United
States Securities and Exchange Commission
Washington, D.C. 20549
NOTICE
OF EXEMPT SOLICITATION
Pursuant to Rule 14a-103
Name of the
Registrant: Salesforce, Inc.
Name of persons
relying on exemption: National Legal and Policy Center
Address of persons
relying on exemption: 107 Park Washington Court, Falls Church, VA
22046
Written materials
are submitted pursuant to Rule 14a-6(g) (1) promulgated under the
Securities Exchange Act of 1934. Submission is not required of this
filer under the terms of the Rule but is made
voluntarily in the interest of public disclosure
and consideration of these important issues.
PROXY
MEMORANDUM
TO:
Shareholders of Salesforce, Inc.
RE: The case
for voting FOR Shareholder Proposal 6 on the 2023 Proxy
Ballot (“Stockholder Proposal Regarding an Independent Chair of the
Board”).
This is not a
solicitation of authority to vote your proxy. Please DO NOT send us
your proxy card; National Legal and Policy Center is not able to
vote your proxies, nor does this communication contemplate such an
event. NLPC urges shareholders to vote for Proposal
6 following the instructions provided on management's
proxy mailing.
The following
information should not be construed as investment advice.
Photo credits
follow the end of the report.
National Legal and
Policy Center (“NLPC”) urges its fellow shareholders to vote
FOR Proposal 6 on the 2023 proxy ballot of Salesforce, Inc.
(“Salesforce” or the “Company”). The Resolved clause states:
Shareholders request the Board of Directors adopt as policy, and
amend the governing documents as necessary, to require hereafter
that that two separate people hold the office of the Chairman and
the office of the CEO as follows:
1
Selection of the Chairman of the Board: The Board requires the
separation of the offices of the Chairman of the Board and the
Chief Executive Officer. Whenever possible, the Chairman of the
Board shall be an Independent Director.
The Board may select a Temporary Chairman of the Board who is not
an Independent Director to serve while the Board seeks an
Independent Chairman of the Board.
The Chairman shall not be a former CEO of the company.
Selection of the Chairman of the Board shall be consistent with
applicable law and existing contracts.
Summary
As has
been long recognized under the American form of government,
separation of powers and checks and balances are healthy
principles. When it comes to leadership of public corporations,
which are owned by a broad ideological and economic spectrum of
shareholders, those practices also enhance accountability and
self-examination. While not perfectly analogous to a representative
republic form of democracy, the separation of responsibilities
between a chief executive officer and a chair of the board enables
each to focus on critical matters that fall under their respective
purviews.
At the
same time, one person occupying both the Chair and CEO roles
infuses that leader with an inordinate amount of insufficiently
checked power. As we cite from the Council of Institutional
Investors in our proposal’s supporting statement:
A CEO who also serves as chair can exert excessive influence on the
board and its agenda, weakening the board’s oversight of
management. Separating the chair and CEO positions reduces this
conflict, and an independent chair provides the clearest separation
of power between the CEO and the rest of the board.
As the
legendary late ITT Corporation CEO Harold Geneen wrote in his 1984
book Managing:1
If the board of directors is really there to represent the
interests of the stockholders, what is the chief executive doing on
the board? Doesn’t he have a conflict of interest? He’s the
professional manager. He cannot represent the shareholders and
impartially sit in judgment of himself.
And as
two business law professors argued in the Harvard Business
Review, “letting the CEO chair the board can compromise board
discussion quality, weakening the corporation’s risk management
ability.”2
1 Geneen, Harold.
Managing, Doubleday, January 1, 1984.
2 Mandato, Joseph
and Devine, William. “Why the CEO Shouldn’t Also Be the Board
Chair,” Harvard Business Review, March 4, 2020. See
https://hbr.org/2020/03/why-the-ceo-shouldnt-also-be-the-board-chair.
2
The HBR co-authors, Joseph Mandato of Stanford
University and William Devine of Menlo College, cite as examples
“debacles” from recent years at Boeing, WeWork and Facebook (now
Meta), in which they argue that a board of directors might be less
willing to challenge a Chair and CEO, if both are the same
person.
“A CEO
feedback session whose import is underscored by having the CEO’s
organizational equal—i.e., the board chair—conduct it is not
possible, of course, when the board chair is the CEO,” the
co-authors wrote. “This makes it harder to check a top exec
steering the corporation astray.”
While Salesforce
believes that combining the roles of CEO and Board Chair “is the
best structure to drive long-term stockholder value,” we argue the
opposite is true.3
Salesforce’s Response to Our Proposal
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Salesforce claims the CEO and Board Chair roles should continue to
be consolidated based on the following rationale:
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The
need for “flexibility” in the Board structure
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Existing “active” and “independent” oversight within the Board
structure
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To
serve the interests of shareholders over time
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Adherence to industry standards
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The
need for “flexibility” in Board structure
In its
proxy statement of opposition, the Company board of directors cite
the need for “flexibility” in their ability to design a leadership
structure, characterizing our proposal as “rigid” and
“prescriptive.”4
To that we plead:
“Guilty as charged.” Flexibility should be viewed as a bug, not a
feature.
Looking
at the United States government example, is our constitutional form
of government too rigid and prescriptive? Or should elected (or
even appointed) leaders have elastic rules to play by – like
Salesforce’s – so the preferences of a few powerful elites can
be accommodated, dependent on shifting priorities like personal
relationships, politics, peer acceptance, Twitter favorability, and
other irrelevant subjectivisms beyond fiduciary duties? Despite the
perceived benefits of having “efficient and effective decision
making” and “one unified (corporate) voice,”
3 Salesforce, Inc.
2023 proxy statements,” Salesforce, Inc., April 27, 2023. See
https://investor.salesforce.com/financials/default.aspx.
4 Salesforce, Inc.
2023 proxy statements,” Salesforce, Inc., April 27, 2023. See
https://investor.salesforce.com/financials/default.aspx.
3
combining the roles of CEO and Chair leads to further concentration
of power and influence within the entity.5
Speaking of that, Salesforce’s corporate governance policies say
that combining the roles of Board Chair and CEO should be
determined by the Board “according to its view of what is best for
the Company at any given time.”6 Returning to our
U.S. government example, would national oversight by our elected
leaders be better served if, say, Congress decided it would be best
if the roles of Speaker of the House and the President of the
United States were held by the same person – but at another
random given time, decided it was not the best practice? Such
determinations are more subject to flawed, personal human opinions
than to what’s best for the Company. Shareholders depend on
consistency in knowing the rules that leadership plays by, and the
existing “flexibility” of the Company’s Board policies inhibit
that.
Existing “active” and “independent” oversight within the Board
structure
Salesforce, in reference to combining the roles of CEO and Chair,
claims that “stockholders continue to be best served during the
current challenging business environment by this leadership
structure.”7 The Company
contends that shareholder interests are protected because of the
Board’s independence, while failing to create a Board that is
actually independent. Salesforce’s 2023 Proxy states the “Board
regularly reviews the Company’s leadership structure,” with the
Board also self-evaluating its own effectiveness.8 9 We find this to
be illogical and a testament to the unacceptable corporate
governance practices of the company.
The
Board also argues – like every other company with a similar
governance structure – that separation of the Chair and CEO
roles is not necessary, because the Company has a Lead Independent
Director with “significant” and “meaningful”
responsibilities.10 The
responsibilities of the role include:
-Calling
meetings
-Reviewing
and approving Board meeting agendas and materials
-Chairing
board meetings when the Chair/CEO is too busy managing the
Company
-Acting
as a liaison between the Chair and the independent directors, as
well as among committee chairs
-Being
available for consultation meetings and communication with major
stockholders
In
reality, the Lead Independent Director sounds more like an
executive assistant than a position with “engaged and robust
oversight of management and strategy.”11 We also
question the Lead
5 Ibid.
6 Ibid.
7 Ibid.
8 Ibid.
9
“Salesforce, Inc. corporate governance guidelines,”
Salesforce, Inc., September 15, 2022. See
https://s23.q4cdn.com/574569502/files/doc_governance/2022/09/Corporate-Governance-Guidelines.pdf.
10 Salesforce,
Inc. 2023 proxy statements,” Salesforce, Inc., April 27, 2023. See
https://investor.salesforce.com/financials/default.aspx.
11 Ibid.
4
Independent Director’s “commitment… to provide independent
oversight,” considering she holds positions on the boards of
Alphabet, Inc., Honeywell International, Inc., and Vertiv Holdings
Co., all in addition to her role with Salesforce.12
Salesforce has stated
that the Board of Directors should “consist of a substantial
majority of independent directors.”13 Having the CEO
act as Board Chair is an obvious exception that decreases the
independence and objectivity of the entire Board and should be
remedied so that all Board members are independent.
To
serve the interests of shareholders over time
Salesforce claims that separating the positions of Board Chair and
CEO “is neither necessary nor in the best interests of our
stockholders.”14 The Company
also claims that giving the Board ample flexibility will increase
its ability to “determine the structure that will best serve the
interests of Salesforce and its stockholders at any given time,”
while citing Salesforce’s recent financial performance to support
its argument to keep the roles consolidated.15 This, however,
contradicts the beliefs of many financial experts and controverts
common industry practices.
The CFA
Institute rejects Salesforce’s policies and states that “Good
corporate governance not only protects the interests of investors
and improves their trust in capital markets, but also acts as a key
driver of investment performance.”16 The CFA
Institute insists that “Board independence is a key cornerstone of
corporate governance” and that “the same person should not perform
the roles of Chair and CEO and that the chair should be an
independent director.”17 Separating the
these roles is good corporate governance.
Adherence to industry standards
By
combining the roles of CEO and Chair, Salesforce claims to be
consistent with industry standards, though separating these roles
is increasingly practiced within the industry. While only 36
percent of the boards for S&P 500 companies have an independent
chair, the Spencer Stuart Board Index found that 51 percent of
S&P 500 companies had separate CEOs and Board Chairs in 2017
versus 59 percent in 2022 (see chart next page).18 The growing
separation of the CEO and Chair positions within publicly traded
companies signifies the changing sentiment towards Chair
independence.
12 “Salesforce
leadership: Robin L. Washington,” Salesforce, Inc., accessed May
16, 2023. See
https://www.salesforce.com/company/leadership/bios/bio-washington/.
13 Ibid.
14 Salesforce,
Inc. 2023 proxy statements,” Salesforce, Inc., April 27, 2023. See
https://investor.salesforce.com/financials/default.aspx.
15 Ibid.
16 “CFA Institute
pushes for more independence and diversity on company boards,” CFA
Institute, September 14, 2021. See
https://www.cfainstitute.org/en/about/press-releases/2021/independent-directors-in-Asia-Pacific.
17 Ibid.
18 “2022 U.S.
Spencer Stuart Board Index,” Spencer Stuart, October 2022. See
https://www.spencerstuart.com/-/media/2022/october/ssbi2022/2022_us_spencerstuart_board_index_final.pdf.
5
The
dangers of too much concentrated power
When it
comes to leadership structure, the concentration of power in a
one-person Chair/CEO redounds little, if any, innate benefit to a
Company and its shareholders, that a separated Chair and CEO
structure could not also accomplish. On the other hand, Chair and
CEO responsibilities are more likely to dilute the effectiveness
and fulfillment of each role, if both are held by one person.
In the
Boeing example cited by Mandato and Devine, the co-authors cite
former Chair/CEO Dennis Muilenburg’s three-year tenure, during
which the company successfully lobbied to ease government oversight
of new airplane designs.19 A subsequent
series of events “is suspected to have led to two plane
crashes and the tragic loss of 346 lives,
the grounding of almost 500 planes worldwide, and company
losses that will exceed $18 billion” (as of March 2020).
The two
professors noted that during Muilenburg’s reign, he sought to
remake the company as a “global industrial champion,” who debated
openly with SpaceX founder/CEO Elon Musk over whose rocket would
carry the first person to Mars. Meanwhile, he allegedly fostered an
employee culture that disrespected and mocked regulators, among
whom the twice-crashed 737 MAX was referred to as “a joke.”
“Boeing
might have benefitted from a board chair initiating a closed
executive session that considered Muilenburg’s fixation on global
and interplanetary aspirations,” Mandato and Devine wrote. “Perhaps
those aspirations could have been identified as what they turned
out to be: signals that the corporation’s priorities had veered
dangerously out of alignment.”
19 Jolly, Jasper.
“Boeing 737 Max disaster casts long shadow as planemaker tries to
rebuild fortunes,” The Guardian, June 25, 2022. See
https://www.theguardian.com/business/2022/jun/25/max-disaster-casts-long-shadow-as-boeing-tries-to-rebuild-its-fortunes.
6
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Even
now Boeing is trying to recover from the disastrous 737 MAX
“cascade of errors, shortcuts and management failures”20 that marked the
Muilenburg era – but is still losing ground to rival
Airbus.21
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In the
present case with Salesforce, the Board argues in its opposition to
our proposal that the arrangement with the present Chairman/CEO
Marc Benioff has allowed him to “provide the
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Board
with focused leadership, particularly in discussions about the
Company’s strategy, business plans and related risks.”22 This introduces
the risk that Mr. Benioff finds certain issues pressing that are
not aligned with the issues that shareholders find important.
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Questioning Mr. Benioff’s Leadership as Chairman and CEO
“Woke” business
activities
-Salesforce
has been accused of “censoring disfavored customers’ political
speech” by preventing the use of email services to specific
customers.23 Salesforce
reportedly halted access to several email addresses of the Trump
campaign and the Republican National Committee in order to
“prevent… use of our services in any way that could lead to
violence.”24 These were
“politically motivated steps to censor, penalize (and) de-platform
disfavored speakers” with the goal of generating negative
press.25 Salesforce has
also banned conservative voices from using Slack, such as the
Federation of American Immigration Reform,26 as well as
Chaya Raichik, who created and runs the Twitter page Libs of
TikTok, which “reposts left-wing content and has reported on
sexually inappropriate things taught to children in schools.” In
response, Slack simply stated that Raichik violated its “Acceptable
Use Policy.”27 These
restrictions controvert an earlier
20 Cohn, Scott.
“One year after the 737 Max’s return, Boeing is still trying to get
back on course,” CNBC, Jan. 24, 2022. See
https://www.cnbc.com/2022/01/24/the-737-max-may-be-back-but-boeing-is-still-trying-to-get-back-on-course.html.
21 Jolly, Jasper.
“Boeing 737 Max disaster casts long shadow as planemaker tries to
rebuild fortunes, The Guardian, June 25, 2022. See
https://www.theguardian.com/business/2022/jun/25/max-disaster-casts-long-shadow-as-boeing-tries-to-rebuild-its-fortunes.
22 Salesforce,
Inc. 2023 proxy statements,” Salesforce, Inc., April 27, 2023. See
https://investor.salesforce.com/financials/default.aspx.
23 Frericks,
Anson. “Our letter to Salesforce,” Strive, February 27, 2023. See
https://strive.com/our-letter-to-salesforce/.
24 Bernstein,
Brittany. “Salesforce ‘takes action’ to keep Trump campaign emails
from inciting violence,” National Review, January 14, 2021.
See
https://www.nationalreview.com/news/salesforce-takes-action-to-keep-trump-campaign-emails-from-inciting-violence/.
25 Frericks,
Anson. “Our letter to Salesforce,” Strive, February 27, 2023. See
https://strive.com/our-letter-to-salesforce/.
26 Simonson,
Joseph. “Unfair: Woke tech company Slack bans conservative group
from platform,” Washington Free Beacon, June 16, 2022. See
https://freebeacon.com/culture/unfair-woke-tech-company-slack-bans-conservative-group-from-platform/.
27 Jung, Bryan.
“Slack bans conservative ‘Libs of TikTok,’ reports Daily Caller,”
The Epoch Times, March 1, 2023. See
https://www.theepochtimes.com/slack-bans-conservative-libs-of-tiktok-reports-daily-caller_5089844.html.
7
comment by Mr. Benioff when he said, “we are not going to litigate
which organizations are allowed to be a customer of Salesforce,”
with Mr. Benioff’s then co-CEO Mr. Taylor saying that “deciding
which customers are allowed to use our platform… would violate our
principles and violate our principles of trust.”28 Such
restriction of speech against disfavored customers could result in
backlash, lawsuits, or even boycotts of Salesforce.
-Mr.
Benioff has repeatedly threatened to remove Salesforce’s presence
from several U.S. states over pieces of legislation. In 2015, Mr.
Benioff threatened to pull Salesforce from Indiana over the
Religious Freedom Restoration Act, which “protect[ed] businesses
who use religious grounds as a defense in certain litigious
circumstances. The bill enable[d] entities to cite their religion
when they could be sued in situations.”29 Then, a week
after an abortion ban went into effect in Indiana on September 15,
2022, Mr. Benioff threatened to pull Salesforce out of any state
that restricted abortions.30 Mr. Benioff
said that he is dealing with “crazy presidents, crazy governors and
crazy mayors all over the world in every country, every city and
every state” and accused such politicians of “discriminating
against (Salesforce) employees” by not supporting “equality and
dignity.”31 How is
insulting elected officials beneficial for shareholders?
-Salesforce
has committed to various race and sex-based hiring quotas, despite
laws that prohibit them from hiring based on race or gender. The
Company released an annual equality report in 2019, in which they
described their desire to double the U.S. representation of black
leaders,32 “have 50% of
our U.S. workforce made up of underrepresented groups by
2023,”33 and “increase
‘women-identifying and non-binary employees’ to 40% by
2026.”34 These goals are
in place despite the fact that “Title VII bars hiring or promoting
based on race or gender, even to rectify societal
harms.”35 Implementing
such goals, which seek to “systematically reduce the proportion of
jobs held by whites and Asians,” have not only resulted in lawsuits
at other technology giants, such as Google and Starbucks, but can
lead to further divisions within Salesforce’s workplace and
customer base.36
28 Roach, Sarah.
“Salesforce to employees: We’re not going to stop working with the
NRA,” Protocol, June 9, 2022. See
https://www.protocol.com/bulletins/salesforce-nra-policy.
29 Rondeau,
Olivia. “Salesforce CEO Marc Benioff threatens to pull company from
Indiana over abortion restrictions,” The Post Millennial, September
25, 2022. See
https://thepostmillennial.com/salesforce-ceo-marc-benioff-threatens-to-pull-company-from-indiana-over-abortion-restrictions.
30 Ibid.
31 Ibid.
32 Frericks,
Anson. “Our letter to Salesforce,” Strive, February 27, 2023. See
https://strive.com/our-letter-to-salesforce/.
33 Prophet, Tony.
“Our path to equality: the Salesforce annual update,” Salesforce:
The 360 Blog, November 13, 2019. See
https://www.salesforce.com/blog/equality-annual-update/.
34 Frericks,
Anson. “Our letter to Salesforce,” Strive, February 27, 2023. See
https://strive.com/our-letter-to-salesforce/.
35 Ibid.
36 Ibid.
8
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Mr. Benioff has
voiced his support for the Black Lives Matter movement,
specifically by saying that he had “respect” for people leading the
movement.37 His support
comes despite allegations that BLM has “intimidated the leaders of
some of America’s largest corporations into paying fealty to its
harmful and deceptive narrative.”38 The calls by
BLM to defund the police “directly contributed to the spike (in
murders of African Americans
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during
2020)”39 and led to an
“uprising that destroyed many of our cities’
downtowns.”40 41 A key leader of
the Black Lives Matter Global Network Foundation, Patrisse Cullors,
has described herself as a “trained Marxist,”42 and has been
credibly accused of financial misappropriation of funds, using
corporate donations to purchase mansions in wealthy neighborhoods
and channeling money to family members.43
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2021 the Company signed an open letter that called on companies to
oppose laws that suppress voting rights, including the Georgia
Election Integrity Act, which is now a law that ensures improved
election accountability. The Company said that the bill is
“inconsistent with our nonpartisan principles on voting
rights.”44 Many leaders
called the law “unacceptable” and “a step backwards,” while the
President of the United States likened the law to “Jim Crow in the
21st century.”45 The results of
the Election Integrity Act was seen in the 2022 elections, with it
being the “most successful election in history,” as early voting
tripled relative to 2018, and it became “easier for citizens to
vote
37 Janjuha-Jivraj,
Shaheena. “Winning with purpose – Salesforce getting beyond
words,” Forbes, October 31, 2020. See
https://www.forbes.com/sites/shaheenajanjuhajivrajeurope/2020/10/31/performance-with-purpose--Salesforce-getting-beyond-words/?sh=90d327cd803b.
38 Colton, Emma.
“Companies that loudly supported BLM fall silent when confronted
with skyrocketing black murders,” Fox News, April 26, 2022. See
https://www.foxnews.com/us/companies-that-loudly-supported-blm-fall-silent-when-confronted-with-skyrocketing-black-murders.
39 Ibid.
40 Ibid.
41 “Shareholder
proposal highlights Coca-Cola CEO’s hypocrisy,” National Legal and
Policy Center, April 26, 2022. See
https://www.nlpc.org/corporate-integrity-project/shareholder-proposal-highlights-coca-cola-ceos-hypocrisy/.
42 Colton, Emma.
“Companies that loudly supported BLM fall silent when confronted
with skyrocketing black murders,” Fox News, April 26, 2022. See
https://www.foxnews.com/us/companies-that-loudly-supported-blm-fall-silent-when-confronted-with-skyrocketing-black-murders.
43 Bellamy-Walker,
Tat. “Black Lives Matter activists accuse executive of stealing $10
million in donor funds,” NBC News, September 7, 2022. See
https://www.nbcnews.com/news/nbcblk/black-lives-matter-activists-accuse-executive-stealing-10-million-dono-rcna46481.
44 “Salesforce
pushes for voting rights, police reform and criminal justice
reform; donates $1.5m for voting access,” Salesforce, Inc., May 13,
2021. See
https://www.salesforce.com/news/stories/salesforce-pushes-for-voting-rights-police-reform-and-criminal-justice-reform-donates-1-5m-for-voting-access/.
45 Mittelstadt,
Natalia. “Iconic brands that slammed Georgia election law have eff
on face amid state’s record voter turnout,” Just the News, November
16, 2022. See
https://justthenews.com/politics-policy/elections/corporations-bet-against-georgia-election-integrity-law-and-lost-amid.
9
and
harder to cheat.”46 47 Mr. Benioff’s
unchecked judgment and reactionary approach to key business
decisions led to the Company’s opposition to a law that benefited
Georgia voters.
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Mr. Benioff is an
active participant and on the Board of Trustees of the World
Economic Forum. This ongoing support and partnership with the WEF
continues despite claims that the Forum “seems to exist to destroy
national economies” and the head of the organization stating that
they seek to “master the future.”48 There is much
that is troubling about the WEF. For
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example, WEF
describes itself as an “international organization for
public-private cooperation,” and that it was “founded on the
stakeholder theory, which asserts that an organization is
accountable to all parts of society.” This undermines shareholder
primacy and national sovereignty.
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-Salesforce
has committed to having net zero carbon emissions, making the false
claim that it plans to implement 100 percent renewable energy
across its value chain, and growing 1 trillion trees by 2030, to
align with the United Nations Sustainable Development
Goals.49 Mr. Benioff
went as far as to demand commitment from all companies attending
the World Economic Forum.50
-Mr.
Benioff believes that “capitalism, as we know it, is dead”, and
instead prefers a new kind of “capitalism” that is “not the Milton
Friedman capitalism, that’s just about making money.”51 Mr. Benioff
believes that Salesforce should focus on “responsibly serving all
stakeholders,” which include “shareholders, customers, employees,
partners, the planet, and the communities in which we work and live
to succeed.”52 This is in
opposition to an
46 Brown, Spencer.
“Coca-Cola gets trolled in Georgia for Lying about election
integrity law,” Townhall, December 6, 2022. See
https://townhall.com/tipsheet/spencerbrown/2022/12/05/coca-cola-gets-trolled-in-georgia-for-lying-about-election-integrity-law-n2616773.
47 “Myth v. fact:
Georgia’s election integrity act,” Senate Republican Policy
Committee, June 23, 2022. See
https://www.rpc.senate.gov/policy-papers/myth-v-fact-georgias-election-integrity-act.
48 Carlson,
Tucker. “Tucker Carlson: World Economic Forum exists to ‘destroy
national economies,’” Fox News, January 18, 2023. See
https://www.foxnews.com/opinion/tucker-carlson-world-economic-forum-exists-destroy-national-economies.
49 Howard,
Jeffrey. “Salesforce advances UN sustainable development goals
through accessibility, inclusion, and belonging,” InclusionHub,
April 22, 2022. See
https://www.inclusionhub.com/articles/salesforce-advances-un-sustainable-development-goals.
50 Hutchison,
Harold. “’Do that right now’: Salesforce CEO demand commitment to
‘net zero’ emissions at Davos conference,” Daily Caller, January
18, 2023. See
https://dailycaller.com/2023/01/18/mrac-benioff-salesforce-wef-davos/.
51 La Monica,
Paul. “Marc Benioff says that capitalism, as we know it, is dead,”
CNN Business, October 4, 2019. See
https://www.cnn.com/2019/10/04/business/marc-benioff-capitalism-dead/index.html.
52 “FY23
stakeholder impact report,” Salesforce, Inc., accessed May 17,
2023. See https://stakeholderimpactreport.salesforce.com/.
10
article written by the former Chief Justice of the Delaware Supreme
Court, which states that “directors must make stockholder welfare
their sole end, and… other interests may be taken into
consideration only as a means of promoting stockholder
welfare.”53 As a
Delaware-based corporation, Salesforce’s board of directors is
required by fiduciary duty to hold the interest of shareholders
above those of other stakeholders. By spending lavishly on ESG
goals, diversity requirements, and other secondary non-business
activities, Salesforce has been the target of significant activist
investor pushback and has made itself financially and legally
vulnerable to further legal or financial consequences.
Succession
Planning
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Mr. Benioff has been
the common thread of failure in several succession attempts. In the
summer of 2018, Keith Block was promoted to co-CEO, with the
intention of taking Mr. Benioff’s role as CEO of the
Company.54 However, Mr.
Block’s “authority was constantly being undermined,” as Mr. Benioff
“had trouble letting go… ask(ing) several executives to continue to
report to him rather than Block.”55 Once Mr.
Benioff appointed a new COO, Bret Taylor, without Mr. Block’s
consultation,
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Mr. Block chose to
resign instead of taking over as CEO. Mr. Benioff “put Block in an
impossible situation” and, as a result, Mr. Block decided to leave
the Company in February of 2020.56
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Salesforce tried to
implement another succession plan by promoting Mr. Taylor to the
role of co-CEO in November 2021.57 Despite Mr.
Benioff’s speeches of how he sought to “empower” Mr. Taylor, Mr.
Benioff still very much represented the face of the Company, and
Mr. Taylor would resign shortly thereafter in late 2022 after a
“showdown” between the two executives.58 Former
executives at the Company said “Benioff didn’t want to relinquish
control,” as evidenced by him continuing to conduct performance
reviews of the Company’s executives, controlling meetings, and
setting strategy.59 After a failed
attempt by Mr. Taylor to become the sole CEO of Salesforce, he
decided to resign. This was followed by the resignation of five
other top
53 The dangers of
denial: the needs for a clear-eyed understanding of the power and
accountability structure established by the Delaware General
Corporation Law,” University of Pennsylvania Law School, Institute
for Law and Economics, March 20, 2015. See
https://www.shareholderforum.com/access/Library/20150320_Strine.pdf.
54 Stewart, Ashley
& Thomas, Ellen. “The inside story of how Salesforce went from
gifting ultra-luxury cars to mass layoffs and a ‘showdown’ between
co-CEOs,” Business Insider, April 28, 2023. See
https://www.businessinsider.com/inside-18-difficult-months-at-salesforce-2023-4.
55 Ibid.
56 Ibid.
57 Ibid.
58 Ibid.
59 Ibid.
11
executives at the
Company, including the CEOs of Slack and Tableau.60 Despite these
malfunctions, Mr. Benioff has insisted the “co-CEO model was
working.”61
As a larger-than-life
personality at the helm of Salesforce as it rose from an idea to
one of the largest software companies in the world, Mr. Benioff
became the face of not only Salesforce, but the software industry
as a whole. As a Harvard Business Review article states,
“transitions from ‘iconic’ CEOs are often the
riskiest.”62 Most succession
failures are “self-imposed wounds,” despite “a successful outcome
(being) largely within a company’s control.”63
The dilemma when
transitioning out an iconic CEO is that “the longer an incumbent
CEO’s tenure, the more challenging and riskier the
transition.”64 Several key
risks in succession planning are “deferring to the incumbent CEO
too much… holding onto the iconic CEO too long… (and) being lulled
into a false sense of security.”65 Mr. Benioff
himself has said that he doesn’t know if he’ll be able to let go of
Salesforce, with many close to him sharing similar
doubts.66 With Mr.
Benioff acting as both CEO and Board Chair, the Company relies
heavily on Mr. Benioff’s leadership. By separating the roles of CEO
and Board Chair, Salesforce can begin to reduce its dependence on
Mr. Benioff, improving the likelihood of a favorable outcome in the
Company’s next succession attempt.
Financial
mismanagement
Mr. Benioff is known
for his lavish spending, pursuit of high-profile acquisitions, and
high-end vacations. He has pursued all at the expense of the
Company. During August of 2021 Mr. Benioff used corporate funds to
fly dozens of executives to Hawaii on an annual trip, greeted by
Mr. Benioff handing out $10,000 Cartier watches.67 On other
occasions, the Company would purchase six-figure cars for its
executives.68 These were
drops in the bucket compared to the Company’s acquisitions of
MuleSoft, Tableau and Slack, costing Salesforce a combined $24.7
billion during periods when valuations were extremely high, not to
mention that there has been little to no integration across
products to create cross-selling synergies.69 It was believed
by former Salesforce executives that these acquisitions were done
to keep up with competitors, as
60 Ibid.
61 Stewart, Ashley
& Thomas, Ellen. “Marc Benioff says he has a successor. A
leaked Salesforce org chart identifies the likely candidates,”
Business Insider, May 4, 2023. See
https://www.businessinsider.com/leaked-salesforce-org-chart-identifies-likely-benioff-successors-2023-5.
62 Botelho,
Hayden, & Wright. “Beware the transition from an iconic CEO,”
Harvard Business Review, February 1, 2023. See
https://hbr.org/2023/02/beware-the-transition-from-an-iconic-ceo.
63 Ibid.
64 Ibid.
65 Ibid.
66 Stewart, Ashley
& Thomas, Ellen. “The inside story of how Salesforce went from
gifting ultra-luxury cars to mass layoffs and a ‘showdown’ between
co-CEOs,” Business Insider, April 28, 2023. See
https://www.businessinsider.com/inside-18-difficult-months-at-salesforce-2023-4.
67 Stewart, Ashley
& Thomas, Ellen. “The inside story of how Salesforce went from
gifting ultra-luxury cars to mass layoffs and a ‘showdown’ between
co-CEOs,” Business Insider, April 28, 2023. See
https://www.businessinsider.com/inside-18-difficult-months-at-salesforce-2023-4.
68 Ibid.
69 Ibid.
12
Salesforce failed to
develop new products internally or grow organically.70 The spending on
extravagances and acquisitions is a key reason activists targeted
the Company. Instead of spending millions on luxury items and
billions on acquisitions, Mr. Benioff should have focused on
expanding margins, developing new products, and managing the
Company.
Conclusion
These
examples have shown that the Company has made multiple missteps and
poor decisions under Mr. Benioff’s leadership, that the Lead
Independent Director has failed to provide “meaningful” oversight
over the CEO, and that the Board has failed to mitigate or
prevent Mr. Benioff’s pursuit of “woke” initiatives and suboptimal
strategies. The company even went as far as sponsoring an event
called “Woke Wednesday.”71
It
appears that everyone stakeholder of Salesforce is a part of Mr.
Benioff’s “Ohana” family culture, except for the Company’s
shareholders, and the several thousand Company employees who were
recently laid off. Mr. Benioff has clearly used investor resources
to pursue his own agenda. A separate chair, with an outside
perspective and clearly designated powers, has more implied
authority to help avoid such misappropriation of Company resources
and reduce risks from poor decisions.
For
these reasons, we believe it is imperative that Salesforce
permanently change its corporate governance policies to require an
independent Board Chair at all times.
Therefore, we urge stockholders to vote FOR Shareholder
Proposal 6 on Salesforce, Inc.’s 2023 Proxy, regarding an
independent chair of the board policy.
Photo
credits:
Page 3
– Salesforce Tower, waltarrrrr/Creative Commons
Page 7 – Marc
Benioff, Fortune Global Forum/Creative Commons
Page 9 – Black
Lives Matter riot in Minneapolis, Chad Davis/Creative Commons
Page 10 – Marc
Benioff, World Economic Forum/Creative Commons
Page 11 – Bret
Taylor, Cite Conference/Creative Commons
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INFORMATION MAY BE DISSEMINATED TO SHAREHOLDERS VIA TELEPHONE, U.S.
MAIL, E-MAIL, CERTAIN WEBSITES AND CERTAIN SOCIAL MEDIA VENUES, AND
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OF AUTHORITY TO VOTE YOUR PROXY.
70 Ibid.
71 Ali, Sahara. “A
conversation with DeRay Mckesson on civil rights 2.0 during black
history month,” Salesforce, Inc., February 3, 2021. See
https://www.salesforce.com/news/stories/a-conversation-with-deray-mckesson-on-civil-rights-2-0-during-black-history-month/.
13
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For questions
regarding Salesforce, Inc. – Proposal 6 – “Stockholder
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National Legal and Policy Center, please contact Paul Chesser,
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14