TPL 2.0 : Investor Preferences

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Investor Preferences in C-Corp Conversion:

  1. No dilution.  Share issuance of any kind should be prohibited in the corporate charter.  Any changes to this policy should require a significant majority vote. 
  2. Share repurchases should remain the primary method of returning capital.
    1. If a dividend is necessary, it should be regular and consistent.
  3. Board members, including originating board members, must be voted upon by shareholders.  Board terms should be of reasonable length.
  4. Board should be of reasonable size so as to function healthily at all times. Independent directors should outnumber executive members. 
  5. Remain in “business of going out of business”.  Primary duty of corporation is return of capital via royalty collections and asset sales.
    1. State limitations on additional business activity such as new business ventures and additional land/royally acquisitions.  
  6. Executives shall be required to purchase shares via dedicated cash compensation and/or company loans to ensure that shareholder and management incentives are aligned.  Executives should be required to attain and maintain some material level of ownership. 
  7. Executive compensation should be simple and oriented towards long term results.
  8. Stock shall be split regularly so as to facilitate liquidity for repurchases.
  9. Transparency in reporting of results and material events should be commensurate with those expected of a $5B+ publicly traded corporation.
  10. Corporation must hold an annual meetings and be regularly open to investor communcation.
  11. NO DEBT!

The list above was kept short deliberately.  Spin-offs, head count, and other business decisions (in my opinion) should be the responsibility of directors and management with interests and incentives that are aligned with those of shareholders (TPL 2.0).

Update 6/22/20:  This post was originally written on 8/11/19.  Almost a year later we have some clarity on the board makeup.  Looks like a win and a loss.  Highlighted above.

7 thoughts on “TPL 2.0 : Investor Preferences”

  1. This is a great list. Thanks for consolidating and boiling down. If this could be achieved, shareholders would have a growing revenue and net income company with a steadily reducing number of shares, and modern corporate governance.

    Three suggestions:
    o Directors have to also own shares.
    o Strongly prefer making it impossible to ever issue new shares, unless by a split process, and not new shares. Bolt that into the corporate charter.
    o Shareholders get to vote on the C-Corp conversion plan.

    Oh, a final item. Have TPLblogger share with TPL management what fair and full information sharing looks like, for their new Investor Relations department.

    Liked by 3 people

  2. Thank you. I’d like compensation tied to business performance, not stock performance. It’s a small detail, but we certainly don’t want the kind of defense we have seen by the present trustees when we discuss performance. The argument that the stock performed well and thus management has performed well leads to Enron disasters.

    Proof of the ability to allocate capital rather than hype the stock is critical.

    Thank you!

    Liked by 3 people

  3. good points, Ezra brings up very important point not a small point: compensation must be tied to business performance current management can not take credit for what has happened in the basin. up to a 300% bonus seems too rich. what will be the benchmarks be? maurice meyer jr. chairman of the trust for 30 years 1961-1990 who passed away in 1997 would never have allowed what current management is doing to the trust

    Liked by 2 people

  5. Several unanswered questions

    Was there a valid meeting called on May 22, 2019?
    Did we count the votes accurately?
    Was Oliver duly elected as our trustee?
    If so
    Where does all of this stand
    Since we followed the proper rules of the Trust and the votes were counted by a validly authorized representative, I believe that everyone was under the assumption that we have a validly elected third trustee.
    If so, there needs to be additional shareholder action to dismiss.
    I know that there is a strong effort to move on the C Corp front, however we cannot marginalize the fact that we are still a Trust created under Trust laws and required to operate accordingly. In addition, the incumbent trustees (not a committee) are still responsible to properly discharge their duties as such and they are responsible for their actions up to if or when the Trust is converted to a c-corp.
    It would be good to address ALL of the Trust issues presented during the voting process and resolve those facts for everyone who cast a ballot.
    Where does the white card and the blue card stand?
    Where do we stand?

    Liked by 1 person

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