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.”



ISS Rules in Favor of Blue Card; White Presses for a Vote

“… a public track record that seems to reflect direct efforts to improve the governance of the companies on whose boards he has served. Cook brings substantial experience as a public company board member, as well as chairman of the San Antonio chapter of the National Association of Corporate Directors. In fact, he appears to have played an integral part in the effort to de-classify the board of Crane [Co]. At Crane’s first annual meeting after Cook became the chairman of the Nominating and Governance Committee, the company granted shareholders a vote on whether to de-classify its board, which shareholders approved. Cook’s track record appears to reflect a willingness and ability to push for corporate governance changes that benefit shareholders.”

Looks like their conviction was off the charts with all the “seems” and “appears” in there.

White had a tough day but doubles down on its call for a vote.

“We continue to regret the depths to which the TPL incumbent Trustees and management have sunk in order to try to tarnish the business reputation of their largest shareholders, while spending millions of dollars in shareholder money to preserve their lifetime jobs.

Once again, we call on the incumbent Trustees to immediately commit today to bring this matter to a shareholder vote on May 22, 2019, as currently scheduled. We have now repeatedly asked for this simple public commitment from the trustees given our increasing concern that they are considering delaying the vote if they believe Eric Oliver will otherwise be elected trustee. The incumbent Trustees’ continuing silence on this matter is very alarming to us and should be to all shareholders.”

Getting too late to postpone in my opinion.  We’ll be two weeks out in about four hours.  Postponement now, in my opinion, would be a big GFY to all of the ‘non-card’ individual and institutional investors that have carved out midweek time to fly in and attend.  Blue probably just making White sweat here by not publicly re-committing to the set date as there is limited upside for them to do so.