WOKE WEDNESDAY: Reddit’s IPO, activist slate madness, and Norfolk Southern’s day of re-reckoning-ish

Live from Blackrock’s Pickle Ball-scented mason jar collection, it’s yet another Woke Wednesday edition of Business Pants. Joined as always by Analyst-Hole Matt Moscardi! In today’s woke data-polka-dotted sweatpants called February 21, 2024: two classic headlines, 75,000 happy nerds, 5 shareholder activist arm wrestling contests, 0.5% of Jeff Bezos’ left earlobe, the 2nd Glass Cliff Australian CEO Apology Tour in the last six months, and Matt’s famous deep fried Norfolk Southern extra crispy board of director chicken wings!

Our show today is being sponsored by Free Float Analytics, the only ESG data platform to measure real board influence and diversity power gaps

DAMION1

1. Let the headline do the talking:

1. Google co-founder Sergey Brin sued by the widow of a pilot who was flying one of the billionaire’s planes to his private island in Fiji when it crashed

2. The idea that globalization is dead? 'It's a little absurd,' says Globalization Partners CEO

1. Nicole Sahin

2. Stakeholders Rule!

1. Here’s a new one: Reddit plans to reserve shares for its big users in IPO, WSJ reports

1. It aims to reserve an as-yet-undetermined number of shares for 75,000 of its most prolific so-called redditors

2. first IPO of a major social media company since Pinterest's (PINS.N), opens new tab debut in 2019

3. planning to make its public filing in late February and complete the IPO by the end of March

4. Boomerang founder CEO Steve Huffman

5. Former CEO and cofounder Alexis Ohanian famously stepped down from the board in June 2020 and asked the company to fill his position with (its first) black board member

1. That became Michael Seibel, MD at Y COmbinator and director at Dropbox (as of Dec 2020), where he has 2% influence compared to founder/CEO Drew Houston, who also sits on Meta Platforms board

2. Shareholder activists

1. Investment firm Buxton Helmsley Group (BHG) said it nominated four candidates to the board of directors of Fossil Group after the fashion design company's stock lost three-quarters of its value over the last year.

1. CEO/Chair/Founder Kosta N. Kartsotis has been a director since 1990 and has more aggregate board tenure (33 years) then the rest of the board combined (32 years) according to last year’s proxy statement.

2. It also listed tenure “rounded to the nearest half year” so two directors show tenure of 0.5 and 3.5 years. 

2. Investment firm Arkhouse Management launches proxy fight at Macy’s, nominates nine directors

3. A group of investors led by Ancora Holdings wants new CEO, COO at Norfolk Southern; nominates eight new members to board

4. Banner week for billionaire investor Carl Icahn—a total of four board seats at JetBlue and American Electric Power will go to deputies as Icahn celebrates his 88th birthday

1. At JetBlue, Icahn disclosed his 9.9% ownership stake on Monday, the same day that new Glass Cliff CEO Joanna Geraghty took over the job

2. JetBlue appointed Icahn Enterprises general counsel Jesse Lynn and Icahn Capital portfolio manager Steven Miller, neither, seemingly, with airline industry experience

3. American Electric Power appointed Hunter C. Gary, senior managing director at Icahn Enterprises L.P., and Henry (“Hank”) P. Linginfelter, retired executive vice president of Southern Company Gas

1. Additionally, the Board has invited Andrew J. Teno, portfolio manager at Icahn Capital, to serve as a non-voting observer in Board meetings

4. Icahn. The man who can’t keep his own spaceship in shape: Icahn Enterprises (IEP) stock price was $122 in December 2013 and $54 last February but currently sits at just under $20. Congratulations

5. In May 2023, Hindenburg Research accusedIEP of overvaluing its holdings and relying on a "Ponzi-like" structure to pay dividends.

1. Today, IEP warned of a sequential decline in its indicative net asset value in the fourth quarter, sending shares of the investment firm, which named insider Andrew Teno as its CEO, down another 11%.

3. CEOs Rule!

1. In yet another Glass Cliff CEO alert: Woolworths CEO Brad Banducci has announced his resignation, amid scrutiny over alleged price-gouging tactics used by the Australian supermarket giant

1. He will be succeeded by the company's head of e-commerce Amanda Bardwell.

2. He faced calls from customers to step down after walking out of an interview with a Four Corners reporter during a tough line of questioning on price gouging.

1. Australians have taken to X (formerly Twitter) to voice their opinions on the interview with one commenter saying "is Brad Banducci trying to fill Alan Joyce's shoes and take the title of the most hated CEO in Australia?"

3. ABC reporter Angus Grigg interviewed Mr Banducci for a Four Corners story on the "cosy duopoly" between Coles and Woolworths and the tactics used to increase profits.

1. The big two, Woolworths and Coles, control 65 per cent of Australia's supermarket sector and in 2023, during a cost-of-living crisis, the profit margin at Mr Banducci's company expand by an extra $318 million.

4. Woolworths Group chairman Scott Perkins insisted the CEO's departure was not influenced by the controversies and praised him as one of the company's "finest leaders"

1. "I can be absolutely emphatic on that point," Mr Perkins said.

2. Asked about Mr Banducci's resignation, Prime Minister Anthony Albanese said he wanted to "talk about things other than personalities … When customers get to the check out, they should get the lowest prices possible and when farmers are getting less for their products ... the price at the check out should reflect that."

3. But Nationals leader David Littleproud did not hold back: "It's about time … The behaviour of Brad Banducci in that documentary on Monday night shows that once you tear away the very shallow exterior of these CEOs, underneath it is a very deep-seated and very sinister value of the company that he was leading - that was exploiting farmers and consumers."

4. The government has directed the Australians consumer watchdog to launch a probe into prices and competition within the supermarket sector after appointing former Labor minister Craig Emerson to review the effectiveness of the grocery code of conduct.

5. The CEO is gone but what about its longest serving director, Chair Scott Perkins, who has been on the board since 2014. According to our data he was already the most influential member of the board (21% compared to Brad’s 19%)

1. He is also the chair of Origin Energy and a director at Brambles wo he will still be busy when he loses this nice job

2. At the end of 2023 he sat on all 5 board committees: Risk, Audit and Fiance, People, Sustainability, and Nomination, where he served as chair

2. Amazon founder Jeff Bezos completes $8.5bn share sale plan

1. Multi-billionaire Jeff Bezos has sold another 14 million Amazon shares, worth around $2.4bn (£1.9bn).

2. The latest sale brings the total number of shares he has sold in the firm over the last nine trading days to about 50 million, with a value of around $8.5bn.

3. Guess how many he has left? 1,208,288,970. Meaning his overall ownership percentage plummeted from 12.3% to 11.8%

MATT1

Norfolk Southern: The Boeing of Land Travel

Investor Group Announces Slate of Highly Qualified, Independent Director Candidates and Proposed Management Team for Norfolk Southern Corporation

• Ancora Holdings Group (Ohio based) slate

• Movenscforward.com

• Replace CEO Alan Shaw (2022) with Jim Barber (ex-UPS COO)

• Replace COO Paul Duncan (2022) with Jamie Boychuk (ex CSX EVP of Ops)

• 7 director slate

• Betsy Atkins - FIVE board, highly influential overall, middle performer (437 EBITDA, 412 TSR), Wynn Resorts (totalitarian!, and she’s connected), Solaredge, super boarder (18+ board history), FL based

• Bill Clyburn Jr - ex railroad regulator, Senate counsel - government wonk, DC based

• Nelda Connors - FOUR boards, average influence, middle performer (423 EBITDA, 436 TSR), Baker Hughes biggest (she’s connected), Chicago based

• Sameh Fahmy (ex CSX advisor, CN SVP)

• John Kasich (ex governor of Ohio)

• Gilbert Lamphere (ex CSX board, CN board)

• Allison Landry (XPO board), low influence (4%), poor performer (408 EBITDA, 237 TSR, bottom 10% for controversies)

• The Board lacks sufficient railroad industry expertise and is instead comprised of interconnected directors who have irrelevant experience in the energy, retail and entertainment sectors

• CORRECT: NSC an interconnected boards, with pass throughs from Cenovus and connections to Boeing, Caterpillar, other American Royalty boards

• They can’t even audit themselves right - insane:

• In 2023, NSC appoints Atkins Nuclear Secured (a sub of SNC-Lavalin) to conduct the “safety audit”, with lead auditor Admiral Kirk Donald of US Navy (retired)

• ANS reports directly to CEO Alan Shaw

• So why ANS instead of someone who actually does rail safety? Aka, fun times with 1st and 2nd degree connections:

• Maybe because there are only ~270 Navy Admirals at any given time

• In 2023, NSC appointed Admiral Phil Davidson to the board (retired)

• It appears according to DoD public docs that in 2008 both Davidson and Donald were consulting for nuclear sub research - they are in the same field… at the same time… 

• So it’s HIGHLY POSSIBLE the lead safety auditor is connected to a NSC board member as they report in to the CEO rather than the board itself

• However, the replacement board isn’t exactly the gold standard of non-connectedness

• New CEO from UPS, but COO would be from CSX with TWO board members who are ex CSX

• CEO is ex UPS, on the board of CH Robinson and US Foods, no stranger to connections

• On board with Bob Dutkowsky who is at Pitney Bowes with UPS exec

• Also, replacement directors replacing… other CN execs?  Claude Mongeau is ex CEO of CN

• The strategy seems to be get two overboarded women who are professional directors (Connors, Atkins), get the entire team from CSX / CN, and sprinkle in some government… which I guess is an upgrade from a current board who is mostly been there for 20 years OR has experience in retail and food with a sprinkle of CN and government?

• For the record on CSX…

• NSC had a 111% increase in accidents since 2012… CSX had a… 53% increase in accidents!  

• NSC had a 23% increase in employee injuries since 2012… CSX had a… 39% increase!

• Your better bet here is to get rid of anyone involved in a railroad in the US and stock the whole fucking board with European rail executives where they seemed to have figured this out

Finally…investors couldn’t do it, so he did it himself…

• Michael Lockhart, the head of the “safety” committee, is retiring!  After getting 90% FOR votes, he finally is packing it in!

• He’s being replaced on the safety committee by Christopher Jones who joined the board in 2020

• Tell me if this sounds familiar:

• In 2021, Jones was NOT LISTED BY NSC as having “safety expertise”

• In 2022, Jones was NOT LISTED as having “safety expertise”

• In 2023, Jones was NOT LISTED as having “safety expertise”

• In 2024, Jones named Chair of the Safety Committee