WSJ’s Top 250 directors, plus Exxon’s vote, Elliott’s win, and Tesla’s new director

Written By Matt Moscardi

Trade Wire - BUY/SELL

Top Stories:

  1. Chipotle Chief Strategy Officer and former CFO Jack Hartung is joining the board of Tesla, where he will be greeted by his son-in-law–a non-executive, salaried employee of Tesla since  2016–and Elon’s brother Kimbal, who served on Chipotle board from 2013 to 2019. 

  2. Here’s a good one at small cap company Luminar Technologies, following a Code of Business Conduct and Ethics inquiry by the Audit Committee of the Board of Directors, CEO and Chair Austin Russell and director Jun Hong Heng immediately resigned. However, the former CEO will remain on the Board and be available to the incoming CEO on transition and technology matters.

  3. As a companion piece to the 2025 “down to two women on the board but nobody seems to care” theory, there are several companies now that are appointing male directors despite having only two women on the board, as an example:

    1. Nutanix is comfortable with only two women as they replace retiring David Humphrey with Eric Brandt. With Eric, they now have two board members who were executives at Broadcom, a second director who also has experience being CFO, and a guy that already serves on four other publicly-traded companies so he understands how to schedule board meetings.

    2. Likewise at Qorvo, Peter Feld joins a board with only two women. Peter represents the second director at Qorvo with experience at Marvell Technology

    3. And at Live Nation Entertainment Trump administration toady Richard Grenell joins a 2-women Board; just this morning the new Live nation Entertainment director tweeted: “Left wing violence is out of control from Palm Springs, CA to Washington, DC. Leaders on the Left must speak up now. We all must focus on this growing Left wing violence problem.” Grenell is miraculously the acting president of the Kennedy Center for the Performing Arts despite no background in anything resembling “the Arts.”

  4. Two influential directors are stepping down from their respective boards:

    1. O’Reilly Automotive is losing Larry O’Reilly, consistent with the Board’s mandatory retirement age policy. Luckily for shareholders they have a spare O’Reilly in the trunk: that’s Larry’s brother David O’Reilly.

    2. And at Paychex, founder, former CEO/Chair, and board member since the Carter Administration Thomas Golisano and his 63% influence is stepping down. That’s a lot of power up for grabs.

  5. Finally, in executive pay news:

    1. Bath & Body Works has a new CEO, Daniel Heaf, who will replace Gina Boswell. The total bill to shareholders is more than $17M: a golden hello of $5M and a golden parachute of $12M

    2. And at Omnicom Group, Chair and CEO John Wren is giving up his $1M annual salary in order to get a massive pile of 4M options without performance-based conditions. This means that if the company can get back to its share price from only 6 months ago the CEO will have managed to make $120M.




<PROXY CAGE MATCH BUMPER>


PROXY CAGE MATCH

  1. Phillips 66 and activist investor Elliott Investment Management each won two seats at the company’s annual meeting this week, capping one of the biggest proxy cage matches of the year and following months of increasingly bitter finger-pointing between the two sides.

    1. The vote is significant because no activist at an S&P 500 company had successfully won a board seat in at least 15 years without support of one of the big three index funds—BlackRock, Vanguard, and State Street, While Elliott’s campaign was backed by prominent proxy advisory firms ISS, Glass Lewis, and Egan-Jones, Phillips 66’s top three passive investors all sided with the company.

    2. The two Elliott nominees elected were Sigmund “Sig” Cornelius, who recently retired as the president of Freeport LNG, and Michael Heim, an operating partner with Stonepeak who also was a founder and president of the Targa Resources midstream pipeline giant.

    3. On the Phillips 66 candidate slate, Robert Pease was reelected, and Harbour Energy COO Nigel Hearne was added to the board.

  2. Victoria's Secret adopted a "poison pill" plan to block a potential takeover by Brett Blundy’s firm, BBRC International, unless all shareholders are fairly compensated. Starting May 29, shareholders will get rights that activate if anyone acquires 15% or more of the company, allowing them to buy shares at a discount and dilute BBRC’s stake, which is currently about 13%. After resolving past antitrust filing violations, BBRC is now allowed to increase its stake to 49.99%.

 


<VOTE RESULTS BUMPER>


VOTE RESULTS TABLE 


Here are the highlights from 100 large-cap annual meetings over the past week:

  1. Only 41 total SHPs: and from only 34 companies, meaning 66 meetings had zero SHPs.

  2. In fact, 51 of 100 meetings had nothing happening: zero shareholder proposals and zero shareholder dissent.

  3. Only 6 wins overall:

    1. Say on Pay

      1. Otis Worldwide: 61% NO

      2. Simon Property Group: 53% NO

    2. Simple Majority vote

      1. Choice Hotels International: 97% YES

      2. Alexandria Real Estate Equities: 84% YES

      3. Celanese: 64% YES

      4. Skyworks Solutions: 98% YES

  4. 13 “moral” victories (over 30%): 

    1. Say on Pay

      1. O-I Glass: 34% NO

      2. Las Vegas Sands: 38% NO

      3. Akamai Technologies: Stock Incentive Plan 41% NO

      4. AIG: 35% NO

      5. BlackRock: 33% NO

      6. CVS Health: 41% NO

    2. Shareholder approval on excessive golden parachutes

      1. Vertex Pharmaceuticals: 37% YES

    3. Simple Majority vote

      1. Medspace Holdings: 31% NO

    4. Shareholders ability to call a special meeting

      1. Xylem: 46% YES

    5. Act by written consent

      1. CVS Health: 43% YES

    6. Independent board chair

      1. Colgate-Palmolive: 30% YES

      2. Cummins: 41% YES

    7. political contributions

      1. Otis Worldwide: 40% YES


  1. The shareholder disconnects:

    1. Otis Worldwide: 61% NO on Pay; lowest director 93% YES/98% average YES

    2. Alexandria Real Estate Equities: 27% NO on Pay; lowest director 91% YES

    3. Las Vegas Sands: 38% NO on Pay; 6 of 9 directors between 10% and 18% NO

    4. BlackRock: 33% NO on Pay; lowest 2 directors 92% and 96%

    5. Motorola Solutions: 20% NO on Pay; lowest director 92% YES

    6. CVS Health: 41% NO on Pay; lowest director 91% YES (97% average YES)


  1. The directors (over 20%): only 17 higher than 20%, 2 over 30%, and 1 over 40% (about 900 directors: 2% over 20%)

    1. WEX: James (Jim) Neary 31% NO; Melissa Smith 33% NO; Jack VanWoerkom 41% NO

    2. Enphase Energy: Thurman John Rodgers 61% NO (classified board)

    3. Haverty Furniture: 42% NO G. Thomas Hough

    4. Universal Health Services: Maria Singer (49% NO; Class B & D)

    5. Teleflex: All directors between 28% and 36% NO; (Say on Pay 27% NO)

    6. Simon Property Group: Glyn F. Aeppel (37% NO); Larry C. Glasscock (30% NO); Gary M. Rodkin (27% NO); Peggy Fang Roe (27% NO); (Say on Pay 53% NO)

    7. AIG: Diana M. Murphy 21% NO; Linda Mills 26% NO; James (Jimmy) Dunne III (~20% NO); (35% NO on Pay)

    8. Molson Coors Beverage: Roger G. Eaton 21% NO

    9. First Solar: Paul H. Stebbins 21% NO

    10. APi Group: Carrie A. Wheeler 28% NO

    11. Teradata: Michael P. Gianoni 26% NO


  1. The oddities:

    1. Auditor dissent?!

      1. Elevance Health: 12% NO

      2. American Water Works: 12% NO

      3. First Solar: 13% NO

      4. Align Technology: 10% NO

    2. The bullshit:

      1. The Domino’s Pizza competing proposals dirty trick: where the board proposes a version of the shareholder's proposal that is slightly more onerous: in this case, 25% vs. 15% of shareholders having the the ability to call a special meeting:

        1. Align Technology: Management (65% YES) versus SHP John Chevveden (17% YES)

        2. Akamai Technologies: 10% call a special meeting (51% YES/58,453,104) vs. 25% call a special meeting (52% YES/59,520,777)





<THE BIG VOTE BUMPER>

THE BIG VOTE PICKS

MATT

The Wall Street Journal released a report on the Top 250 Board Directors

  • The 250 most influential and effective corporate directors who are set to serve on an S&P 500 board throughout 2025.

  • There is no definition of what is either influential OR effective

  • There is a methodology that focuses on a point system for individual attributes (like committees and roles), company performance, and a bonus for sitting on a lot of big boards

  • The methodology includes what seems like a random point system - the maximum number of points a director could hypothetically get is 23.25… because… it’s a number… 

  • But the important things to note is there are no real consequences in the list to underperforming, they value being a lead “independent” director or chair, they don’t care if the company is being sued, and they really like directors who are professional directors on lots of boards

  • So I compared the top 100 in their list to our data, this is what it looks like - and this is why we need to use analytics on directors

  • At a minimum, we should agree what a winning director is - can we agree that a winning director should pay the CEOs the least possible for the fewest controversies and highest sustainable returns?  Isn’t that the goal?

  • Here’s the top 100:


Some standouts:

  • #1 is Ed Philip of United Airlines - weird number 1?  I mean, 2 boards in our database, one totalitarian Canadian company and UAL where he has 8 years of tenure? Chair at the totalitarian company, nom chair at both… it’s such a nothingburger pick I have no idea what to say about it?  Bats .600 overall, below average TSR but average everything else?  It’s the most average choice ever

  • In fact, if I filter US large cap directors by those with:

    • >.500 TSR, earnings

    • >2 boards

    • No totalitarian boards

  • I end up with a whopping 144 directors before I get to the first from the top 100, Kevin Kennedy, who ranks #7

  • The point system is a liability for investors - John Koraleski (#26) got ALL of his points just from sitting on committees, and only debits for performance

    • In fact, 29 of the top 100 UNDERPERFORMED for company performance!

    • For Monica Lozano, despite getting the performance of Apple, 59% of her 28th place score was simply sitting on a lot of boards despite underperforming on the “company” component


Our data on the top 100:


  • Dictator friendly

    • 27 of the top 100 sit on boards that are Totalitarian - including TOP DIRECTOR Ed Philip on the BRP board in Canada

    • For 6 of them, it’s their ONLY current board - immediate grounds for disqualification?

  • Highly influential, but not the highest

    • Average max influence is a whopping 13% with a min average of 8%

    • Single most influential board member of the top 100 is Tom Salice on Mettler-Toledo, ranked 64th

  • Long tenured

    • 21 of them are more than 11 years, the “sweet spot” according to the methodology - and not independent in the UK

  • Not much emphasis on smarts, resume, or diversity

    • 15% have advanced degrees

    • Only 11% went to elite schools

    • 35% have been CEOs somewhere

    • The list is 74% white and 50% white men - while large cap US companies are only 40% white men

  • Highly networked bunch of “leaders”

    • 51% have core industry knowledge at a board where they sit

    • 82% have leadership experience (CEO, chair, LID)

    • 72% are highly networked to their boards

    • 2% have a direct economic stake in a company where they sit

    • Only 17% of the top 100 outperform on both earnings and TSR

    • Only 44% have paper “merit” - so more than half of the top 100 arguably don’t merit at least one board slot they have on paper

  • Mostly manufacturing and finance

    • As a group - 54% have a background in manufacturing or machinery, 39% have finance backgrounds

    • A whopping 2 have a background in engineering and technology - the top directors don’t actually have any knowledge of the oncoming onslaught of an AI future?

  • Super connected

    • Feature in 3,828 loops back to their own boards - that’s nearly 40 loops per person

    • There are a stellar 558 connections between these board members and their boards through the Partnership for New York City, and 513 through the Business Roundtable

  • Without core outcomes… high TSR, low controversies

    • Average of the top 100: 0.509 TSR, 0.427 controversies



But you can vote on some of them THIS WEEK:

  • Chevron - 4 directors in the top 100

    • Debra Reed-Klages

    • Marillyn Hewson

    • Wanda Austin

    • Wick Moorman

  • Exxon

    • Joe Hooley

  • Lowe’s

    • Marvin Ellison

  • Merck - 2 directors in the top 100

    • Tom Glocer

    • Pamela Craig

  • Allstate - a whopping SIX directors from the top 100

    • Donald Brown

    • Andrea Redmond

    • Monica Turner

    • Kermit Crawford

    • Maria Morris

    • Perry Traquina


Top 100 targets:

  • Of them, Donald Brown, Andrea Redmond, and Kermit Crawford failed to deliver more than .400 in TSR

  • Debra Reed-Klages is the most connected to her board at Chevron - 42% of the board she loops back to

  • Wanda Austin has the most powerful network, also at Chevron

  • Joe Hooley at Exxon is the only one to have sued his own investors (despite having been one at State Street)... speaking of Exxon


But let’s talk about Exxon quickly…

  • No SHPs mean you have to vote on directors instead

    • Jeff Ubben - underperforms on TSR, earnings, and carbon

      • He got the role on the board as an activist - and despite many board slots, he’s batting .371 on carbon, .250 on TSR, and .301 on earnings, the worst overall on the board

      • Ubben was called an “ESG proponent” when news broke he was joining the board, which was done in part to dilute influence from Engine No 1 directors

      • Ubben has no clear track record of being an ESG proponent in the data - maybe he talks about it? - but 4 years later, Exxon is on the REVERSE course - suing shareholders, rolling back targets

      • He’s arguably a carbon vote

    • Larry Kellner - underperforms… everywhere

      • Kellner of Boeing fame is also the worst performing director up for a vote this week for credit rating drops - 26 times across all boards he’s been on in the last 7 years, Kellner’s companies saw their credit rating at SP drop

    • Joe Hooley

      • Get the f out with suing shareholders as an ex shareholder

Matt Moscardi
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