January 11, 2021

tpltblogger9 Comments

Looks like it’s happening!  Jan 11.  Same ticker.  No split.  The third link I listed looks to be comprehensive doc describing the corporate action.  Please post in the comments section if anything catches your eye.

I’m now going to unpin the 2.0 Investor Preferences post that we’re all tired of seeing.  As the final documents come out, I’ll circle back to each point in that post to see how we did.  All signs point to pretty good.

While I’m still prepared for something to go sideways, I’d like to say thank you to Eric Oliver and Murray Stahl (and their families, colleagues, and other support) for fighting this fight.  It couldn’t have been easy.  As an analyst and TPL follower, I came into the 3rd Trustee contest fairly neutral but it became very clear, very quickly who was on the right side of the divide.  This a great outcome for owners.

1 : Press Release

The Trustees of Texas Pacific Land Trust (NYSE: TPL) (the “Trust”) announced today that, in connection with the Trust’s previously announced plan to reorganize the Trust from its current structure to a corporation formed under Delaware law named Texas Pacific Land Corporation (“TPL Corporation”), the Trust expects to distribute all of the common stock of TPL Corporation to holders of sub-share certificates in certificates of proprietary interest of the Trust (“sub-share certificates”) on January 11, 2021 (such date, the “effective date”).

Prior to the market opening on the effective date, the Trust will distribute all of the shares of TPL Corporation common stock to holders of sub-share certificates as of such date on a pro rata, one-for-one basis in accordance with their interests in the Trust. The trading of sub-share certificates on the New York Stock Exchange (“NYSE”) will cease prior to the market opening and TPL Corporation common stock will begin trading on the NYSE on the same date under the symbol “TPL,” and the sub-share certificates will be cancelled.

2 : 8-K

3 : Information Statement

9 thoughts on “January 11, 2021”

  1. thanks TPLBlogger,
    regarding the preferred shares- i assumed it was pretty standard for a corporations board to be able to issue preferred shares without seeking shareholder approval. Is it the potential voting/vetoing rights of these shares, backdoor way of issuing new standard shares (via conversion) or simply too much flexibility given the past behavior of the trustees that is causing unease? Maybe others could comment so we know what to watch for.

    regarding no stock split- Once converted from a Trust, it seems that the self liquidating story (whether true or not) is no longer part of the long-term discussion. Splitting shares for greater liquidity (as anyone who has tried to buy or sell more than 100 shares knows) seems inevitable. Perhaps this is not something normally announced at the same time as changing the legal structure, or is it the opposite? perspectives from others appreciated.

    Liked by 1 person

  3. Absolutely insane BOD fees – every one of them gets more than 210k per year, the 2 great co-chairs get 250k! That’s a total of 2 million a year.

    No mention of everyone on the BOD having to own a certain amount of shares.

    Liked by 1 person

    • On one hand they seem crazy high. But consider today we are paying half that much to the two trustees, while small owners like me own more shares than all trustees and executives combined. Nike, PG, Coca Cola, etc all pay larger director fees for essentially window dressing. These people may actually have to do some work at TPL. And they will be required to have some skin in the game.

      We have wasted a lot of money on the proxy fights, missed buyback opportunities, and a general sense of frustration with the lack of modern governance. Am very happy to have Oliver and Stahl on the board, and the other names seem to be people that can think logically. Its probably the swan song of the two current trustees, and they may not even run for re-election in 2023.

      Big changes are coming and when you look at the TPL blog’s wish list of what we wanted to get from the c-corp path, we ended up with just about everything. I couldn’t be more pleased!

      I also wonder free of the trust shackles, will TPL more opportunistically acquire acreage as we have amazing cash flow, and the oil patch has a ton of badly strapped operators due to low prices.

      Slightly related, any thoughts of anyone on what happens to the stock price on January 11th? Do we start to see it creep up starting on January 3rd? Or is the recent run-up already pricing this in?

      Liked by 1 person

      • Don’t get me wrong, the conversion to C-corp is definitely an overall positive. Something we have all been looking forward to for a long time.

        But there is no denying that the BOD salaries are very excessive. You cannot compare the BOD salaries for a 175B market cap company to that of a 5B. Yes, they are paid for window dressing. I’m not quite sure how that is different for TPL. They really don’t need 9 directors to oversee a (mostly) royalty collecting company. I know this was a compromise as part of the settlement agreement, and we get Stahl and Oliver on the BOD, but I don’t like the feeling of the rest of the non-owner directors having no incentive to be aligned with shareholders. If there was a requirement that 50% of their salaries have to be used to buy shares in the company, I could get on board with their big pay.

        You mention that they will be required to have some skin in the game, what does this mean? Did I miss something in the filing?

        Liked by 1 person

        • I think we are mostly in agreement here. Agree for their size it is excessive ( both in number and $’s), but its what may have had to happen to get the deal done to get to c-corp land. For me the director pay is a smaller issue than the other nonsense that has gone on too long. And over time the number of directors may come down. I have seen that trend in many large cap companies to reduce by 20% the outside directors. I just can’t see Oliver and Stahl allowing a lot of corporate bloat on their watch.

          I was referring to the agreements for the executives on required TPL purchases, that got stopped once the path to c-corp started. This was outside of the current release of information specific to the conversion. One can also hope the directors also impose something like this for the directors also.

          Liked by 1 person

  4. Agree on the board fees – though like the joke goes, some times things like this are expensive because they are worth it. I’d expect Oliver and Stahl drive rationalization over time as well as insure there is alignment (ownership) at the board level – which is how this all started. In the history of the company (and Stahl’s ownership) this is a blip. 2m is small potatoes vs the opportunity cost of the last year.

    With that Bloomberg subscription (jealous) – what’s the top 10 ownership look like? Will this conversion drive etf ownership? That could be huge….robots are price takers, and would need to buy something like 40% of float.

    Weird thing – Robinhood will no longer let you buy royalty trust companies after 1/11. No idea why and probably not that important to Tpl.

    Liked by 1 person

  5. Any idea why Robin Hood suddenly stopped carrying TPL on Monday? Since Monday the stock is no longer supported on their platform. Weird.

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