PEPSICO’s ANNUAL REPORT - Tops to date – and one of the two or three most engaging sets of reports over our 30+ years of reviewing proxy materials. Packed FULL of engaging soundbites, like the theme – “Winning with pep+” (which we have been doing for 30+ years) plus lots of quick facts on things like “Sustainably Sourced Ingredients… Expanded Portfolio Offerings, Climate, Water, Packaging. People” – and, our favorite, “Continuing to invest in the business - more than $10 billion in advertising and marketing and capital investments” - PLUS GREAT RESULTS like 14% organic revenue growth, EPS up 11% and a 10% increase in the annual dividend – for their 51st consecutive year… PLUS…lots more interesting, positive and “engaging” news, very engagingly presented in their well-written and well-laid-out 6 page summary section.
“PROXY VOTING IN THE PALM OF YOUR HAND” – a paper-thin, ½ page tutorial on how to vote QUICKLY with a ProxyVote app from Broadridge – and how to get it - in the CITIGROUP meeting package. Why did Broadridge not enclose this in EVERY proxy package they mailed, we wonder.
3M’s AR – “Accelerating our transformation” - for the way it began with its 120-year-old mission-vision, then candidly admitting that “we recognize our company is not reaching its full potential” and following up with a fact-filled description of their progress to date. While yes, reviewing stellar results is still the most “engaging thing” to investors, coping aggressively with the future is equally important to communicate if you want to hold our interest – and our investment in your company.
LEAST ENGAGING – AND ACTUALLY, A BIT OF A PROBLEM…Those heavy cardboard inserts with soggy-sounding slogans, like Intel’s “GO VOTE…Let your proxies be heard.” What kind of writing is THAT? There’s also a big problem with a lot of the cardboard-sloganeering we’ve seen to date, saying “take two minutes right now on any device you prefer.” Sorry, folks - and a potential source of “buyer-blowback” we think: There is simply NO WAY to vote today’s average proxy card in an informed manner in a mere two minutes!
Dear Readers, we will continue to monitor and report on the best and worst examples of Shareholder Examples that cross our desks in the coming quarters. Reader nominations will be much appreciated! NOW is the time to seek out the best examples AND to resolve to do better at your own company next season!
A SPECIAL SHOUT-OUT TO BofA and IBM for CONTINUING TO CONTRIBUTE $1 TO CHARITY FOR EACH SHAREHOLDER ACCOUNT THAT VOTES – and to NEWCOMER THIS YEAR, PEPSICO. THIS IS A PROVEN WAY, PLEASE NOTE, TO INCREASE SHAREHOLDER “ENGAGEMENT” - AND GET THEM TO VOTE.
This year, BofA will split its donations equally among three Mental Health organizations (three big cheers!) ONE MIND, NAMI (National Alliance on Mental Illness) and, in a very nice nod to non-US shareholders, MENTAL HEALTH UK - and IBM will contribute $1 to Water.org for each shareholder account that votes its proxy.
New this year is PEPSICO - heartiest congrats - which will donate to WORLD CENTRAL KITCHEN, which provides “fresh meals to communities affected by disasters around the world.” We drop everything to vote our proxies right away when companies do this as we know many other investors do too.
We still can’t understand why every company that has a large retail investor population doesn’t do this, since it can increase the quorums of mostly company-friendly voters by four percentage points or more over pre-donation levels – basically eliminating votes that are the bane of all Directors - on shareholder proposals that are too close to call.
Far better - and far less expensive - and far more effective than trying to round up retail votes at the last moment – and gratifying to retail holders, rather than annoying them with evening phone calls – a tactic that sometimes actually backfires!
ANOTHER GOOD REASON TO INCREASE INVESTOR “ENGAGEMENT” THIS YEAR:
We have been struck by the large numbers and varieties of Anti-ESG Proposals being advanced this season by far-right-wing proponents who try to characterize them as “good governance proposals.”
Smart issuers should want to see most of these proposals soundly defeated – with too few Yes-votes to be resubmitted next year. But most of the management rebuttals we have seen to date seem over-legalistic - and sound to us like ‘protesting too much’ - and far too obtusely - rather than bluntly calling out how wrong-headed they really are.
It will be interesting to see how many “Anti-ESG Proposals” fail to meet the threshold for resubmission, but right now, we are not optimistic, even though here, ISS and Glass Lewis look to us like issuers’ best friends on this front.
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