Transcript
Welcome to shareholder Primacy from free float media podcast about activist investing Securities Law, and all the ways, the financial and legal worlds, intersect and Collide in real life and Lipton and me, Mike Levin have returned. And is a law professor at the University of Colorado, who teaches in research is Securities and business law. She holds up the legal end of the podcast. And that's Mike Levin an activist investor who lives and works in Chicago. He covers the financial side of our podcast. Yes, we do. Hey, we haven't talked about advanced notice by us and quite a while now, halfway in. Yeah. It's been a really long time. Many months, I checked the last time we mentioned the phrase advance. Notice bias with a little bit of frequency here, but the last time we actually looked hard was well over for a year ago. I don't realize that. So let's let's there's a case. That just developed that illustrates some really interesting truths and realities about what's going on there. So let's, let's talk about that in a minute. Yeah, absolutely. And we can, we talked a couple times about new creative strategies for shareholders to offer proposals and this week, there's kind of a doozy so we'll talk about that as well. Yes, we can another another A proxy solicitation for predatory proposals. So yeah, we'll handle that too. But first Mailbag. Yes, don't forget. You can email us if you want to complain or suggest topics or ask questions, you can reach us at shareholder, Primacy one word at freefloat, LLC. All right, let's let's hopefully hear from some people. It's been, it's been a little while. So yeah, keep those cards and letters coming as they used to say, when there were cards and let us keep those emails and DMS coming. Hey, advanced notice bylaws. There was an interesting case that just got decided by the Delaware, Supreme Court probably like, two weeks ago. I think. Yes. When it came out. Yeah, quite recently. So, let's Let's plunge into that. Now let's first met, I quickly summarize by us for yes. The three people here. That haven't figured that out yet. Oh, so in bylaws in Us, corporate. Bios. Constitutive what do you call a constitutive documents, constitutive documents student of documents in the bylaws companies are allowed to put in terms that Allow them to require shareholders to provide notice. Well, in advance of an AGM, notice of intent, to present business. At an AGM. Yeah, although I'm going to say not just like companies, I hate when people say it's companies not companies. Its bore its bored, the board, the boards adopted but yes exactly. There's there's humans that infected. Yeah. Um and there's two salient. attributes of them, which I will mention the first is the notice. Which is the time period. So, essentially companies are allowed to require a shareholder to provide. There's no notice. I'm going to nominate a direct. I'm going to submit proposal, I'm going to do something. Several months before the AGM. And the second attribute of this is the content of the notice. The the things that you have to describe or provide to the company to the board. When you're the shareholder, that's providing the notice. And there's a, there's a lot more controversy and debate about the latter than the former the time. The timing is, you know, you really can't do a year but there's usually four or five months and then the content gets to be all over the place. You know, there's some Basics like who the shareholders, how many shares you own but then you get to all sorts of delicious. Do you tell? But what kind of shares are they derivative Shares? Are they net longer than that? Short, I as your is your wife involved? Yeah. Who else? What other active stuff? If you've done, there's a whole and we don't show you at least at this moment. Need it. We'll talk about that a little while but there's a whole long list of things that Companies have started to or allowed to or whatever to include in the notice. Yeah, so that yeah. So yeah, exactly. So like these boards are demanding this information and there could be good reasons for it in the corporate sense. Like it gives boards time to prepare a defense and inform shareholders about the contest. Maybe the nominated know maybe the nominating shareholder or the candidate has real conflicts of interest or issues that need to be pointed out. I mean, one of the big cases on this last time we discuss this calendar versus aim and in that case, the nominating shareholder was a convicted felon. Oh yeah. It was all sorts of stuff. Absolutely. So so the let me, I'll mention two other things that we can talk about this case. The first is that The rationale stated for providing these is generally two-fold so that a company can assure and orderly board meeting. That's where the timing comes for us. So they really get a while decent notice and they know what kind of coming so they can, you know, have security there if needed or something, I don't know. And then the second rationale is he has to do with kind of lip service to fiduciary duty. That we, you know, the Board needs to kind of vet and thoroughly look at all. And this is more Cheryl nominations for the board rather than other proposals. But you know, there's supposedly some sort of a Duty that the board has to do all this. And so by asking for, you know, your wife's second cousins involvement in this, you're just charging. You know, I mean that's the issue that the bylaws they, I mean that there's a legitimate, there may be a legitimate reason for the board to ask for certain kinds of basic information. But as you say by laws can often require such onerous and sensitive information, that it stops really being about collecting information, like it's about to turn, it's actually about deterring. Oh, it's from Challenge and it's it's all always. But I mean legally, the legally, the courts are drawing Extinction. So like there was that Massimo case there was one by law. Where originally, they asked for all other Investments and Investments of the hedge fund nominated, the candidate and all investment. Into the candidates family members, right? So, so legally, so yeah, no, I I'm with you. I agree with you that it's always about deterring the contest, but there is a theoretic rationale, which is to allow boards to properly, inform shareholders, and to run a proper contest where shareholders have awful information. So, a couple of years ago, yeah, we talked about this, the Delaware Supreme Court. So, this is where the law kind of was decided a case called Kellner and the Court held first that these bylaws might turn out to be. If you're challenging one of these bylaws, if you're legally saying this is improper, they can be facially invalid for various reasons. Like if they conflicted with statutory law or the corporate charter or in that particular case, if they're so long that they are literally unintelligible, that will be That would be an invalid advanced notice and that's called facially facial. That's okay. Facial initially. But the court, But the court also held that if an advanced notice bylaw was adopted for the improper purpose of preventing a contest in the first place, rather than to Simply collect information to run a proper contest. So the court was a distinction. If it's adopted for the improper purpose of preventing a contest, then the bylaw would be unenforceable set the court. But the court also held that if the board was acting in good faith and adopted the bylaw to legitimately collect information. But the bylaw was just onerous because the board just got over its skis and it demanded too much, a little overly exuberant about what that it was like. Exactly, right. Yeah. But if they acted in good faith and they were not just trying to deter a contest, they were genuinely trying to collect information but they just went to far. If that's the situation, then the legal remedy, that can be enforced by the court is not to just invalidate the whole bylaw. But to essentially rewrite it to Pennsylvania, to take out parts of it, the parts of it that don't make sense. But the Court held again, if the motive of the Law was actually to prevent the contest at all, then you inval, then you just don't enforce the bylaw at all. So that was a couple years ago and this latest and that was the cat was counting that was counter. That was okay. So the latest case, we have these two companies Owens Corning and AES, and they adopted advanced notice bylaws that it was alleged or extremely onerous like they may have required the fun disclosed, some of their limited partners, definitely just required disclosure of the performance fees that were being charged to limited partners that kind of thing. So, obviously sensitive stuff and a couple of stockholders sued for a declaration that these bylaws were unenforceable because they were not adopted for the legitimate purpose of gathering information. But for the illegitimate purpose of preventing a stockholder challenge at all and the stockholders filed, a books and Records request. And they got some in history that they claimed showed that this was improperly motivated and so forth. But these particular stockholders who brought the case, they had no intention of mounting a proxy contest. They didn't want to nom. Any directors. So the issue was, could they even Sue? And they're like standing? Yeah, just okay. Standing. It was phrased, his ripe this. But that's the same idea. Okay, they're claimed was they were injured and should be permitted to sue because these bylaws would deter other stockholders from running contests and entrench the board and that would harm all corporate stockholders because the board, but then kind of know it, insulate it from any kind of Challenge and what the Delaware Supreme Court held. What was before we get there, can I just make sure you understand what's happening here. Absolutely. So for in these two companies, individual showers not an institution, some little, some little guys, I assume, you know, we don't know if that kind of types sued. To challenge. The advanced notice bilas at each of owner's Corner's and Owens Corning and AES. Yes, Basically asking the chance to record to declare the either the entire thing, or the Amendments, invalid. Yeah. Just on the basis. Just just on the basis is that they were that they and I'm being a little casual here in my language, but on the basis that the changes were bad, they disenfranchised shareholders, and some some material way. But importantly, neither of those two shareholders, and this is in the factual record, neither of those two shareholders had any intent to like turn around and nominate. You know, it's not like the two shareholders said and I was planning on nominating. Somebody, but these Bylaw terms that they adopted in the past, probably a couple years deterred me. The the basis for their objection to them was that they were just disenfranchising kind of on their own. Right. Yeah. And then yeah. Okay. And that was before chance to record and chance to record said Ah, no thanks. I think exactly. Yeah, and exactly. And then it was appealed to the Delaware Supreme Court is basically. So the idea was that the shareholder. I mean, not exactly that they were disenfranchised. It was just the idea that if I'm in a company where the board is this entrenched that's going to be bad for me as a stockholder, all right? Yeah, that but the Delaware Chancery Court and then and this is what the Delaware Supreme Court just held on appeal that they shareholders could not Sue that they can't sue. Unless they either planned to run a proxy contest or show that they were deterred from running a contest. Something like that, they were a little vague as to exactly what you have to show. But what you definitely can't do is simply say, I'm not running a proxy contest. I'm simply in a stockholder of this company in order to challenge a lot. That was all right. That was what was the reasoning. Yeah. So that either or both Chancery and supreme well, that's, Supreme Court. And I got to tell you that, I find the reasoning a bit tough to parse. They're a little all over the place and that's because I think they used two different kinds of rationale and they kind of mixed them together. So one rationale was the distinction between law and Equity this is a classic Delaware thing, directors have certain legal hard limits on their behavior that come from statutes, maybe the corporate charter and then separately there are the fiduciary limits on their discretion that they exercise the duties of loyalty and care which comes more from law than that. No, that's that's the equity side. So right exactly the limit the hard limits, the statutes like this is simply a power director Stone have. That's law and Equity is fiduciary duties. So, directors have to act within the statutory bounds. Like, just generally, like they can't sell all corporate assets without a shareholder vote. They can't pay dividends out of state and capital. Those are hard limits on directors. Managerial Authority, they can't be on their statutory Authority. That's legal. And then separately, they have to comply with their fiduciary obligations, that's Equitable. So the way Delaware likes to put it, the very poetically direct or actions are twice tested once in law and once next question Equity, right? Yeah. So the case begins, right? Yeah, I've probably told it to you before. I love to tell it to my students. So the case Begins, by drawing this distinction and invalid, bylaw is illegal under the authorizing statutes, and an inequitable, one violates the directors fiduciary duties. And the challenge here wasn't that the bylaw conflicted with statutory law or was beyond director's Powers. This was an equitable Challenge on the grounds at the directors, violated their right, because because the law allows Companies to have advanced notice term, right? Exactly. This was a dispute about the nature of those terms. Exactly. Right. What day the Delaware legislature could pass a law that like, gives more color to this, but so far hasn't. So, this was exactly. This was a fiduciary duty of loyalty issue of whether they were violating their, they were being disloyal, essentially by entrenching themselves and under my shoulder vote and the Court held that kind of challenge. It has to be brought in the context of a particular nomination. Now, I gotta tell you, if they'd stopped there, if that had been it, if that had been the opinion, I could kind of see what the rationale like I could. You could say that of course Equitable powers to interfere with corporate management to put a bylaw on hold really shouldn't come into play over abstract disputes. If the Court's going to issue an injunction, this powerful remedy, we need someone who can point to a more personal injury. I would understand that logic. I'm not saying I agree with it, but I'd understand it. The problem was, that wasn't really the logic. They set the stage with this distinction between law and Equity. But they didn't then take the next step and say, Equity is different because it's this powerful tool and Court should be hesitant to use it. That's actually not what they said. They said, if you're mounting a legal challenge, you're going to have to show that it's illegal to apply the bylaw in all circumstances. Like if the director didn't comply with the proper statutory procedures for an acting a bylaw, so the bylaw was never enacted in the first place. Then that means the bylaw is always unauthorized. But the court said, Equitable challenges are different. The court said we Can't decide Equitable challenges in the abstract the way we can decide legal challenges, we can't decide Equitable challenges in the abstract outside, the context of a particular nomination because we don't have enough facts. We don't know what the nomination contest will look like, we don't know how the board will interpret the board because these two guys said we're not nominating. Anybody exactly like what if they're misinterpreting the bylaw, what if the bylaw would actually be interpreted some other way? We don't know what kinds of burdens will actually be placed on the nominator and until we have that information, we can't really decide whether the bylaw operates in equitably. So we can't make these abstract pronouncements. That was their logic but here's the problem with that logic. Remember, in Kellner, the rule was if the if an advanced notice by law is adopted for an improper purpose, it's unenforceable period under any set of circumstances. And if that's really the rule we don't need to know the facts of some hypothetical future challenges. All we need to know is why they Adopted this one now, and that's something we can determine. And it was in. I think it was in the record or there was some facts. There was like, a couple footnotes there. Something that was said, oh, you know, Universal proxy was there and then we're just trying to make life harder for activist. I mean, they there were some there were some there were some testimony that this was intended to make life hard for shareholders. Like but they had like board meeting minutes, you know? So the plan is said that it's suggested but like not it. So So that's the problem. Like this idea that there's a distinction between a facial attack on something and attacking it as applied to you personally, that idea wasn't invented by the Delaware Supreme Court. The Delaware Supreme Court was actually drawing on a long history of that distinction. When someone challenges a statute like let's say congress passes a statute and you want to challenge it is unconstitutional. The statutes unconstitutional can't be enforced. In that context, there's a long history of Courts, drawing a distinction between a facial challenge where you argue that the statute is unenforceable, and all circumstances. And as applied challenge, which says, well maybe the statute is okay, sometimes but it's bad when you apply it to me, personally, that's the tradition. The Delaware Supreme Court was drawing from this distinction in the legislative challenge context between a facial challenge where you have to show. The statue is always unenforceable usually and an applied challenge, which says well. Okay, fine. Maybe it's okay sometimes but it's unenforceable as applied to me except here's the problem when we're Talking about that distinction, that's been long drawn in legislative challenges, the facial attack, where you have to show, it's always unenforceable or the as applied challenge where you show. It's unenforceable as applied to you. The usual rule in legislation is if your challenge is that the legislators themselves acted for an improper purpose, they had an unconstitutional motive. That's a facial challenge. That's a challenge. The statute can never be applied, because the mode of taints the whole thing, that's how it usually works. But here, the Delaware supreme court on the one hand, a facial challenge to a bylaw, has to show that, it's always bad and all circumstances. And then they said, if you adopted for an improper motive it's always bad for all circumstances. And then they said that's the same thing for an improper motive unless you actually have a specific activist intervention and you are dealing with a specific context and then the court went further. Oh, that logic by that logic by itself, I just don't follow and then the court went further because the fact Is in other cases, they have a adjudicated entrenching devices outside the context of a contest of a particular contest. So like several years ago, there was a challenge to a poison pill. It was adopted in Williams and it had like a 5% trigger. And it had a really broad definition of acting in concert. And there was no actual activists. At the time, the public shareholders just sued and said this pill will inhibit after that. Write, two owner is and the court allowed that challenge to proceed. So when dealing with the bylaws this court, the Delaware Supreme Court had to distinguish Williams, it had to sit like why did allowed the Williams challenge to proceed? What was just random stockholders who aren't around mounting a challenge and not allow it here. And the argument they made was poison pills have more of a deterrent effect, you're facing Financial ruin. If you trip a pill for an advance, notice bylaw. If you submit a nomination, it's rejected and you Sue. It's not his owner's. Let's just say, let's you're already, I'm gonna ask you about like, bylaws and practice but let's just say I accept that. Let's just say for the moment, hypothetically that I accept their rationale, that poison pills have more of a deterrent effect because if you trip it, like your blown out of the water financially, whereas with it out, you're doing it out. The worst possible thing that happens is they reject your nomination. Notice, let's agree. That's true for the moment. Okay, that would be a very good justification for distinguishing. The between the two situations if the court were to hold, as I said before that Equity, only acts in extreme cases, but that's not what it said, we Trenching. Developer if we don't see how it works in the context of a particular nominator but there's no reason that should be any more true for a bylaw than for a poison pill. I mean, if you can't gauge the actual effect, without looking at the nomination, process is just true. That Williams was improperly decided. Yeah, exactly. So, now, what here's what I will say, and defense of the decision, Remember the test is whether they adopted it for an improper motive. Why did the board really adopt? The bylaw? Well, here's the thing about motives we don't have a mind reading machine, okay? Yeah, we can't get in their heads, right? You can't get in their heads. We have to look at the evidence like the physical evidence, the documentary evidence testimony, whatever to figure out what was in their head. We have to look at all the circumstances. Now, one way, you can figure out their motives is by looking at the bylaw. This is what happened calendar like the bylaws were so ridiculous. That the court was like, okay these can't possibly have come from a good motive but That is imprecise and it's very unlikely that in the Boardman, it's they actually wrote now down something like aha. Now, we'll never be challenged, we can do what we want. They don't write that down. So if we, but it's true. If we have an actual contest, if we have an actual nominator come along and they try to comply with the bylaw and they're nomination is rejected, we will have more facts. It will be easier to determine if the board is acting with a proper or an improper motive. That's true. But at the same time, if the legal question is, what if the question being asked is what was the motive at the time of adoption and adoption has happened? The other evidence is there, it may be thin, maybe the stockholders can't prove their case but it's there. We should be able to ask the question but you also get to the problem that if I was a shareholder, I'm not at either of these two companies. These bylaws May deter a shareholder from doing anything and then developing any of the factual that was that was exactly what the shareholders argue here. And that was exactly what the court rejected because they just their view was this isn't that much of a deterrent, but yeah, there's a big deterrent. This is huge. That's what I'm gonna ask you about, but I mean this is the thing like between this case and the tornetta decision on musk's pay package and some of the other decisions that we've talked about. Yeah, I think in general this court and Delaware with all the legal changes recently, they've taken a new attitude toward public stockholder litigation. They're signaling that they're going to be very skeptical of public stockholder litigation. I don't think they're sending the same signal for specific activist interventions or claims by parties to emerge things like that. The difference is when we're talking about Postal code or litigation. Clay, random people. Like the guy who held 9 shares of Tesla internally. Yeah, those are lawyer. Those are lawyer-driven cases. And some people say that and they mean that like, in a denigrating way. And I don't, I think this kind of litigation serves a very important role, but it's true. How these cases come about is the lawyer identifies a case, they identify a stockholder, the lawyer develops, they'll find plaintiffs right in the stockholder doesn't have a personal interest. They're kind of faceless representatives of all the stockholder and that kind of litigation fundamentally is regulatory. The stockholder is essentially a placeholder for the general public and the lawyer is serving is almost like a private attorney general. They're there to enforce the law with respect to the general public. That's Run from cases where you have an actual activity, prevention, which is the stuff that I get involved in, which is where, right? Yeah, and I think it's this General litigation that has a regulatory character, that's what Delaware is beating a retreat from. So I think the court saw this future laid out before them, where if they went the other way, then imagine what happens. Every time a company adopts, an advanced notice bylaw. A lawyer is going to recruit a stockholders seek books and records and then they're going to investigate the books and records and oftentimes, they'll Sue. And that wasn't the business. That the Delaware Supreme Court wanted to be in that like this. They didn't want that relationship with companies and Boards incorporate in the states so it helped with it helped. But as you say the problem is this raises the cost of intervention. If you're an activist because this is I started saying this is a big deterrent. I mean, well, if yeah if it had gone the other way we would have liked Shareholders would have done your job for you, they would have cleaned out the worst of the bylaws and that would create an easier path to activists in general. So that it's worth mentioning, it's worth mentioning the nature of the deterrent effect. Yeah. Okay. Which is not the advanced notice bylaw terms on their face. Sure, some of them like, you know, I don't want to disclose my LPS. all right, I don't want to disclose my feet but there's a lot of other Disclosure that Financial activists have just gotten accustomed to just tolerating, okay. And, you know, putting together, you know, all of our derivative positions and other activists, I mean, things were going to object to that. Fortunately, for us, Kellner, put a stop to some of it, okay? The nature of the deterrent effect is, how companies, pursue the advanced, notice by laws, okay? Because they are in a position to just summarily reject a notice. And sometimes they don't even say why. Okay, and we have to really drag it out of them. So okay? There's three bits of data. You forgot to provide or there's something that was too vague or something. Okay. And they can string it out. Okay, to the point where your past the just or you know, even passed, right? And it starts to cost you money and you're threatened to sue them. Or you actually do sue them. And then proverbially on the steps of the courthouse, they say okay fine. Well because exactly what you will let you, we'll let you onto the onto the AGM agenda. Yeah. That's what that's what happened in Massimo that like, you know, they wait until they're just at the point where the court is going to decide it and then they say, oh no, never mind so the court. So, that's right. So that's where that's where my I have a lot of beef with as I started as you started back on with these overall. But in the execution of it, I would love to see some sort of a penalty. I don't know how this it work. Okay, I've written before that. We need some sort of no action process at the Delaware Chancery where somebody could sort of say, here's our advanced notice, bylaws. So you're going to, what are you going to say, if we get sued over this or something, but that's just not how it works. But so the nature of the deterrent, effect has to more with the litigation process and how companies use these and how they weaponize him. rather than You know, some of the facts of the of the terms. So so that I mean once again I hadn't really followed this Owens Corning. Okay, I mean it was I started reading it when you taught me about it but now that I see it, I say wow you're right Delaware Delaware at least Chancery and probably Supreme Court is just trying to make it this is one way where they're trying to make life harder for shareholders and I like it. Yeah, well I think I don't think they wanted to. They just didn't like the idea of every time a board passes this by other books and Records demand and they're threatened litigation. And I mean, I can see why that would be a hassle. But this situation where as you say, like the board can pretty much just create a wall and drag it out and then it never gets tested because they don't because they settle it. And because all the shoulder wants to be, I mean, the whole point is to try to get on the AGM agenda. Yeah. I mean and then once they allow that you're fine. So yeah I this is what I've been expecting with 1488 more and more like and we saw it already that like as soon as the shit like the company will refuse to let us share. Holder proposal on the ballot and as soon as you go okay, there it is. It's fine. Yeah. So anyways so this Now that we've talked about this, bothers me, even a little more than it did before. So we'll have to, we'll have to, we'll have to return to this at some point. But for now, what I think we should do is take a quick break. Okay, go to this, go to this other subject about Preparatory proposal, shall we? Absolutely. All right, let's do that break now. And we'll return in a minute. Here is your older privacy. Shareholder Primacy is brought to you by free flow analytics.com. The only free database of corporate directors, their influence and their performance Fiona Stocker, retirement, plan go to free flow, analytics.com, and look up which of your elected directors are performing well, which aren't use your vote in the alternative democracy and get your data at free flow. Analytics.com. Now, back to the show, Welcome back to Charlotte Primacy. I'm a man Lipton here with Mike Levin. So the universal proxy, it may have product companies to start adopting these advanced notice by laws. A lot of them were adopted. Well, we just talked about, but yes, okay, exactly. But it also has enabled these, I guess there's a term now for it zero slate. Yeah, I don't love that phrase. It basically, it's a proxy contest with outboard candidates, it's a proxy. This that's where the zero comes from. And I try you with drawing the world's attention. Thank you. But I'm trying to think of a different. No, no big. I'm trying to think of a different phrase because it's ah, some of these can include Director candidates but frequently. You know, the idea is is is is is there a way for a shareholder to proposed business? For the AGM, put it on the proxy, but not include. Not include director, candidates directors. But, you know, and I want, I want to. I think my problem with this now that we're talking about it is I want to focus on the business, not the fact that there's no candidates, right? So so you know, okay, make the proposal or whatever it is the highlight of the discussion. Anyway, okay. So yes, I don't know if I completely true. I mean, all I did was notice that there was a real interesting one and now we have another. Now we have another one so we mentioned a couple weeks ago. Trillium did this at BJ's Wholesale for a 1488 proposal they got were they threatened to or something was too, they started to they started it and BJ's gave up and agreed to included on the company proxy, right? But there was no SEC, there was no SEC stuff, there was no security filing. There's just like a one news release and Trillium claim credit and I got I got a little disappointed in trillion for not getting more but it was then. But now now we have this New one. So what's this new one? All right, so the new one is next are the media company owns a lot of local TV stations, remember them, they evidently have received proposals from CWA, the communication workers of America. The union that represents a lot of their talent and engineers and so forth. It's also worth noting that another proponent in this is SOC the other labor union, Affiliated fund. So next, our media, again, we said is the big broadcasting group. They're the ones that are emerging with tekna. So they're the ones they're going to create this massive, local broadcasting Empire, owning a lot of local stations all over the country. And I can't remember I have a real close but that I think it's on hold for a minute or something, but that's the Trump Administration approved it but a lot of states are now. Suing. Yeah, there's some interesting anyways. So, so they have announced. Here's what we know. We don't know what time which is why we're going to only talk about this, a little casually right here, and then maybe return to it next hour. And XTS announced their shareholder meeting is AGM is June 16th. They sent out their definitive proxy. Um, there was no mention of this. Of the CWA stuff. And so for the return out in a minute, well anyway, and I missed this but CWA actually filed one. Disclosure with on Edgar and they found that on March 9th, okay? So it was, it was, you know, obviously, so, several weeks ago, so it was just additional proxy materials, they didn't even file a preliminary proxy statement. And in that day, disclosed, that they submitted to next star, five governance proposals. And they described. Once for proxy, access one is to allow shoulders to call a special meeting with 15% threshold, allow shareholders to approve a poison pill within a year of adoption creating independent board chair. And then allow Cheryl just to approve any transaction that amounts to 20% or more than the market cap. So five, which was interesting because there's already like NASDAQ rule would require approval of issuing. 20% of the shares, but they want to go further. Yeah, to anyone and New York sections. Yeah. Okay, so there's five very straightforward. A governance proposals of varying popularity, where's the kind of things that? Yeah, those are the kinds of things that Cheryl just vote in favor of ab To me based on what little we've seen so far. Why CW is focusing on this and not something else like like labor relationships or something. But they have their reality I mean it might interfere with the actual merger. Right? If you need transaction approval, I suppose. Yeah but I don't know how the next start thing is structured and I don't know how the timing of the agent. Yeah. Would pertain to that. So and again we know everything just from this one file filing. So we're gonna have to infer a couple things and then return to this is what I think it seems that the CWA is going to solicit proxies. They're going to do what the Mine Workers. Do you met coal? Okay, they're going to go out and hire solicitor and go collect all the proxies himself so on and so forth. So it based on this they're going to replicate and that was a success for the Mine Workers but the Mine Workers ended up having their proposals being included on the corporate, right? That was so what happened then is the Mine Workers, kind of cornered him at Warrior met got fearful that they were going to lose. I met my guess is they were going to lose control over the proxy. Solicitation so they included all five at the time of the Mine Workers. Proposals on the warrior proxies statements there, of course we're on the agenda, okay? That did not happen yet now it's clear. based on the timing of all this that Next car could have done it, you know, communications workers of America filed their proxy materials long before they next are sent out their proxy statement, presumably they sent proper. Notice it's not clear, you know, whether the notice was accepted or whether the CWA just kind of sent this out, but it's, it's seems that these were properly notice to the company under the advanced, notice by us. Yeah, I mean, that's the thing. The event was there for directors things, but they cover this kind of thing over this as well too, right? A couple other things we know from this filing and all, you know, all the participants they're all CWA. Employees. CWA said, they would file their preliminary proxy on a report March 30th, we have seen it yet so we don't know what's going on. Next star. It's also worth noting had excluded a different proposal. There's some some stuff at the SEC, you know, Edgar or the 1488 website. So there was some other proposal that was submitted and excluded not from the CWA, okay? So it's not clear. It doesn't appear that CWA. Even tried to submit these under 1488 and had them like rejected. Well yeah, I mean, I could only have done one under 14 AA. So if they, if they wanted to use one day 14/8, they would have had to pick one. So they probably, you know, they wanted all these so, but what's, what's really, most Salient is that next. Our did not include any of these five on its own proxy. So it's gonna let this, you know, once if and when the CWA submits, you know, its own preliminary and then official proxy, and then hires the solicitors, they're going to really have competing proxy processes going on here and that conceivably could disrupt a little bit. Alright, the next star proxy solicitation and the and AGM. I don't know how much you know, some of these again, some of these are relatively popular. Yeah, proposals. These are the kinds of things that even the big mutual funds tend to vote, right? And if you pills, so if you know, make this up if Vanguard. Yeah, I don't know what they think of this. I'm just pick them out, I don't know. Yeah, you know, likes the idea of voting for the poison pill adoption proposal, they're going to have to vote on the CWA project and they will not vote on the next star process properly. You can attend the meeting. I suppose, I don't know, maybe Van Gogh. Yeah, they don't have time for this, so Um so on the one hand there's a lot of open questions so we don't know how the solutions going to work. We don't know. You know when when Warrior met when the Mine Workers didn't worry about coal they did their own solicitation. There Was You Know Brandon reasons, the guys name it, the Mine Workers. He's actually with the AFL-CIO, he actually worked the phones. It was really it was beautiful. Okay, that's not clear. Whether the CWA is going to do something somewhere, they're gonna hire a solicitor what they're going to do. There's like I said, there's a lot of open questions because they have found the definitive either pointing proxy statement yet, um, but it's been waiting for this. We've been doing it. We have a really interesting example. And, you know, next to our clearly his handling, this little differently then then Warrior met did, but we'll have to see so Clearly, this is a monster in part two problems with SCC. 1488, I think, but, I think this is one in particular, is more about the merger. I mean, there's a reason why the workers in particular, and if they were doing 148, they would have just on one proposal. But, but right, I mean, well, as we may be in a new world where this is the thing if 1488 is increasingly unavailable. But Right? Yeah. These are like, these are like blue chippy, SG. Activists, the CWA. And yeah, they have money and they have money to do it. My concern is since the SEC. Was the SEC. Give at the SEC can take it away, they created their virtual proxy rule. The business roundtable's already objected to these zero slaves. So there's a, there's a chance that there's a chance to see me. It's probably too late for this one. Not for this one. Yeah. But they can give new guidance. That says, actually, you have to run a direct or candidate to use. You can't like reinstating? What is it called? The Bonafide a Bonafide directly rule for for this kind of stuff. So yeah. Anyway, so I wanted to highlight this point out that it's out there. I am eager to sort of see what happens if and when the CWA files its proxy and then how next our response, they might be, they might amend the proxy and then listen. Yeah. Change the date of the meeting, who the hell knows, so it could get, it could get really interesting. So, um, we will we will look at this again probably in the next few weeks I suppose. Okay, great. All right, let's do that in the next few weeks though, and pause here to go on other stuff. All right. This is shareholder Primacy hosted by and lifting and me Mike Levin. I'm an independent activist investor and advisor to investors about their activist situations and is of course, and always professor of law and the Lawrence W demuth chair of Business Law. At the University of Colorado, law school. You can find me Mike at the activist investor one word.com and and at law dot Colorado, DOT e, d u. Our podcast is produced and distributed by free float media. Thanks for listening. We'll talk again.