Corporate Governance

Norfolk Southern recently faced significant challenges, mostly due to the 2023 train derailment that caused extensive damage and released hazardous chemicals into the surrounding community. A closer look reveals that Norfolk Southern has misplaced priorities by placing greater emphasis on divisive political and social issues over core business operations, compromising shareholder value. As fiduciaries to our clients, we wrote a letter to fellow Norfolk Southern shareholders supporting Ancora's board nominees, believing they represent the best opportunity to refocus on fundamental business priorities and restore long-term value for shareholders.

Over the past few years, Disney has chosen to take sides on divisive political and social issues, leading to a large drop in favorability and negatively impacting shareholders. This value-destructive conduct seems to have distracted Disney from their core mission of delivering unmatched entertainment. As fiduciaries to our clients, we wrote a letter to fellow Disney Shareholders expressing our support for Trian Fund Management’s board nominations, which we believed represented the best opportunity to restore Disney’s magic and increase long-term value for shareholders.

Despite significant geopolitical risk, Starbucks has been aggressively implementing a strategy to expand their presence in China, already its second largest market after the United States. We believe that the company is overexposing itself to the risks of doing business in China, without adequately considering those risks or disclosing them to shareholders. As fiduciaries to our clients, we wrote a letter to Starbucks urging the company to undertake a full and clear-eyed assessment of their exposure to China-related risks, develop a mitigation strategy, and disclose all relevant information with their shareholders.

In 2022, Southwest cancelled over 16,000 flights, leaving countless customers stranded during the busy holiday season, costing the company more than $1 billion. Despite underperformance, Southwest's executives were rewarded with outsized bonuses and compensation packages untethered to the company's performance, and instead based on ESG metrics. As fiduciaries to our clients, we wrote a letter to Southwest urging the company to make all business decisions through the lens of maximizing long-term financial value for shareholders, without regard for extraneous social or environmental goals.

On behalf of our clients, we expressed concerns over McDonald's pursuit of value-destroying and potentially illegal diversity policies, particularly in light of the recent U.S. Supreme Court decision in Students for Fair Admissions v. Harvard. In a letter to the CEO & Chairman, we outline the legal and business risks associated with those policies and urge McDonald’s to prioritize the financial interests of shareholders by rescinding its diversity targets, denouncing discrimination, and committing to merit-based decision-making.

In 2021, the biggest asset managers helped get activists elected to Exxon’s board. On behalf of our clients, we engaged with Exxon, privately meeting with CEO Darren Woods to express our concerns over non-financially motivated mandates advanced by new board members and recommended adding board candidates committed to maximizing value. A few weeks later, that’s exactly what Exxon did, announcing the addition of two well-qualified directors to its board.

In 2022, the Walt Disney Company’s approval rating plummeted following company’s public embrace of controversial political positions. We believe that companies should only be involved in political engagement on issues that are germane to driving shareholder value. We engaged with them to ensure they commit to making all decisions based on the long-term profitability of Disney and return to their mission and status as a beloved American brand.

In 2021, BlackRock and other large asset managers forced Apple to conduct a racial equity audit, against the recommendation of Apple’s board of directors. We believe these audits distract leadership and employees from focusing on core business concerns, with zero evidence that they increase shareholder value. We engaged with Apple to rescind any commitments to an audit and commit to make all employment decisions on merit.

In 2021, large asset managers, including BlackRock, State Street, and Vanguard, voted against the recommendation of Chevron’s board to require the company to reduce its Scope 3 emissions. On behalf of our clients, we engaged with Chevron’s CEO and board, reminding them of their fiduciary obligation to the actual shareholders and not the institutions that claim to represent the owners while prioritizing other stakeholders.