Tight Spot

tpltblogger49 Comments

You really have to feel for the five previously unaffiliated directors. They got caught up in a big mess.

At this point, it’s safe to say that management has no reservations about spending shareholder money and (if history tells us anything) is likely ramping up on more spending (lawyers, PR, crisis consultants, etc) to try to make this agency problem larger. They appear to be at the point of no return. The only way out is to keep going.

UNLESS…

Unless the Fab 5 wakes up and takes action. Inspired by their fiduciary duty to serve the interests of shareholders, the Fab 5 could wake from its slumber and make things right.

Or they could roll over and collect their paychecks and RSUs.

Tough decision to be sure.

What would you do?

49 thoughts on “Tight Spot”

  1. There is still time to save their reputations by putting an end to this madness. Otherwise, the co-chairs will eventually get voted out – after spending ample shareholder capital to stay in power. New directors will inspect the books and recorded and likely find some unsavory actions taken right under the Fab 5’s noses (aside from the known questionable governance practices). Then their reputations would be tarnished. Better to be a hero now than a zero later.

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    • People seem to always choose what is wrong for themselves. Let’s hope its different this time. Otherwise, its going to be that long slow road of change but I’m optimistic this will happen. Other than the investor groups two leads, Murray and Eric I have no confidence in any of the rest. But wouldn’t it be nice if they at least tried?

      Liked by 1 person

  2. Its one thing to be greedy, but its another to basically have the world see you as complete crooks. As Buffet has said before, he told his managers that if their actions were to be reported the next day in the local paper and let the local community to judge them, would they still do what they do?

    The battle is clearly lost for the management. I mean even the management being as diluted as they are should see that. To me, they now have 2 options:

    1) Stop this attempted intimidation (which is what it is), throw in the towel now and save their remaining reputation by responsibily wrapping this up and apologising.

    2) continue this BS and nonsense, continue to ruin millions of dollars in legal fees. When they get voted off, eventually, a shareholder out of many (or maybe HK/SV) will try to find legal ways to get them to personally compensate shareholders for the loss. This will be a lesson that they dont want to learn.

    Either way, prop 4 is dead. So option 1 seems like a no brainer

    Liked by 1 person

  3. I disagree that the ‘Independent’ directors got caught up in a big mess. They are not idiots and have previous business experience, except for the General who should have stayed retired, as he knows nothing about governance or he would have raised a red flag. They were part and parcel of this mess and could have stopped it at any point, even going back to the McGinnis issue.

    They should also resign after the meeting on the 18th.

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    • I disagree as well. A ten minute internet search provides plenty of information about the governance issues with the company. If they honestly did not know that they were being brought on to be secured votes for management they are not competent to be independent directors of a public company.

      Liked by 1 person

  4. Let’s use the power of numbers!!!

    What if somebody posted the emails of the board members on the blog?

    What if many of the blog readers hit the board members up with emails on the error of their ways?

    All in a brand new post

    Liked by 1 person

  5. There has been chatter that after the inevitable HK/SV win that there will be a clean sweep of management and BOD.

    Even more interesting would be a forensic investigation of all actions over the last several years.

    Condos. Planes. Buys. Sells.

    If that turns up enough wrong doing then any execs and BODs could be in big trouble.

    You’d think they’d think about that.

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  6. The predictable pattern to date strongly suggests they will do whatever’s in their own self interest, regardless of how their actions hurt the company or shareholders. Unfortunately, this is the psychopathy we are dealing with. I not expect humility, contrition, any sense of fiduciary duty, acceptance of responsibility, or an ethical obligation to do the right thing from these people. This will not be part of their calculus. What I do expect isn this: If they think they can end the standoff with their cushy jobs and lucrative board seats in tact, they will surrender. If not, they will do what every criminal does when cornered … they will come out shooting figuring they have nothing to lose.

    Liked by 2 people

  7. Here is a question. Once we win this thing. What will be the process of finding a new CEO? How can we be sure it will be someone of integrity. Could Murray or Eric be considered? They have full time jobs already!

    We don’t even need someone smart. Just someone with integrity who won’t muck it up!!

    Liked by 2 people

    • to be honest, I would imagine HK/SV would have someone in mind to nominate… another thing is, yes Murray has a full time job… but seriously, how much time/effort is required to run TPL? Although hugely un-qualified, I bet I can do a job better than the current management… its not exactly rocket science to collect royalties and other revenue streams, buyback shares, RETIRE THEM, rinse repeat….

      Liked by 1 person

      • Fuck, TPL is 900,000 acres of land in a trust. As far as business goes its as autopilot as they come, which is exactly why most of us own it. We don’t need a fancy pants lawyer, transformative leader, or pedigreed prodigy or famous rockstar. Give me someone, anyone, with integrity. Give me the antithesis of what we have now.

        Liked by 1 person

  8. I’m sure the Murray & Eric know someone who would do it right. The Board has to dump Glover though and he has a golden parachute as do all the others hired in the last couple of years.

    Liked by 1 person

    • Playing the devils Advocate here this discussion in the thread is so far back in the past and disconnected from reality.

      https://finance.yahoo.com/m/9bf91e1a-a75a-3bb2-81ab-de1e1dd41aaf/4-growth-stocks-to-buy-and.html

      “Generating 76% of its revenue from fees and royalties related to the oil and natural gas production on its acreage, Texas Pacific considers itself an “ETF of the Permian Basin.” Furthermore, the company generates 24% of its sales from fees related to providing brackish (untreated) water for drilling, treated water, and saltwater disposal on its land.”

      You don’t have to look far to find out that royalties aren’t the only source of income. Yes they were back in the trust glory days but that changed in 2017 with the water operation. Before that TPL was a ten person company guided by three trustees for life. Now its a ninety plus employee organization [with a dysfunctional Board of Directors -Grin]. So let me ask you, how did that happen? Is it possible the current management has some skills at building a successful organization? Shouldn’t we be looking at how we can employ those skills for our benefit? Kick ass and take names may result in instant gratification and long term regrets when the golden goose stops laying.

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    • Yes, they have bonus parachutes if terminated without cause. That said, the use of the Glass Lewis quote in the proxy may be proved to be fraud. At the very least, it was untrue. The CEO and CFO filing an untrue proxy with the SEC would be “cause” in my book.

      Liked by 1 person

  10. If I was director I would be looking at how to exit stage left. The problem is their DNA is all over this mess and the only way to get out alive is exit.

    Liked by 1 person

  11. Anyone have any luck getting Investor Relations to answer emails? They are ignoring mine.

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  13. if proposition 4 was not needed for operations and individual BOD(s) were ‘for’ it. Then one of two things must be true:

    1) they knew the company position on #4 was based on a lie (complicit)
    2) they don’t understand the companies operations (incompetent)

    both disqualify them as directors (IMO). Their only hope (of a cushy paycheck) is running with the herd.
    and
    we need to know how each individual Director voted on #4

    Liked by 1 person

    • It came out during the trial that 8 of the 10 board members voted for Prop 4. The only dissenters were Stahl and Oliver. Based on that majority, TPL felt justified to say that the Board supports Prop 4 — despite the testimony of Stahl and Oliver that they wanted their “Against” vote to be disclosed, which it finally was in a disclosure issued after the trial (based on legal pressure no doubt).

      It really does illustrate the balance of power on the board. We only have two shareholder-friendly ones and all others should be voted out when their day of reckoning comes. I had hope for Kurz and Best when they joined the board last year as independent board members (even Stahl and Oliver praised them in the press release), but it turns out they are just as bad as the other six and gotta go.

      Liked by 1 person

      • wow, I did not know this thanks (i guess). It is hard to believe I could get sadder about this situation.

        all must go then (but EO and MS)

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  14. Anyone else having a hard time remembering all of this crap? From the gondola’s in Colorado to the videos about why we should’ve elected the General, to the video of Murray and Eric in Abilene (maybe that was just Eric and not Murray too), to the previous “great ideas” for who should have been elected as trustee with conflicts of interest, to everything else…. Would be nice to have a document or PowerPoint to track it all. The court case briefs are helpful for a lot of it but sheeeshhhhh it’s getting too much to keep up with. For whoever wants to put this into a Grisham like novel or TV series, I’d be happy to buy it or watch it….

    Liked by 2 people

  15. I find it interesting that there is no mention of the Glass Lewis position flip reported on any of the online websites such as FINVIZ et al. Doing a search online for “Texas Pacific Land legal battle” I came across a document I haven’t seen before. It sure addresses in detail the present BOD standard operating procedures for dealing with their stockholders.

    https://www.prnewswire.com/news-releases/texas-pacific-land-corporation-stockholder-responds-to-boards-attack-on-proposal-to-declassify-and-suit-for-inspection-of-company-records-301450144.html

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  16. My view is different.

    The five so calleed independent directors are acolytes of the co-chairmen who appointed them. They are each professional directors. They welcome the opportunity to join the board, especially the general who has been there from the very beginning pre-incorporation as a C Corp. They are professional directors of public companies. That is how they make their living. They are never going to act independently. They’re going to act as the co-chairman who invited them on the board ask, or more correctly tells them to act/vote. It is clear they are on the board for one purpose only which is to support the people who are responsible for putting them on the board and because $250,000 a year for doing next to nothing is how they earn their living. It’s not a big price at all to do as asked. In fact, the reverse is true. it is a small price that one pays to be a Director in return for a big reward which in this case is $250,000 and stock options. The only requirement is they say yes to the two parties that “brung them to this party”.

    You have to understand that they can’t vote against the CEOs and the CEO who were with the TRUST and compensated which in the case of the two former trustees, what was it, $3K a year prior to the last two years asa trust.

    If these so-called independent directors were to vote against the wishes of the co-chairman, they would never again be invited on any other public board. It’s as simple as that; they make a living from the board compensation, and they want to be on boards of public companies in order to make their living without having to do much of anything That my friends and fellow shareholders is the story and that is what we are up against.

    Hopefully by the end of this year they’ll all be out as we will have had an opportunity to vote and install a new board. I don’t rule out the possibility for the present board to figure out how to delay, delay, delay some more, but it’s inevitable that we will have an opportunity to elect a new board and if we do we better damn well vote for it if you’re interested in seeing the cash hoard and the cash flow being used to buy stock, 90 employees being reduced to maybe a dozen or so, over $80 million of corporate overhead virtually eliminated (the most it ever was as a Trust was $4 million) and hopefully the water business spun off so we the shareholders can continue to hold it as a separate entity and not have it be a drag on TPL. By the way the management has not denied that the produced water business is probably unprofitable. Keep in mind that TPL has spent well over $100 million to date on CAPEX for water operations while the intelligent thing, the smart thing, the right thing to have done was to find operator who would’ve spent that money rather than TPL spending a penny and TPL collect the royalty on the revenues that operator generated TPL’s was and should again be solely a royalty operation with only immaterial expenses. Do you recall that the original charter called for regular repurchase of outstanding shares

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  17. What is it about the fact that we only have the opportunity to vote for 3 directors at the 2023 annual meeting that is so difficult to understand? All this vote the bastards out is so much wasted bandwidth.

    Under the board declassification proposal spelled out in the 2022 proxy statement, apparently approved by the stockholders at the 2022 Annual Meeting, and allegedly being implemented by the Board [unless they decide not to] there are only the 3 Class III Directors up for election to a one year term at the 2023 Annual Meeting. They are the 2 co-chairs and Stahl.

    If a director is voted out at the 2023 Annual Meeting and no one has run against them that creates an opening on the Board. If you read the TPL Certificate of Incorporation Section V Directors Article 5.2 vacancies I believe it says that any vacancy will be filled by affirmative vote of the Board ….not by the stockholders. Please correct me if I am misinterpreting this.

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    • It has been explained to me that if MS and EO resign from BOD that a proxy contest could begin. It’s seems like to me that would be the end game. Someone please confirm or correct.

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      • Their resignation, after the Nov. 2022 meeting is officially ended (May 18, 23 is a big day), ends their obligations under the shareholder agreement. So they could effectively, re-run, and if they got on, be board members without the constraints of the agreement. The main constraints would be 1) keeping silent 2) voting with the board in several cases and 3) the inability to view the books and records (aka investigate wrong doing). Would the proxy contest begin? Probably not until the nominations for the board slots open up. The shareholders, with a 50% vote, could theoretically remove board members “for cause”. Is the potentially fraudulent GL proxy and support of the lawsuit against shareholders ” negligent in their performance of his or her duties to the Corporation”? Yes for me, but I am not a lawyer.

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  18. This is about as steady of share price decline over the past 6 months as you could possibly have. Very impressive, congratulations to TPL management and BoD!

    I’m sure the buyout program is taking advantage of it and cash is not being used for other matters at this time!

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  19. If they have any sense they are taking advantage of it.

    Texas Pacific Land Corp. AFTER HOURS
    Last Updated: May 16, 2023 4:04 p.m. EDT Delayed quote
    $1,289.36 -37.32 -2.81% After Hours Volume: 269

    Here is a permalink to a custom StockCharts.com chart of the drop.

    https://schrts.co/rxiDjmrP

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    • You all realize that buying shares back gives them inventory to award shares to themselves and their pet employees. I’d rather that they sat on cash until this whole mess is cleaned up.

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  20. For those speculating in previous posts, Horizon sold 14k shares of TPL in Q1 per their 13F filing.

    But they have been buying exactly 1 share per day since May 5th!

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  21. Question for the TPL blog: How do you make $10 billion in six months?

    Start with $27.5 billion and put the TPL Board of Directors in charge of it.

    As a long-term holder I share in everyone’s anger and frustration at the behavior and decisions of TPL Management and Board, which are shameful and indefensible from any perspective.

    Regardless of the outcome, I believe management’s legacy is forever stained. Who’d have thought it possible to destroy such a wonderful compounder….

    It’s worth repeating Warren Buffett’s comment (paraphrasing) that you should buy companies that even an idiot could run, because someday an idiot will. Once again Buffett is proven right.

    Thanks to all who have contributed to the blog

    Liked by 1 person

  22. I think HK is not done with TPL for those who are speculating they are dumping it for PBT. The fact that they have been buying again (although a smaller scale) is to showcase that they have faith in the company still. Again, if you read their 1Q commentary, they talked about trying to not disturb a compounder as it will do its magic overtime, I dont think they are changing that view just yet

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    • I agree. Recent 13F shows, as was just mentioned above, they sold maybe 1% of the position.

      There could be many reasons for such a sale.

      I need to remind myself their position is around $2.5 billion. No way they easily abandon that.

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      • pretty sure that fighting Barry and Norris over #4 indicates they are not exiting. The court battle seemed to negatively affect share price last time (the blue-white card war) so I doubt MS-EO would see spending their own money on another round in court as way to boost share price this time- just so they could take the off ramp.

        Its a game of thrones, Barry is Jamie Lannister and Norris as Cersei (yikes). Glover is Joffrey. EO is Jon Stark and MS is Arya. Everyone else is some kind of cross between Hodor, Theon and Bronn.

        In the series, Cersei would rather see Kinds Landing burn than relinquish control….

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        • I want to see Barry, Norris, and Glover do the walk of atonement, getting mocked, ridiculed, and spat on every step of the way. Shame! Shame! Shame!

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        • For sure TPLblogger. We make light cause its all we can do. When we all started this journey (after MM died and B&N took over and behaved problematically) we knew it would be a long ride. I believe B&N feel that they were not given their due for TPLs growth. For me, the conversion to a C-corp was (at least in part) so we could remove B&N. Something we couldn’t do in the Trust structure. It was foolish to believe they would go quietly. B&N thought the Shareholder Agreement assured that they controlled enough votes to hold on. EO&MS have proven more problematic and bold than anticipated. Coupled with G’s win on staggered elections, B&N came up with another plan. Dilute HK&SV. That also seems to be failing (cross fingers). Pretty sure that B&N know there is no way they stay now if they can’t control the votes. The games not over, but from my position it appears we may be winning. It is just costing more than we hoped.

          as for the rest of the board they are lackey yes people. Not that different from most boards. I see no hope there.

          @Au79alpha- that was a satisfying episode………….

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