Investor Preferences in C-Corp Conversion:
- 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.
- Share repurchases should remain the primary method of returning capital.
- If a dividend is necessary, it should be regular and consistent.
- Board members, including originating board members, must be voted upon by shareholders. Board terms should be of reasonable length.
- Board should be of reasonable size so as to function healthily at all times. Independent directors should outnumber executive members.
- Remain in “business of going out of business”. Primary duty of corporation is return of capital via royalty collections and asset sales.
- State limitations on additional business activity such as new business ventures and additional land/royally acquisitions.
- 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.
- Executive compensation should be simple and oriented towards long term results.
- Stock shall be split regularly so as to facilitate liquidity for repurchases.
- Transparency in reporting of results and material events should be commensurate with those expected of a $5B+ publicly traded corporation.
- Corporation must hold an annual meetings and be regularly open to investor communcation.
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).