Gabi Gliksberg, a long time stockholder of Texas Pacific Land Corporation and, before the conversion, Texas Pacific Land Trust, through ATG Capital Management, LLC, has issued an open letter to Texas Pacific’s Board of Directors in response to the Board’s criticism of Proposal #7 to de-stagger the Board and his lawsuit for inspection of Company records.
The letters reads as follows:
Dear Members of the Board,
As a longstanding stockholder of Texas Pacific Land Corporation , I write to you today to address the concerns and respond to the arguments you have raised in your December 20 letter to the Company’s stockholders.
First, I disagree with the Board’s reasoning in urging stockholders to vote against my Proposal #7 to declassify the Board. You defend the current classified Board structure as providing stability and continuity of individual knowledge. Yet, you ignore the issues of Board responsiveness and accountability to the corporation’s owners, values that are extremely important to myself and other stockholders. The Company exists to benefit its owners, not the Board. And it should be up to the stockholders as owners to decide if they should retain the Board’s membership at each annual meeting in the name of “stability” and “continuity,” or make changes as they deem fit based on director performance. That is why corporate boards are continually being declassified across different industries and why declassification is supported by major institutional investors, ISS, Glass Lewis and more. Put simply, declassification works. In fact, ISS and several substantial shareholders have already come out publicly to support Proposal #7.
The Board’s strident resistance to Proposal #7 is both puzzling and telling. Contrary to your letter’s assertion, my proposal does not require immediate declassification of the Board, as the Board will of course need to accomplish declassification consistent with the requirements of applicable law. This kind of scare-mongering of stockholders is reminiscent of the Company’s vigorous (albeit unsuccessful) attempts to keep stockholders from being able to consider Proposal #7 at all by seeking agreement from the Securities and Exchange Commission (“SEC”) to refrain from enforcement action if the Company excluded that proposal from the proxy materials for the upcoming Annual Meeting. A reasonable stockholder pondering these actions would understandably think twice before blindly relying on the Board’s promise that the Nominating and Corporate Governance Committee “plans to begin the process of evaluating the declassification of the Board in 2022.” That is why passage of Proposal #7 is so important – to communicate to the Board in unmistakable terms (that are impossible for the Board to ignore) what the Company’s stockholders believe constitutes effective and responsive corporate governance, whether or not the Board shares the same view.
Second, the Board’s criticisms of my lawsuit seeking production of books and records regarding the representations made by the Company and Mr. McGinnis that he was the Company’s second largest shareholder in 2019 are both inaccurate and self-contradictory. Your contention that you offered to allow me to review “the information reviewed by the Board” in connection with its inquiry into Mr. McGinnis’s holdings is in my view a cagey attempt at revisionist history. The fact is the Board refused to tell me what specifically you would allow me to review or even to identify which categories of documents you were willing to let me review, despite multiple requests that you do so. What I “refused” to do was sign a draconian confidentiality agreement as a condition of being allowed to review an unknown category of documents that you yourself concede are not privileged. Unfortunately, this stonewalling was part and parcel of the way the Company has responded to all of my inquiries about Mr. McGinnis’s 2019 stock ownership, and it left me with no choice but to file a lawsuit to enforce the Company’s obligations under Delaware law. The outcome of that lawsuit is now in the Court’s hands. Stockholders can review my Complaint and judge for themselves.
However, all of that is beside the point in many ways. Given the clear representation in your December 20 letter that the Board “conducted an inquiry into the matter” of Mr. McGinnis’s stock ownership, the Board should immediately and publicly release the results of that inquiry to all of the Company’s stockholders. All I have ever sought is the truth about a straightforward factual question: were the representations about who the Company’s second largest stockholder was back in 2019 factually accurate or not? The Board’s refusal to provide an answer to that straightforward question with supporting documentation is what ultimately led to my Delaware lawsuit. Even now, the Board refuses to disclose the results of its “inquiry” to stockholders – a remarkable fact given that the Board is affirmatively asking the stockholders to reelect Mr. McGinnis as a director. If the Board now has determined the answer to the question of Mr. McGinnis’s ownership and has evidence to support its conclusion, then it should publicly set the record straight instead of grandstanding. Transparency – rather than more obfuscation – is what would be in the “best interest of all stockholders.”
Third, you claim this is all about my trying to obtain a seat on the Board. Of course, I have never hidden the fact that I want to serve my fellow stockholders on the Board of a Company that I feel passionate about. But the notion that my submission of Proposal #7 and suit to enforce the Company’s legal obligation to provide access to corporate books and records are part of some elaborate ruse is, to put it charitably, ridiculous. Surely, the Board has better things to do with its time than assault my integrity. I would have thought you would have tried to persuade TPL shareholders to your point of view by making a good case on the merits rather than engaging in ad hominem attacks. I guess I was wrong. This Company’s stockholders deserve better.
Finally, in its December 7 proxy statement the Company stated as follows, “Murray Stahl, in violation of the Stockholders’ Agreement, has informed the Company in writing on December 2, 2021 that he intends to vote against the election of Dana F. McGinnis.” Does the Company plan to comment on this point?