The Big Vote at Snowflake, plus Tyson gets replaced, a zombie at Veeva, and declassifying wins
PROXY COUNTDOWN SCRIPT
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This is Proxy Countdown. Welcome to the big show for the week of June 24, 2024 alongside my tag team partner Matt Moscardi. I'm Damion Rallis. On today’s countdown:
Tyson Foods buries the alleged lead
Veeva Systems laughs at its shareholders
A proxy cage match heating up at Masimo
John Chevedden continues his winning streak
And on the Big Vote, forget what they told you in 3rd grade science, all Snowflake directors are alike
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Trade Wire - BUY/SELL
Top Stories:
On June 13, 2024, Tyson Foods announced that CFO John. R. Tyson had been suspended from his duties effective immediately and that Curt Calaway will serve as interim CFO. An exhibit to the filing added: “We are aware that John Randal Tyson, Chief Financial Officer of Tyson Foods, was arrested for an alleged DWI.”
Not sure why that sentence couldn’t have gone into the main report.
Matt: Calaway has been at Tyson for 18 years in the finance and treasury departments, and was at PwC for 11 years prior as an auditor… meanwhile John R Tyson has had a total career of 5 years, 4 of which were as a make believe Chief Sustainability Officer, but has the name “Tyson”... I’d say it’s an upgrade?
James D. White, Lead Independent Director of Affirm Holdings, has resigned. Mr. White informed the Company that his decision to resign was not made because of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. My best guess is that he accessed Free Float’s free platform and saw that his overall influence was 7% compared to the 73% influence held by Founder, CEO and Chair Max Levchin
On June 19, on the recommendation of a special subcommittee of the Compensation Committee of the Board of Directors of Veeva Systems, CEO and founder Peter Gassner was granted 2,650,000 premium-priced performance-based stock options outside of the scope of the company’s compensation plan. In case anyone was worried, Gassner recused himself from the vote.
Also at Veeva Systems, shareholders voted out director Paul Sekrhi, with a clear majority of 51% saying NO, but the board decided to ignore the vote: “The Board’s decision to not accept Mr. Sekhri’s resignation was based, in part, on Mr. Sekhri’s extensive executive and board experience.” The board then went on to blame ISS and said “that it would not be in the best interests of … shareholders … to accept Mr. Sekhri’s resignation”
Why were shareholders (and ISS) pissed? Well, ironically enough, it was because of his “extensive board experience.” Paul currently serves on the boards of:
vTv Therapeutics Inc. (2022–present) (Public)
Longboard Pharmaceuticals, Inc. (2020–present) (Public)
Compugen Ltd. (2017–present) (Public)
AdhereTech, Inc. (2024–present)
Spring Discovery, Inc. (2021–present)
eGenesis, Inc. (2019–present)
And Veeva Systems. Did I mention Veeva Systems?
And lastly, we have three golden hello awards to report on:
Paula Hansen, the new Chief Revenue Officer at Docusign will receive a Golden Hello package consisting of a one-time signing bonus of $4,000,000 and $27M in equity, half of which will vest annually over four years if she still has a warm desk chair.
Likewise, at HP, new CFO Karen Parkhill will receive a Golden Hello consisting of $15M in equity that will vest over three years based on her “continued employment” and $1.5M in cash.
And Michael Speiser, who is the lead director of Snowflake, the subject of our Big Vote today, has been appointed to the board of Workday and will receive a one-time grant of restricted stock units in the amount of $750,000. Awards of this nature are extremely rare for independent directors.
Carl Eschenbach, the CEO of Workday, was on Snowflake board and comp committee and used to work with Slootman at EMC
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PROXY CAGE MATCH
A proxy battle is heating up at Masimo Corp. Activist investor Politan Capital Management, which already has two members on the board, has nominated another two directors to dethrone founder, CEO, and Chair Joe Kiani (77% influence). If Politan’s nominees prevail, they will control two-thirds of the board.
Activist investor Starboard Value is suing software maker Autodesk to force the delay of its annual shareholder meeting and reopen the board nominating window and allow the activist to mount a proxy fight.
Activists can typically only begin a proxy fight if they submit their proposals within a specific window. Starboard said in its suit that Autodesk, in “an apparent effort to prevent a proxy challenge,” deliberately waited until that window had closed before disclosing to shareholders that it would delay its annual report and had launched an internal investigation into accounting irregularities and financial misreporting.
(Autodesk began probing irregularities around how it reported operating margin and free cash flow in early March. By March 8, Autodesk had informed the SEC of the probe, regulatory filings show. The company waited until April 1 to tell shareholders about the investigation, filings show, which was more than a week after the nominating window had closed.)
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VOTE RESULTS TABLE
Moving over to our vote results table, I looked at 42 AGMs over the past two weeks.
As usual the vast majority of directors received well over 90% support. In fact, the big winners of the week are:
ABERCROMBIE & FITCH’s board: 99.2% average support
UiPath, Inc. (PATH): Matt: dual class, A gets 1 vote, B gets 35 VOTES (held by Daniel Dines)
June Yang 99.96% - Dines 100% YES equates to 90.3% YES vote, 9.66% of remaining vote… if BLK and Ark both vote YES, that’s 24.9% of the non-Dines vote… so one dude at Bob’s Mutual Fund Mart voted No for kicks.
99.93% Karenann Terrell and Michael Gordon
However, we do have one notable loser this week:
And that’s the aforementioned Paul Sekhri, who we covered at the top of the show (51% NO) at VEEVA SYSTEMS INC (VEEV)
There was also a near miss at Natera, Inc. (NTRA), where lead independent director Roelof Botha (49.3% NO) squeaked by.
Shareholders are apparently not impressed that Botha also serves on the boards of 23andme, Block, MongoDB, Unity, and a number of private companies as well as being a Managing Partner of Sequoia Capital
Luckily for Botha, he controls 1.08% of voting power.
There continues to be wide support for pay practices. Only 4 companies showed considerable dissent with more than 20% of voters saying no and that’s at:
Say on Pay 48% NO
Chair Robert Switz 14% NO
The problem was obvious:the Compensation Committee’s decision to issue “Special Performance-Based Equity Grants” to three named executive officers, including CEO Matt Murphy. Shareholders should and usually do hate any kind of award called “special,” especially when it results in the CEO total paying doubling from 22$ to 45$ million for being the same dude.
Live Nation Entertainment, Inc. (LYV): 37% NO Say on Pay
DELTA AIR LINES, INC. (DAL): Say on Pay 28% NO
Synchrony Financial (SYF, SYF-PA, SYF-PB): 39% NO on pay
Average Comp member 4% against
Moving over to the world of Shareholder proposals. Only 10 of 42 companies even voted on shareholder proposals of any kind, despite the false narrative that shareholders are hijacking annual meetings. Let’s start with the victories. Both proposed by John Chevedden:
MONOLITHIC POWER SYSTEMS INC (MPWR): SHP declassified board 84% YES
REGENERON PHARMACEUTICALS, INC. (REGN): SHP simple majority voting 76% YES
Independent board chair proposals continue to struggle, for no good reason:
DOLLAR TREE, INC. (DLTR): SHP Independent board chair 28% YES
TARGET CORP (TGT): SHP Independent board chair 29% YES
CATERPILLAR INC (CAT): Independent Board Chair 23% YES
And finally, here is my favorite oddity of the past two weeks:
Mastercard Inc (MA): a director election resignation bylaw (New York City Carpenters Pension Fund: 14% YES) proposal requesting essentially that if a director fails to get a majority vote two years in a row that the director has to actually leave.
“We already have a director resignation policy that requires our directors to offer to resign if they do not receive majority support from stockholders.”
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THE BIG VOTE
Snowflake
AGM Date: July 2, 2024
Documents
General Observations
Ownership
Institutional
Vanguard: 6.3%
Individual
Frank Slootman 3.4%
Benoit Dageville 1.9%
Performance outliers:
Overall: .511
Stephen B. Burke .337
EBITDA .206
Kelly A. Kramer .775
Benoit Dageville .006
Jeremy Burton .006
TSR .394
Christopher A. Hazleton .237
Jeremy Burton .288
Carbon .506
Stephen B. Burke .208
Kelly A. Kramer .807
Controversies .824
Stephen B. Burke .122
Board stuff
Committees
Audit (a)
Nominating and Governance (n)
Compensation (c)
Cybersecurity (s)
Formed in November 2023
Skills
(Non-Executive DIrectors)
Economics and Accounting 15%
Computers and Electronics 8%
Communications and Media 6%
Law and Government 7%
Fine Arts 5%
Sales and Marketing 3%
(Executive DIrectors)
Economics and Accounting 11%
Computers and Electronics 13%
Communications and Media 7%
Engineering and Technology 5%
Diversity Gaps
Female Power Gap 30%/17% (-13%)
Industry average female influence = %
Insider influence: %
Industry average %
Connection points
Dell Technologies/EMC Corporation: Garrett, Slootman, Burton
CFO Michael P. Scarpelli was former EVP
Chief Revenue Officer Christoper Degnan former exec
Pure Storage: Garrett, Slootman, Speiser
ServiceNow: Slootman, Briggs
Palo Alto Networks: Ramaswamy, McLaughlin
Greylock Partners: Ramaswamy, Slootman
Cisco Systems: Garrett, Ullal, Kramer
Data Domain Corporation: Slootman, CFO Scarpelli
Snowflake employees: Ramaswamy, Slootman, Dageville, Speiser
Other
CFO Michael Speiser became director of Workday on 6/18/24
Carl M. Eschenbach was a member of our board of directors until he resigned on April 5, 2023. He was appointed the Co-Chief Executive Officer of Workday, Inc. on December 14, 2022 and became the sole Chief Executive Officer on February 1, 2024. Our current customer agreement with Workday was entered into in January 2024 and provides for Workday to make payments to us of approximately $2.8 million over a 36-month period.
Stephen B. Burke, currently a Class I director, is not standing for re-election at the Annual Meeting and will therefore step down as a member of our board of directors, the compensation committee, and the nominating and governance committee upon the expiration of his term at the conclusion of the Annual Meeting.
On February 27, 2024, our board of directors appointed Sridhar Ramaswamy as CEO and a member of our board of directors.
The cybersecurity committee was formed in November 2023
Effective upon his resignation as a member of our board of directors, we entered into advisor agreement with Mr. Eschenbach pursuant to which he provides advisory services to management, our board of directors, and any committees thereof. In connection with his role as an advisor, (i) Mr. Eschenbach’s RSU awards outstanding at the time he resigned from our Board continued to vest and (ii) he received an additional RSU award for 534 shares of our common stock. All of Mr. Eschenbach’s RSU awards have fully vested.
Matt:
Two dynamics at play for Snowflake:
S-1 Mercenaries- the board and virtually entire governance structure is designed to IPO - to hyperscale in advance of going public - NOT run the company
It’s a de facto dual class company - classified board plus with insider holders plus big three ownership means changing anything is nearly impossible
Who is the S-1 Mercenaries, whose slogan is AMP IT UP TO HYPERGROWTH ALL OVER YOUR FACE
Frank Slootman and CFO Mike Scarpelli
The recurring board of Pure Storage, ServiceNow, Data Domain - all the Slootman IPOs
Sequoia and Sutter Hill, with a nod to Greylock Partners
Frank Slootman
Book: Amp it Up: Leading for Hypergrowth by Raising Expectations, Increasing Urgency and Elevating Intensity
Economics, “MBA” equivalent in Netherlands, move to US in 1982
Compuware 1995, Data Domain 2003, EMC, ServiceNow 2011 - appointed CEO (the professional CEO) to shepherd the kiddos
Benoît Dageville, Thierry Cruanes and Marcin Żukowski were founders
Both Slootman and Scarpelli were brought in 7 years after founding to run it
Slootman seems to get the call from Sequoia and Sutter Hill for any venture where nerds founded it, built something unsexy - data storage, cloud services, IT help desk - and they want to turn it into 20x returns
But it’s a lot of smoke and mirrors - Snowflake isn’t profitable but has a 45bn market cap, ServiceNow and Pure Storage are running at 80 and 250 PEs respectively - they barely make money
This is hype central
The footsolider board and management “team”
13 listed on leadership team - two women, head of marketing and human resources
ServiceNow (Scarpelli, Pagan, Lupinek, Briggs)
VMWare (Degnan, Bedi)
Oracle (Dageville, Cruanes, Muralidhar)
Google (Ramaswamy, Persson, Kleinerman, Czajkowski)
Dell/EMC (Scarpelli, Degnan, Slootman, Burton, Garrett)
Pure Storage (Garrett, Spieser, Slootman, Briggs)
NO BOARD MEMBER without a connection to either the VCs (Greylock, Sequoia, Sutter) or Pure Storage / ServiceNow / Oracle
This is friendliest of friends - a trusted group of alumni who are IPO for hire
De facto dual class
Used to be dual class, but given the management team DOESN’T NEED TO BE THERE since they are entirely mercenary, they phased out immediately after IPO
More on this with the classified board math, but for some reason they phase out dual class but NOT a classified board - which maintains control by the non-founder mercenaries?
Proposal 1: Election of 12 Directors
Annual Elections for ALL directors? YES
NOMINEES
Benoit Dageville 57 M 2012 20%
Co-Founder & President of Products
Current Boards: n/a
Votes Against Last AGM: 6% in 2021
Mark S. Garrett 66 M Ans 2018 8%
Former CFO Adobe
Current Boards: GoDaddy; Cisco Systems
Previous: Informatica Corporation (2008-2015); Model N (2008-2016); Pure Storage (2015-2021); and NightDragon Acquisition (2021 to 2022)
Votes Against Last AGM: 12% in 2021
Jayshree V. Ullal 63 F C 2020 8%
CEO/Chair Arista Networks; former SVP Cisco Systems
Current Boards: Arista Networks (chair since 2008)
Votes Against Last AGM: 6% in 2021
CONTINUING DIRECTORS:
Kelly A. Kramer 56 F an 2020 4%
Former CFO Cisco Systems
Current Boards: Gilead Sciences; Coinbase Global
Votes Against Last AGM: 10% in 2022
Frank Slootman 65 M 2019 21%
Chair (2019-); former CEO Snowflake (2019-2024); former CEO/Chair ServiceNow (where Snowflake CFO Micahel Scarpellis was formerly CFO); Partner of Greylock Partners; former President Dell Technologies/EMC Corporation; former CEO Data Domain Corporation (where Snowflake CFO Micahel Scarpellis was formerly CFO)
Current Boards: n/a
Previous: Pure Storage (2014-2020); Imperva (2011-2016)
Votes Against Last AGM: 13% in 2022
Michael L. Speiser 53 M cN 2012 17%
Lead “Independent” Director (2019-); part-time CEO and CFO from August 2012 to June 2014; Managing Director of Sutter Hill Ventures
Current Boards: n/a
Previous: Pure Storage (until 2019)
Votes Against Last AGM: 26% in 2022
Teresa Briggs 63 F a 2019 5%
Former Vice Chair & West Region and San Francisco Managing Partner of Deloitte
Current Boards: ServiceNow; DocuSign; Warby Parker
Previous: VG Acquisition Corp
Votes Against Last AGM: 17%
Jeremy Burton 56 M s 2016 2%
CEO Observe; former EVP Dell Technologies/EMC Corporation
Observe is customer of Snowflake since 2018; payments to snowflake equaled $22.5M over 24-month period
Current Boards: n/a
Votes Against Last AGM: 17%
Mark D. McLaughlin 58 M cS 2023 8%
Former Chair/CEO Palo Alto Networks; former CEO Verisgn; National Security Telecommunications Advisory Committee (2011-2023)
Current Boards: Qualcomm (chair); Rubrik
Votes Against Last AGM: 1%
Sridhar Ramaswamy 57 M 2024 n/a
CEO since Feb 2024; former Partner of Greylock Partners
Current Boards: n/a
Previous: Palo Alto Networks (2017-2019)
Votes Against Last AGM: n/a
RETIRING DIRECTORS
Stephen B. Burke 8%
Matt:
Skills Gripe:
Why bother with a “skills” matrix?
“Was an executive” is basically listed twice - but it doesn’t matter WHERE they were an executive? What they know? What they “executive-d”?
“Was on a board” - so is the only prerequisite to being on a board having been on a board? Are ALL boards the same? The issues the board faces doesn’t matter?
Is a leader? Really? Didn’t you cover that with executive experience?
Five ACTUAL knowledge bases listed - cybersecurity, sales/marketing, AI, cloud computing, and accounting, but no where listed is “everyone on this board is a temporary board member for mercenary purposes designed to say “yes” to Frank Slootman” as a skill
Vote recommendation is easy here -
Keep the nerd, YES on Dageville - he’s the only one NOT compromised
Axe the hired guns - NO on Garrett, NO on Ullal (twice if you can for her role in paying Slootman)
Proposal 2: Say on Pay
22% NO in 2023
% NO in 2022
Former CEO Frank Slootman $21M in 2024
CEO Pay Ratio: to 74:1
Matt:
He got 2bn in 2021 for the IPO - summary table valued it at 59m, but cashout was more than 2bn - and basically zero since - he got Musk pay
Note that the 2bn was to take it public, NOT to make it run or profitable - it was the AMP IT UP ALL OVER YOUR FACE
CEO Pay Ratio is extremely limited to capture this, so I fixed it - three year CEO realized pay SUM over three year median employee SUM
In this case, it’s $2,167,174,154 in realized pay versus $916,503 for a 2,364:1 ratio
Pay committee is totally compromised - if Tesla was compromised through weddings and ketamine, this is pure mercenary loyalty compromised:
Ullal chairs
CEO of Arista, who has on their board Charlie Giancarlo, the CEO and chair of Pure Storage
Speiser
Sat on Pure Storage board until 2019, was temporary CEO of Snowflake, is an MD at Sutter Hill
McLaughlin
Ex CEO of Palo Alto Networks, where chief business officer Amit Singh was on Oracle with founders of Snowflake, James Goetz of Sequoia is on the board, and Carl Eschenbach, the CEO of Workday, was on the board of Snowflake and used to work with Slootman at EMC
Serves on the board of Rubrik with Yvonne Wassenaar who sits on Arista with Ullal
Burke - the only one NOT part of the Slootman crew is stepping down
On the board/comp committee AT THE TIME:
Carl Eschenbach!
Bill Green, who was a director at… EMC, with Slootman
This is not only a vote against pay, where a CEO moves to chair and is given 20m in stock at a low given the company makes no profit, but he got paid for zero profit to the tune of 2bn by a totally compromised board of directors!
NO on Pay
NO on Ullal
Proposal 3: Auditor
PricewaterhouseCoopers LLP (PwC) 0.2% NO 2023
Proposal 4: SHP Board Declassification
James McRitchie
Matt:
No to blow smoke up Jim McRitchie’s ass, but again - key vote and basically impossible to win. Classified boards should be illegal for the comp committee reason, but here’s the math on winning what should be an obvious FOR vote:
Needs 66 2/3rds majority vote
Shareholders:
All directors + execs = 7.8%
Slootman 3.4%
Degnan 1.9%
Vanguard Fiduciary Trust Co. 6.353 %
BlackRock Advisors LLC 3.836 %
Eaton Vance Management 3.524 %
Altimeter Capital Management LP 3.069 %
Sequoia Capital 2.251 %
Jennison Associates LLC 2.092 %
STATE STREET CORPORATION 1.977 %
BERKSHIRE HATHAWAY INC. 1.828 %
Sands Capital Management LLC 1.534 %
Guaranteed NO: Sequoia, Insiders, Berkshire, Altimeter - 15% shares
De facto dual class NO? : Vanguard, Blackrock - 10.2%
Already have 25.2% of shares against (with de facto - 15% without) - 74.8% left, and you need to get 89% of the remaining shares
Vote YES to hire a real board, not a bunch of mercenary bros
DAMION:
That’s the Proxy Countdown for the week of June 24, 2024. Join us next week when we jump back into the Alternative Democracy pool... forever on the lookout for shareholder sharks, floating bandaids, and wayward directors.
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