Glass Lewis Goes Cook

14A Filing

ISS concludes that Cook has more board experience and warns that the vote shouldn’t be considered a referendum on C-corp conversion.

I’d argue the vote is a referendum on 1) alignment of interests (Trustees aligned with sub-unit holders) and 2) trust/verification in the competence of those in power to manage the asset to its full utility.

I admit to being surprised that neither ISS nor Glass Lewis were interested in the prospect of a representative from a large shareholder block with extremely high subject matter expertise getting under the hood.  That said, their verdicts make sense when you give them some thought.

Oliver is a dark horse with no large-institution board experience (though heading the investment committee at Texas Mutual w/ $6.5B AUM seems very relevant).  Cook has Oliver beat from a formulaic “board ready” perspective and is saying the right things in regards to term limits.  ISS and GL have more to lose than to gain in this battle by virtue of its size.  This isn’t one where they stick their necks out.  Limited upside to doing so.  No one ever got fired for buying IBM.

If I’m tasked with finding the next board member for MCD, JNJ, MSFT, etc and the choice is between Cook and Oliver, Cook clearly has the leg up.  I don’t think we’re trying to find that guy though.  ISS and GL are grading apples; TPL’s trustee seat, by virtue of the situation we are in, requires an orange.

In its May 10, 2019 report, Glass Lewis concludes that: 1

“upon a full and objective review of the arguments put forward by the Dissidents and the Trust, we ultimately see a stronger case for shareholders to support the election of General Cook. While he may lack expertise in the various business activities presently occurring on TPL’s land, in our view, General Cook has much broader and more impressive experience as a board member, including service on large public and private company boards, as well as a proven track record of advocating for and practicing good corporate governance, which we believe makes him the better choice for TPL shareholders at this time.”

In its analysis, Glass Lewis further noted that:

“the upcoming shareholder vote should not be construed as a referendum on whether the Trust should immediately pursue a C-Corp conversion, in our opinion. Rather, we believe this proxy contest, like most others, comes down to which nominee is better suited to serve on the board and more likely to represent and advocate for the best long-term interests and rights of all shareholders.”