Bloomberg Takes Note

TPL investors have become desensitized to the absurdity of its governance. The incentives of personal enrichment, power, and resume building appear to nearly always trump serving the will of shareholders. Looks like the outside world is starting to notice.

They Knew All Along (HK/SV Respond in Delaware)

More evidence of fine governance from the team. How does the rest of the board (Cook, Epps, Duganier, Best, Kurz) just watch this all happen? Aren’t they embarrassed?

Defendants first informed TPL in August 2022 that Defendants would vote against Proposal Four, and reiterated their position repeatedly in the following months. Nonetheless, TPL waited to file proxy solicitation material identifying Defendants’ position until the day before the stockholder meeting.

Against this historical backdrop, it is inconceivable that Horizon would have signed an agreement requiring it to vote in favor of the authorization of millions of new, dilutive shares. Moreover, the plain text of the Stockholders’ Agreement shows Defendants expressly reserved the right to vote against any such corporate maneuvering. Hoping the issue would become moot if enough stockholders voted for Proposal Four, TPL took a “wait and see” approach to see how the vote turned out. When Proposal Four failed at TPL’s November 16, 2022 annual meeting, TPL adjourned the meeting to February 14, 2023, and filed this action six days later. TPL simultaneously moved for expedited proceedings, requesting a trial on February 3, 2023, less than ten weeks from now.

This is not the first time TPL has sued Defendants when it did not like the outcome of an election. TPL and Defendants were adversaries in a 2019 proxy contest, which led to TPL purporting to invalidate a trustee election and filing a lawsuit on the eve of a stockholder meeting to prevent one of SoftVest’s principals from becoming a TPL trustee. Regrettably, Defendants expect that discovery will show that this lawsuit is part and parcel of TPL’s historical use of stockholder assets to suffocate basic stockholder voting rights. In particular, Defendants anticipate that the proposed authorization of new shares may be part of a plan to issue shares to individuals who are supportive of TPL’s incumbent management and legacy directors. Without this share issuance, those individuals are at a risk of being replaced.

When the votes from TPL’s November 16 annual meeting were tallied, Proposal Four failed. TPL adjourned the meeting with respect to Proposal Four until February 14, 2023. On November 22, 2022—nearly twelve weeks after first learning that Defendants would vote against Proposal Four—TPL initiated this action and requested expedition.