“Abhorrent Governance”

https://310value.substack.com/p/texas-pacific-land-corporation-a

Nice rundown on the proxy here. Can’t help agree with the author’s thoughts on #4.

Proposal 4: It’s a Trap!

The fourth proposal seems great as the current share price is close to $1,800 per share and several investors believe that a stock split would help generate additional interest in the company. The board points out that more shares are needed to execute a split, ergo, please approve more shares. However, where it gets dangerous for shareholders is that they also say that the additional shares could be used as consideration for acquisitions, and as grants to employees. Regarding acquisitions, the long-held investment thesis in TPL is that it was a liquidating trust. No capital was necessary to grow the royalty businesses and all excess cash flow was to be used to pay dividends and / or retire shares. Furthermore, the company has a share buyback program in place, why go the other way? Last comment on acquisitions, management does not have the trust of the shareholders to deploy large amounts of capital via acquisitions. Regarding the stock grants, there are enough issues with management compensation to compound the issue by allowing the company another piggy bank to extract from.

Would also wholeheartedly agree with the sentiment below. Given the size and pay of this board, waiting a year for action is a joke.

The meeting is November 16, 2022. Advice I would give to the board, is that if any of the non-binding proposals pass, do not let another year go by before having a binding vote, such as was done with the proposal to declassify the board. Have a special meeting as soon as possible so the shareholders’ wishes can be implemented.

8 thoughts on ““Abhorrent Governance”

  1. I continue to believe the trustees are listening and this group (which I self identify with) is highly impatient. Murray Stahl has my trust and owns more than this whole readership group combined. If he signs off on capital allocation or capital markets, I’m good. We should stop saber rattling about suing and all these things that actually inhibit multiple corporate actions and let them run. It’s been a bananas 12 mos between war, Covid, inflation, etc. We missed good opp kn the years leading up to this in part because of activism – in the meantime few companies have been as good an investment over most time frames.
    Best to you all,
    TeamDeck

    Liked by 1 person

    • “Murray Stahl has my trust and owns more than this whole readership group combined. If he signs off on capital allocation or capital markets, I’m good.”

      I trust Stahl too, but remember his hands are tied as a result of the shareholder agreement. We need to vote to dissolve that restriction, because right now he’s the proverbial one-legged man in an ass kicking contest.

      Liked by 1 person

  2. This comment has changed my mind about voting for more shares. This Board has shown no respect for shareholders and has only moved to enrich themselves.
    Let’s not give them more tools to screw us with. Vote ‘NO’ on more authorized shares.

    Liked by 1 person

  3. I agree and will vote shares accordingly. If the additional shares were used to do a stock spit that is positive. But with the history of the Glover management one must have concerns that they will be used for other purposes.

    Like

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