IN-DEPTH: Q&A with The Accountability Board
An interview with Matt Prescott, founder and president of The Accountability Board.
The Accountability Board was launched in 2022 and since then has engaged with many big brand names. What sectors have you primarily focused on?
We’re mostly heavily invested in the food industry, particularly in food production and retail such as grocery outlets, food service companies and restaurant chains. We also have holdings in insurance, tech and a number of other industries, but the food industry is our main focus.
Transparency is a common theme across your demands, whether focused on environmental, social or governance reforms. To look at some of your recent campaigns, can you expand on what you hope to achieve in terms of diversity at Campbell Soup?
When examining their records, we’ve observed that for 20 years they have been touting that they’re heavily invested in growing diversity within the company and that this is for financial reasons. Yes, there are social benefits to increased diversity, but Campbell views it as a competitive advantage. The results are lackluster at the highest levels in Campbell’s management. Diversity has simply not grown by a measure that we would expect to see and we’re asking for an independent audit of the company’s diversity standards, goals, tactics and recommendations for how the company can measurably improve.
At Sysco Corporation, your group has pointed to animal welfare concerns?
At Sysco, one of our primary issues has been the company’s repeated promises for over a decade to eliminate or reduce gestation crates in their supply chain. This is a practice that’s so abusive that 10 states in the U.S. and all of Europe have passed legislation to ban it. For 10 years, Sysco has been making various promises to shareholders about addressing this issue while simultaneously not reporting any percentage of crate-free pork.
To governance now and the push for an independent chair that has been advanced by many investor groups this season. You brought this demand to Casey's General Stores and Target where you secured 20% support and 29% backing, respectively. Why have you brought it into focus this year?
We think that independent oversight of a board of directors is crucial to good governance and to holding a company accountable for its actions. A board’s primary function should be to oversee management, and in our view, it cannot perform that function adequately when the very management it’s supposed to be overseeing chairs the board. It’s an accountability measure.
In your view, what is a good result when it comes to AGM season?
We always want to win. We don’t file proposals simply to advance an issue with a high percentage, though that’s certainly a common outcome and we’re pleased when it happens. Last year, some of our proposals did win, and others came close.
A good result on this particular issue of board chair independence that we saw last year was at Restaurant Brands International, the company that owns Burger King and other major restaurant brands. We put forth a proposal seeking an independent board chair policy and amongst shares not controlled by sitting officers and directors and others, it actually passed with 50% of the vote. We also filed a proposal last year at Wendy's asking the company to join all of its peers in switching to cage-free eggs, which are widely regarded as more humane and better for food safety. If you exclude just the shares controlled by sitting officers and directors, that proposal achieved over 40% of the vote. So, not enough to pass, but a highly significant amount of the vote.
What campaigns are you particularly proud of?
At Dine Brands last year, our climate change proposal achieved over 40% of the vote, which we were very happy with. At two companies, Jack in the Box and Wingstop, our climate change proposals actually passed with majority support, which we were of course very pleased to see. At Denny's, we filed a climate change proposal that got 49.9% of the vote.
It's often argued that E&S proposals have become too prescriptive with the Big 3 referencing this point in their most recent voting spotlights. What is your view?
A lot of E&S proposals are too prescriptive. The way we write our proposals tends to be significantly less prescriptive than we see in other proposals. I believe that the more prescriptive a proposal is, the less likely major shareholders are to support it. With our climate change proposals, for example, at Jack in the Box, Wingstop and Denny's, we believe outside shareholders supported those proposals because they were less prescriptive. They didn't specify the types of greenhouse gas reduction targets that should be adopted, they didn't specify the scope of emissions that those targets should cover, and they left more discretion to the company than other proposals might.
Looking ahead, what are your focus areas for 2025?
For 2025, we will probably file slightly more proposals than we did for 2024. Most of our proposals end up withdrawn before they ever advance to a proxy, but we file several dozen proposals a year at a minimum.
For now, our focus will continue to be on E&S issues, though we’re also focused more heavily on a range of governance issues than we have been in the past, looking particularly at shareholder rights and accountability practices.
In our view, governance practices are important in their own right in terms of shareholder value creation, but they're also important for E&S issues. We believe that the more accountable to shareholders the board of directors is, generally speaking, the more responsive they are to concerns that arise, like environmental and social concerns. So, by working to pass measures that increase accountability at the board level, we think that we can enhance shareholder value by improve the governance structure of a company while simultaneously opening the door to the board becoming more responsive to social issues over time.
Finally, what advice would you have for boards on how you'd like them to engage to achieve best outcomes?
Our mantra is to “never let the perfect be the enemy of the good.” That is to say, we're about progress, not perfection. Last year, for example, there were several diversity related proposals that we filed seeking improved disclosure, asking companies to basically report diversity using more specific metrics than they had been. In a few cases, we withdrew those proposals when companies agreed to improve their diversity reporting, even though they didn't go quite as far as our proposal had asked them to. It was an improvement, and it seemed like a better outcome than sending a proposal forward to a vote.
So, when we engage with companies and boards, we aren’t looking for perfection. More often than not, we are able to find alignment with companies. We might not walk away with exactly that the proposal is asking for, but usually we're able to find some degree of common ground.
