher 63/2023 n 3%

1. Known for: former Chief Medical Officer Johnson & Johnson

2. Other Public Company Directorships: Structure Therapeutics

3. Votes Against Last AGM: na%

1. Marshall O. Larsen 10% cn

1. has reached the mandatory director retirement age under BD's Governance Principles, is not standing for re-election at the 2024 Annual Meeting.

Proposal 2: Auditor

1. E&Y

1. 6% against 2023

Proposal 3: Say on Pay

1. 93% yes in 2023 (79% 2022; 67% 2021)

1. CEO Pay ratio 408:1

2. The Inclusion & Diversity goal will be weighted at 2%, resulting in a 0%, 1% or 2% modifier.

1. Demonstrate efforts to achieve meaningful progress against the business, regional and corporate team Inclusion Plans and measurable improvement on inclusion and diversity goals including equity in retention rates.

3. TSR modifier: 0.8x for less than or equal to 25th percentile compared to peers

4. $19.17B revenue 2022; 2023 target for 40% of short-term bonus set at $18.745B

5. $215k private jet for CEO Thomas Polen

SHP from 2023

1. 62% Support: company failed to enact

1. Kenneth Steiner

1. Shareholders request that the Board seek shareholder approval of any senior manager's new or renewed pay package that provides for severance or termination payments with an estimated value exceeding 2.99 times the sum of the executive's base salary plus target short-term bonus.

2. From 2024 proxy: The proposal requested that BD seek shareholder approval of any “senior manager’s new or renewed pay package” that provides for severance or termination payments exceeding 2.99 times the sum of the individual’s base salary plus target bonus.

1. As noted in last year’s proxy statement, the Board recommended against the proposal because, among other things, the proposal included the accelerated vesting of equity awards in the calculation of severance or termination pay, which the Board believed would severely limit BD’s ability to attract and retain key talent.

2. In response to the proposal, we sought shareholder feedback on BD’s adoption of a “cash-only” termination pay policy (the "Executive Officer Cash Severance Policy") that would prevent BD from entering into any new agreement, plan or policy that provides for the payment of cash termination benefits to an executive officer exceeding 2.99 times the sum of the officer’s base salary plus target bonus, without seeking stockholder approval or ratification.

3. We received positive feedback on this approach from the shareholders to whom we spoke during our 2023 engagement. Shareholders expressed their belief that this was a reasonable approach for BD to take in response to the proposal, and no investor we engaged with requested the inclusion of accelerated equity vesting in the calculation of the termination pay limit.

4. Based on this shareholder feedback, the Board subsequently adopted the Executive Officer Cash Severance Policy in November 2023

2. The shareholder proposal regarding special shareholder meetings by Kenneth Steiner passed in 2022 54%