SUPPORTING STATEMENT: Eight of Caterpillar’s ten board members sit on at least one other corporate board, and every board member is either on another board or has a high-ranking position at another company.



Caterpillar isn’t alone in this regard – nearly all corporations are guilty of contributing to the boardroom incest plaguing American business.



The sharing and swapping of directors has given rise to a cohesive managerial class that has sway over most large companies simultaneously. When directors across corporations – and even non-corporate organizations – are overlapping, interchangeable and only selected from a pool of existing board members, it creates a situation in which directors have more allegiance to the cultural trends that are cross-corporate than they do to attending to the specific interests of their respective companies.



This is particularly evident when companies misuse shareholder assets to meddle in political and social issues, otherwise known as “ESG”. From a uniformity standpoint alone, the cohesiveness of it all is astonishing. How is it that hundreds of massive, multinational, public corporations all behave in near-perfect lockstep with each other on the most divisive issues of the day?



Is there a single Caterpillar director in opposition to ESG?



Additionally, overboarding presents time commitment challenges. It has been found that “companies with overboarded directors performed worse compared to companies with no overboarded directors.” (1) Potential liability for failures of oversight are significant, with relevant litigation causing Boeing “$20 billion in non-litigation costs and more than $2.5 billion in litigation costs.” (2)



Directors are legally required to represent shareholders, and should do so independent of outside influences from other companies and organizations – especially if those other commitments impede on the time directors dedicate to Caterpillar, or if those commitments influence Caterpillar’s decisions to wade into divisive political matters, which carries its own set of risks.



Recent events made clear that when companies – led by this managerial class – engage in overtly political and divisive partisanship, company bottom-lines, and therefore value to shareholders, drop significantly. Disney, Bud Light and Target – which also share and swap directors – all suffered heavy losses in revenue and stock price after embracing divisive positions. (3)



Currently, Caterpillar also engages in such partisanship and also contributes to boardroom incest. In adopting this proposal, the Company would become a leader in prioritizing shareholder interests over the interests of the managerial class.