Texas Pacific Land Corporation shareholder asks board to declassify


CHICAGO, November 16, 2021 / PRNewswire / – Gabi Gliksberg, a long-time shareholder of Texas Pacific Land Corporation and, prior to the conversion, Texas Pacific Land Trust, through ATG Capital Management, LLC, sent an open letter to the board of directors of Texas Pacific asking it to take the steps necessary to amend the charter of the company in order to disorganize the board and include the proposed amendment in the proxy documents for approval by the shareholders at the 2021 annual meeting of the company.

The letter explains the reasons for this action, including the broad consensus among investors and public companies that have declassified boards of directors – which require all incumbent directors (rather than a portion of the board members to administration) run for office every year – ensure superior shareholder accountability and value creation.

The text of the letter reads as follows:

Dear members of the board of directors:

As a long-time shareholder of Texas Pacific Land Corporation (“TPL” or the “Company”), I am writing to you today to discuss an issue of concern to all shareholders: the offbeat nature of the Board. administration of TPL (the “Board”). As you know, I previously submitted to the Company a simple shareholder proposal expressing the opinion that “the board of directors of TPL should be declassified, allowing each member of the board to stand for election on a annual ”. The Company refused to submit this proposal to its shareholders, going so far as to formally request the Securities and Exchange Commission (“SEC”) to refrain from any enforcement action if the Company excludes my proposal from the proxy documents for the next one. December 29, 2021 Annual meeting. I opposed this request through a lawyer.

Regardless of how the SEC governs, I firmly believe that if TPL’s board of directors truly cares about what is in the best interests of the company and its shareholders, then it should immediately pass a resolution recommending a amendment to the company’s charter that declassify the board, allowing all directors to be elected on an annual basis, and then submit this proposed amendment to shareholders for a vote.

As stated on the TPL website, the Board of Directors purpose following the conversion of the Company into a joint stock company is to “ensure that TPL’s activities are carried out with the highest levels of integrity, ethics and responsibility to build strong corporate governance. (Emphasis added). This so-called commitment to “strong corporate governance” cannot be compared to the Council’s stubborn resistance to declassification. There is a strong consensus in the investment and academic communities that boards elected each year without director categories are clearly superior laddered boards have less accountability to shareholders, less reason to be sensitive to interests of shareholders and a greater ability to withdraw. Declassified boards, on the other hand, are widely, if not universally, regarded for this reason, so it’s no surprise that public companies have moved away from classified boards for years, and more than 90% of large corporations. capitalization now have declassified boards of directors.

The investment management and proxy voting guidelines of many of the largest shareholders of TPL, ISS and Glass Lewis, all available on their websites, echo this unanimous preference for electing all directors on a basis. annual. I have included a few highlights below:

In fact, in doing my research, I haven’t found a single significant shareholder of TPL with a publicly accessible voting policy that prefers staggered boards.

It is also telling that none of the other public company boards that include directors of TPL – MRC Global Inc. (MRC), Saia Inc. (SAIA), Texas Roadhouse Inc. (TXRH), Crane Co. ( CR) and FRMO Corporation (FRMO) – are classified. Indeed, as the current chairman of TPL’s nominating and governance committee, General Cook, said during TPL’s 2019 proxy contest:

“At Crane a few years ago we had a classified board of directors. A third of the board members were elected to a three-year term each year, and now it’s pretty much out of favor if you talk to ISS and Glass Lewis, if you talk to other proxy firms. And so what we did was we got together and I was the head of, I was the chairman of Nomination and Governance when we did that, and so we convinced the chairman and also the other board that we should probably go to the annual elections, which we implemented. ”


If the board truly believes in improving corporate governance, rather than portraying ESG as just a cynical marketing slogan, then it would be in a good hurry to listen to General Cook’s advice and follow through on it. example of other companies in which its members sit as directors. The most recent of these companies to vote in favor of declassification was Saia, who, in line with the consensus described above, explained in their proxy circular:

“The Board recognizes the common sentiment among shareholders and institutional investor groups that the annual election of directors would improve the corporate governance policies of the company. The board also believes that the removal of the classified board structure further improves practices previously adopted to promote director accountability and independent oversight… In light of this sentiment and trends in corporate governance, the board has determined that it is in the best interests of the company and its shareholders to declassify the board and provide for the annual election of all directors. “


It was not hyperbole when I stated in my shareholder proposal that there seems to be an almost unanimous consensus in the institutional investment world that declassified boards are now the preferred governance structure. : Saia’s vote approved declassification with a final tally of 25,059,845 “for” versus only 10,262 “against”, or 99.96% to 0.04%. https://www.sec.gov/ix?doc=/Archives/edgar/data/0001177702/000156459021022835/saia-8k_20210427.htm

In light of the above, TPL’s current board structure clearly lags behind corporate governance best practices and the consensus policies of the public company community. Moreover, the Council’s resistance to modernizing its structure by downgrading is both unexplained and, frankly, inexplicable. If the board of directors honestly believes, as loyal corporate trustees, that there are good reasons for retaining its archaic classification system, then one would have expected it to invite vigorous debate with its shareholders on the matter at the next annual meeting. Instead, judging by his reaction to my shareholder proposal and his determination to bury it even before the Company’s proxy materials are released, the board is considering such a debate – and any attempt to change it. the status quo – as a nuisance to be quelled quickly and decisively. Such indifference – even outright hostility – to shareholder democracy is also reflected in the choice of the board of directors of December 29 for the new date of the Annual Meeting – in the middle of the holidays and during a time of year when many Americans are traveling, taking time off, and spending time with their children and grandchildren who are on vacation. It is just not a date you choose if you hope to maximize the number of shareholders in attendance.

The impression that the Council may be primarily interested in anchoring itself in its current positions is hard to miss. This impression is only reinforced by the fact that the Board, having been effectively appointed by the trustees of the previous trust, was never even elected by the shareholders’ meeting initially.

Fortunately, there is a clear way to remedy this situation and right the ship. The Council must immediately take action to:

  • rescind the Company’s no-action letter to the SEC regarding my shareholder proposal and include this proposal in the proxy documents;

  • hold a vote of the current directors on amending the Charter of the Company to disorganize the board of directors; and

  • present the draft amendment to the Charter to the shareholders for a vote.

I welcome the opportunity to present this matter to the Board and would be happy to meet with the Board to discuss further and other necessary corporate governance improvements as the Board sees fit.


Gabi Gliksberg

Gabi Gliksberg
ATG Capital Management, LLC
[email protected]


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SOURCE ATG Capital management


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