Over the course of the 2024 proxy voting season we’ll periodically look at upcoming shareholder meetings and the proposals being voted on. Given our focus on executive and director quality and governance generally, that’s where we’ll focus the most attention. This week we take a quick look at three companies in crisis — Disney (DIS), FuelCell (FCEL), and Carnival Corp (CCL) — that have shareholder meetings this week. Significant attention has already been paid to Disney by the entire market, given the proxy fight between the company, Nelson Peltz / Trian, and Blackwell’s, so for Disney it is really just a matter of watching to see where the votes fall. With Carnival, we see a company going to vote where performance continues to be poor post-COVID, a board that isn’t finding the right way to reenergize the company, governance / pay issues that shareholders should be paying attention to, and the addition of a board member who doesn’t seem additive.
Below we take a look at each of the companies and following that we present a summary table with key facts on the company, its performance, how shareholders have been voting, and the directors. You’ll note that each of the companies has poor TSR, poor Boardroom Alpha board and director ratings, and poor shareholder support. We expect each company to continue to suffer along each of those dimensions until bigger changes are made and would like to see shareholders making their case when they post their votes this year.
Disney (DIS) – Wednesday April 3, 2024
Disney (DIS) is in a heated proxy battle with Trian and Blackwell’s. Well, mostly Trian given Blackwell’s (very) low stake in the company and the general market view that it is a two-party fight between Disney and Trian. The battle has been too close to call from the outset given a wide ranging set of confounding factors including the recent near-term outperformance of DIS shares (up 28% over the past year), big moves regarding content (e.g. exclusive Taylor Swift concert film distribution), positive partnerships (e.g. Epic / Fortnite), disagreement on recommendations by ISS and Glass Lewis (the big two proxy advisory firms), and numerous stakeholders vocally lending support to one side or the other (e.g. Disney’s heirs, ValuAct, other Trian-related boards/companies, pensions like CalPERS and many others).
For shareholders that are concerned about long-term value creation, we suspect they’ll welcome Nelson Peltz and Trian into the fold. It’s clear that prior to Iger rejoining Disney was floundering and, while short-term performance has been promising, ensuring the board is actively engaged and fighting for the best results, likely means a need for an outsider with material holdings sitting at the table.
Read more on the latest activist activity here:
- Weekly Activism & Executive Moves Review (Mar 29)
- Weekly Activism & Executive Moves Review (Mar 22)
- 2024 Activist Cooperation Agreements Through February
- An Early Look at 2024 Activist Cooperation Agreements
FuelCell Energy (FCEL) – Thursday April 4, 2024
FuelCell’s challenging run continues — down 62% over the past 5 years. While shareholders voiced some discontent last year with directors Wilson and England less than 90% support at the shareholder meeting, it seems too little relative to performance. Every single director has a D Boardroom Alpha rating and has overseen significant value destruction during their tenure. Despite this, we don’t expect to see much pushback at the meeting. This is in part because Vanguard and Blackrock investors collectively own almost 16% of the company and should be pushing for better, but given the limits of retail / passthrough voting it won’t happen this go around. Another sign that we don’t like, is that there is no insider buying happening at the company. If the technology and company potential is real, there is no better time for insiders to make a bet on the company with their own money given the depressed stock price.
Carnival Corp (CCL) – Friday April 5, 2024
Carnival continues to struggle post-covid with the stock stuck well below pre-covid highs and rangebound between $10 and $20 since 2023. CEO Joshua Weinstein, on the job for a little over a year and a half, has seen the stock go from just under $9 to just over $15, but that won’t have shareholders celebrating. Pay is an issue at CCL with only 85% support at the 2023 shareholder vote and a stock that is underperforming. CEO Weinstein was paid $8M 2022 and then $13.8M in 2023 with $7.5M of that in stock grants. More striking is a board that was paid $2.9M in 2023. One could argue that these amounts of pay are justified in order to retain top executives and board members that will lead CCL’s recovery, but we’re not sure shareholders will agree. Also problematic from a governance perspective is the entrenched board and non-independent chair Micky Arison.
Last year voters raised their discontent at the vote with higher against votes for directors Cahilly, Deeble, Subotnick, Weil, and Weisenberger (lead independent director). The board has put each of the 11 existing directors up for re-election and added a Nelda J Connors as a 12th director to the slate. Connors is currently overboarded, but is dropping off Boston Scientific’s board in 2024 which puts her in compliance with CCL’s guidelines. To us, this makes no difference as Connors will be still be on 4 boards which is too many when CCL clearly is in crisis and needs full time and attention. Additionally, one of those boards, Zebra Technologies (ZBRA) is down -42% over her tenure and is also clearly in crisis. Overall, her track record as a director is mixed at best and so, to us, it is unclear what the case is to add her to the board.
Company Performance, Directors, and Voting Summary
| Meeting Date | Company | 1/3/5 Yr TSR |
Avg Director Rating | Avg Vote FOR Directors | Vote FOR Pay | Activist Vulnerability | Director | % FOR Director |
Director TSR |
Director Rating |
Started | Age |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Wed April 03 | WALT DISNEY CO (DIS) | 23% -35% 10% |
C | 96.4% | 86.3% | HIGH | Maria Elena Lagomasino Mark G Parker Mary T Barra Francis A Desouza Michael B G Froman Safra Catz Derica W Rice Amy Chang Calvin McDonald Carolyn Everson Robert A Iger James P Gorman Jeremy Darroch |
93.1% 93.2% 96.4% 97.3% 97.2% 98.1% 94.5% 98.2% 97.2% 98.2% 96.7% — — |
2% 3% 3% 2% 2% 2% 2% -12% -12% 18% 9% 27% 37% |
C- C- C- C C C C C- C- B- B- UN UN |
2015 2016 2017 2018 2018 2018 2019 2021 2021 2022 2022 2024 2024 |
74 68 61 52 61 61 58 46 51 51 73 65 61 |
| Thu April 04 | FUELCELL ENERGY INC (FCEL) | -60% -92% -65% |
D | 91.2% | 80.0% | HIGH | James Herbert England Matthew F Hilzinger Natica Von Althann Jason Few Betsy B Bingham Cynthia L Hansen Donna Sims Wilson |
87.6% 92.7% 90.4% 93.1% 92.6% 93.7% 88.3% |
-36% -41% -43% -34% -55% -50% -47% |
D D D D D D D |
2008 2015 2015 2018 2021 2021 2021 |
77 61 73 57 63 59 62 |
| Fri April 05 | CARNIVAL CORP (CCL) | 53% -42% -69% |
C- | 94.1% | 82.6% | HIGH | Micky Meir Arison Stuart Subotnick Laura A Weil Randall J Weisenburger Jonathon Band Helen Deeble Jason Glen Cahilly Katie Lahey Jeffrey J Gearhart Joshua Ian Weinstein Sara Mathew |
95.4% 94.0% 87.8% 87.1% 95.3% 91.2% 91.3% 98.2% 98.9% 97.5% 98.3% |
-0% -0% -5% 1% -4% -12% -18% -20% 6% 39% 31% |
D D D C- D D D D C- A A |
1987 1987 2007 2009 2010 2016 2017 2019 2020 2022 2022 |
74 82 66 64 74 62 53 73 59 49 68 |