Ben & Jerry’s, buying votes

Welcome to shareholder Primacy from freefloat media, podcast about activist investing Securities Law and all the ways, the financial and legal worlds, intersect and Collide. And real life. I'm here with and Lipton while professor at Tulane in New Orleans, who teaches and researchers security, and business loss. She holds up the legal end of our little podcast here. And that's Mike Levin an activist investor who lives and works in Chicago. He covers the financial side of our podcast. Terrific, what should we talk about? You want to talk about the interesting stuff. That happened to Ben and Jerry's this week. How's that sound in? That sounds great. And we should also look at how shareholders can buy and sell votes and a recent effort to create a Marketplace for boats, right? The late great shareholder vote exchange. But let's get started with with a little Ben and Jerry's action. How about it? and my question there is, you eat Ben and Jerry's right? Sometimes what's your favorite? My favorite is a discontinued one. It was a chocolate and peanut butter. It was like. Peanut butter cookie dough and chocolate. Ice cream. I don't have it anymore. I'm a weirdo. I happen to like they have a banana one called chunky. Monkey. That's a little weird. So but we're we haven't had Ben and Jerry's here for a while. We there's other ice cream, we did. But that's, In their honor, we'll talk about their their recent corporate governance case, because there were some headlines this week. Well, there have been headlines for a couple years about the Weird relationship between Ben and Jerry's, and its corporate parent Unilever. But let's talk about the lawsuit this week or last week that Ben and Jerry's filed against Unilever, which is a little unusual because Penn Jerry's this wholly owned by Unilever. In other words, Ben and Jerry says a single shareholder, and it's not Ben or Jerry anymore, and that's your holder is Unilever. The global food Product Corporation. So let's figure out what's going on here. And in fact, how can a wholly owned sub sue, its parent and we'll talk about why they suited and what the prospects for that. You know, I would have thought that the parent would have kind of objected the subsidiary suing them, but, you know, that's just me and I'm not a lawyer, so go ahead. Well, they do object. But the thing is that they're injecting in court, which is not usually how a parent goes about control and subsidiary. So the story in this case begins, 1978 when Ben Cohen and Jerry Greenfield, founded Ben and Jerry's the ice cream company, which is in Vermont in Vermont, not in Delaware and this is still Incorporated it, still Incorporated Vermont. Okay. So they were these Vermont hippie types and they ran the company with this social conscience and they continue to do that even after the company went public, because it had this dual class share structure that gave Cohen and Greenfield the controlling vote. So, in 2000, they decided to sell the entire company to Unilever for cash. So everyone's going to be cashed out but Cohen and Greenfield who held these high vote shares and they were therefore in control of whether or not a deal went through. Apparently, they didn't want to sell their company unless they got some reassurance that the Ben and Jerry's social Mission would continue. So Unilever agreed to what. As far as I can tell, is a unique Arrangement. The merger converted Ben and Jerry's into a Vermont close corporation with a single shareholder Unilever. I mean, well, actually it's unilever's American subsidiary, but it's basically unilever's the only Shareholder. And then as the sole shareholder, Unilever signed a shareholder agreement with Ben and Jerry's the company. It now completely owns it signs a shareholder agreement with its own company, the city areas and the agreement provides. So their only two parties to this agreement Unilever and its wholly owned subsidiary, Ben and Jerry's and provide, you know, believer in early kind of exactly. The directors who were in office at the time of the merger, the ones that Cohen and Greenfield selected, they will remain directors after Unilever takes over, Unilever gets an additional directors, but a majority of the board of these continuing directors and the continuing directors, get to pick their own successors, Unilever agrees. It promises that the continuing directors, get to pick who's going to succeed them in Unilever. As shareholder has to vote to put them in office. And then the agreement says that well, Unilever, it doesn't control the board now because it agreed to allow the directors to pick their own successors, but Unilever gets to pick the CEO and the CEO. According to this shareholder agreement, has operational control over the company but the independent board members remain in control of the company's social Mission. So, that's how Ben and Jerry's. Now, this wholly owned subsidiary of utility and end up suing Unilever. The board that makes decisions on behalf of Ben and Jerry's is answerable to No One, not even the sole shareholder of the correct. Well, it's Answerable to its predecessor directors, like selected them, but they're gone. So it's not answerable to anyone. You know, where Ben and Jerry. One of where they, the directors at any point of this. In this structure. Do I assume they, I don't know if they were after the Takeover or not, that they're not on the board now. No actually not. Now they're, they're they've moved on. Yeah. All right. So that's the structure that we have in place. Let's ask. I think about the lawsuit. Is that a good thing to talk for a minute? Yeah. Another point though, that's worth mentioning. Is that, um, is that, you know, if you don't believe her breaches this contract, like if you really says, oh, the governor's contract, the government's contract, if you don't leave her says, you know, one day, I don't want to select these directors. The interesting thing is that is who has the enforcement rights if you leave, which is what leads into this lawsuit, who has the importance of Unilever, breaches this contract then Cohen and Jerry Greenfield are the original founders of the company but they don't have any enforcement rights. They clearly wanted this Arrangement, presumably the only reason they were agreeing to sell was if the company arranged to the social responsibility Mission. So you think the normal thing would be the contract would say something like Unilever is obligated to continue the social Mission and if they don't Ben Cohen and Jerry Greenfield get to continue or it could say Ben Cohen and Jerry Greenfield get to a point Contin. And directors, and they can, they can see if that's what you'd expect the contract to say, but it's actually not what happened. The contract, as I said, is really and truly only between Unilever and the wholly owned subsidiary, this new version of Ben and Jerry's. And the contract says there are no third party beneficiaries. This contract is not for the personal benefit of Cohen and Greenfield. It's not for the personal benefit of the directors or for the personal benefit of the original shareholders. The only beneficiaries to this contract are Unilever and Ben and Jerry's, its wholly owned subsidiary. So if there's a breach, if Unilever is apparently not living up to its obligations Ben and Jerry's, under the control of this independent board consumed, a force Unilever, to perform its obligations. And if you leave her refuses to cast its vote, as a shareholder, for one of the directors that this new continuing board wants, then that director and the board can sue. So that's how we end up in this lawsuit situation been and Jerry's suing to say Unilever, you breached your shareholder agreement, you breached your Arrangement. All right, and this so there's some there's this written agreement that gives the governance rights basically to this up to the sub. To the extent. It deals with the social Mission. Yeah. Right to social mission, right? So the scope of this Cheryl agreement does probably doesn't have to do with like budgets know that would be that, that's the part that's allocated to Unilever, right? Okay. So so then who sued, who over what? Where There's a new lawsuit that's in the headlines, but it's actually a continuation of dispute that dates back to 2022. So a couple of years ago, the independent Board of Ben and Jerry's, the social responsibility arm decided, it wanted to Halt, all sales in the Israeli occupied territories because obviously they objected sales of Ben & Jerry ice cream sales of the ice cream. They obviously the objected to how is real was treating the occupants of the West Bank in Gaza. So in response to Ben and Jerry saying the board saying you know what we won't want to sell in the occupied territories. Unilever decided that it would what it would do was just spin off the West Bank aspects to a third party distributor. Let's someone else sell but that distributor would get to license all the Ben and Jerry's trademarks and at that point this independent board caused Ben and Jerry's to sue Unilever to Halt the spin off because the independent board didn't even want the trademarks to be used in the West Bank. So they wanted a preliminary injunction saying this is terrible. You know Unilever. Is refute is not is is violating its obligation to let us handle the social responsibility arm. So the board's argument was this is about social responsibility. We don't want to have our Mark anywhere near the West Bank and Unilever. By forcing our Mark near the West Bank through. The spin-off is violating, its aspect of the agreement that it's supposed to let us handle social responsibility. So they try to get a preliminary injunction the court refused to issue an injunction to Halt the spin off. And then after that, the parties reached a confidential settlement, we didn't hear anything more of it. Two years ago, this is okay. Two years ago, we didn't hear anything more about it. The party settled this thing about the West Bank, we don't know what's going on. And so a few days ago, when Ben and Jerry's, again, sues you in a lever and this time they argue your violating the settlement. so this interesting, okay, so the settlement is still actually mostly conf If you go and look what they filed in court, it's all blacked out except for like two Provisions that are made that are that are unredacted so that we can see what they're suing over. So what this is what the directors claim that the Benadryl is directors claim. Unilever is violating now in respect, so the and the problem as far as we can tell, if it will, the settlement had Unilever. It had to make a promise that it would respect the independent board. And it's, you know, continue to respect the independent board and its responsibility for social Mission and all. So it had to agree to donate five million dollars to humanitarian. Wow, that were selected by Ben and Jerry's the board. Right? Problem, apparently, is that after the settlement was reached Unilever appointed, a new head of its ice cream segments. So there's and that includes more than Ben & Jerry's. It includes Magnum inclusive some other brands. So there's this new guy who's in charge of ice cream and he's fighting the settlement. He doesn't want Ben and Jerry's to issue statements in support of the Palestinians of Gaza. That's what they want to do. They should state. He doesn't want the statements and he doesn't want to let Ben and Jerry's. Donate 5 million dollars to Palestinian causes which were the humanitarian organizations that the board selected. So he blocked the board from taking action at according to the complaint, he threatened to dissolve the independent board entirely. And that is why we have the second lawsuit saying that these actions violated, the settlements sound like part of the first loss. Okay. So the way in which Unilever proposed. Originally to do, this was to basically spin off the Israeli armed into a third party which evidently happened which yeah. And and what the board would originally objected to was using the trademarks, right? Exactly. As far as we know, I haven't been to Israel to see, but I gather is still there somewhere, right? You could go by Ben and Jerry's in various places and then the lawsuit in the past couple weeks. Alleged these violations of the settlement agreement that the new person, the new head of ice cream at Unilever. Global wanted to do exactly violation of the groomed by not letting the issue the statements, which is an interference with their social responsibility Mission. And not allowing the donations to Palestinian causes which is an interference with the promise to donate five million dollars to keep that. So there's those those kind of two, two kind of facts on the ground about the statements and the money, all right? So what as you see it, what are because you're the lawyer, what are the legal issues? The most obvious ones are actually the most boring and it's Is this a breach of the agreement? Okay, so like, did Unilever. So the original lawsuit remember the claim was using trademarks in the West Bank was an interference with the board's responsibility for the social Mission. So there's a contract interpretation issue. There is that a social Mission issue or is that an operational issue because the operational issues are allocated to you later. So, and then we have this new settlement, we don't know the full facts. We know Ben and the boards interpretation of the facts. We only have two little blacked out, segments, two little? Right. So, but but, you know, so the Boring question is contractually. Lever actually violate the car either. One of the original shareholder agreement, or the settlement or the summit agreement, right? Right. But that's just a question of contract interpretation. What is the agreement? A quiet require and, and it is what it is. Whether they violate the contract, what I care is, how do you even have a contract here? Because I said, as you said, you don't leave reverse it, you know, this is Unilever, making a contract with itself, and you're right, a contract has to be between two parties at least at least, two parties, but here you don't leave us contract and this is audio, so the listeners can't see. But I like, you know, just imagine scare quotes here, this contract between Unilever and its wholly owned subsidiary. It's as though, it made a contract with itself, it's the legal equivalent to be filing a lawsuit against myself for breaching, a New Year's resolution. I mean, just be fun. Exactly. The corporation is just a legal construction. It's a fixed, it's a standard, a represent, the interests of the people who are involved with the company. And traditionally we'd say, it represents the interests of its shareholders, and if it's a shareholders are institutions, then they represent the issue, the interests of their shareholders, not right? That's the doctrine of shareholder Primacy. But in this case, there's only one shareholder Unilever and its interests are not being represented. If this Corporation is not being run for the shareholders, who is it being one for like, what real world living person is supposed to be the beneficiary of Ben and Jerry's, that these directors are acting on behalf of now, we've talked about this before, some people have argued Corporation shouldn't just be run to advance shareholders interests. They should be run to advance the interests of other stakeholders, the employees, the customers, and so forth. So in this Theory, the corporation is a legal entity should act to advance the interests of these other groups and that's fine. But that's not what's going on here. Either the Ben & Jerry's board isn't claiming to advance the interests of its employees or its consumers. And it's certainly not beholden to the employees of the consumers. It's not advancing the interests of the founders Ben and Jerry because they're not parties to the contract and they have no rights in the contract, the contract explicitly, disclaims any obligations to third-parties. So it's not clear which people the board of Ben and Jerry's is supposed to be representing the current shareholders, know the former shareholders know the employees know the customers know, the board is beholden only to itself using corporate resources to benefit the world, except benefiting the world. In this case is entirely based on the boards own personal values entirely on answerable to anyone except themselves. I mean, the problem. With that is the board members are not parties to this contract. Their interests aren't supposed to be represented. They have a fiduciary duty to advance someone's interests but I have no idea who that's someone. That's right. So, this shareholder agreement. It's governed by New York law and Ben and Jerry's itself is Incorporated in Vermont. Now I don't know what the quirks are of Vermont corporate law, and I don't think even Vermont knows the quarks of Vermont corporate law, quite frankly. But if this will bring, it was gauged by Delaware standards. I think there'd be a real. Oxygen. Whether there's an enforceable contract here because the only real party with an interest, a legal protectable legally, protectable interest is Unilever, and it does not want the Ben & Jerry's board to take these actions, right? They want to continue. They don't think they breached any agreement. Exactly. So they want to continue to do what they were doing. And particularly this, this new ice cream head wants to do their thing, right? And it's it's these are not utilizers interest or not being Advanced and I don't know who the board of Ben and Jerry's. Who, what human people living in the real world whose interests? They think they represent. Wow. Know what is We have any idea why you only for decided to do this in the? First place, why they even agree to this kind of really weird ass structure in the first place. Because coin and Greenfield, wouldn't sell otherwise and I think Unilever gets or used to get some value out of the brands are reputation for social responsibility. I think it's part of the marketing. The brand is associated with this, crunchy, liberal politics, and that's kind of a draw for some customers. And here's the thing, which really highlights the bizarre nature of the arrangement. You don't leave her canoe, the whole thing at any time. Not only could it argue in court that the contract is unenforceable, and I think it has a strong argument. But the contract said, it can be terminated if all the shareholders are great, but there is only one show us a degree with it. This anytime it wants to its living in a hell of its own. Making as far as I can tell, it just doesn't want to. I can imagine what that with it with the ice cream head is he probably knew or whatever he is, but I think that that's the reasons why it doesn't want the headlines. I'm guessing that, you know, the complaint alleges that he threatened to spend the board and I'm guessing that's what he said that. He said look the agreement says, I can solve this agreement and I will yeah, right. Yeah. Including in the West Bank to see how this unfold because it's possible, I don't know because it's so hard to tell it's possible. The board is arguing that when Unilever agreed in 2022 to respect the boards Authority, that that's somehow super seeds. The termination right in the shareholder agreement. Maybe they're making that argument, I don't know, but beyond that, you don't leave her could argue in court. The whole agreement is meaningless or it could simply Exercise its termination right? So but it hasn't chosen to do that. Now, the really interesting thing is that you don't leave her announced several months ago that it plans to spin off the entire ice cream business. Anyway, been and a separate corporation like outside of Unilever outside. They're getting getting out of it, they're getting out of the ice cream business and they either want to make a whole new publicly traded entity, that's ice cream, or they want to sell it to somebody so to be private Equity or something. Yeah, something like that. And I think one way or another, the shareholder agreement is going to be terminated as part of that process, but maybe Unilever wants to keep as much of the status quo as possible until that process is complete. So that might be part of the thinking as well, why they haven't just blown it all up. Oh my God. That is that is like, that's like existentially strange. There is last puzzle, which is Why? Did Jerry like the original banana tree? Want to do this in the first place? Why didn't they create a stronger contract? They could have like, the normal thing would for them to say, the contract is between them Ben and Jerry Ben Cohen and Jerry Greenfield with Unilever Unilever. We won't sell you the company, unless you promise us that you will run your company. This way, they could have done that and the only and, but they did it. So I'm guessing. So the question is, why? And I'm only guessing, but remember the Ben and Jerry's company was publicly traded with shares cone and Greenfield held the high votes. They were the controllers. Now, I don't know about Vermont law again, I don't think Vermont knows about Vermont law, I don't know about Vermont. I didn't Delaware if a controller sells the company to a third party but gets a side agreement, a benefit that is not shared with the minority that creates a conflict transaction. And usually, the issue is something like the buyer offers to pay the controller extra consideration. Like minority shareholders, get 10 dollars per share, but the controller gets 11 dollars per share that extra Dollar going to the controller. That's money. That might have gone to the minority, its money, the buyer was willing to pay but because the controller is demanding extra, it's being siphoned away from the minority shareholders in that situation. The controller is competing with the minority for consideration. It's what's happening right now in the sale of Paramount to skydance, Shari Redstone is getting more for her shares than the public holders are getting. So that's considered a conflicted transaction and as we've said, several times there's a levels of approval that right? It's conflicted transaction. If it's if there's a shareholder lawsuit it gets deep examination by the court. I mean it becomes this whole big thing. So in the case of Ben and Jerry's, the founders didn't demand extra cash. They got the same consideration of every as everyone else, but if they had demanded aside promise of social responsibility, kind of governance. This governance, exactly. That would have been a unique benefit. That presumably, they were paying for, in some way, perhaps with less consideration for the whole company list valuable and if they had set it up as a personal promise, they've created a conflicted transaction. So suddenly, the merger could have been subject to a shareholder lawsuit. So I think that by structuring at this way, not as a personal promise to Cohen and Greenfield but it's a promise to the company generally, that kind of took it out of the box of Inflicted transactions. It's a smooth the approval into 20 in 20 to 2000 and 2000. Ben and Jerry. The people that dependency why they wanted this and this Is now where we are. 24 years later. Wow. All right. Any little break. So I can think about that and I think we should take a break. And, and then return to some other, some other less, less subtle subject. How's that sound? Okay. All right, well, we're gonna we're gonna take that break right now and we'll return to this unexpected idea of buying and selling shareholder votes here at shareholder Primacy. This is the free flow media podcast Network, where we cover the, who of the business news? Because investing isn't a, what, it's a Who Check out our other podcast business pants for fact-based snark covering companies in Executives and the proxy Countdown. The only podcast that treats company meetings like sporting events find them on iTunes Spotify or wherever you get your podcasts back to the show. Welcome back to shareholder Primacy. I'm lifting here with Mike Levin and I guess the question is, can shareholders really buy and sell votes? What's the idea behind this? That's a really interesting question. It's been tried on and off. a not very successfully over the many years and decades but There is this overarching sort of economic theory, we'll talk about the legal stuff in a little while. That votes are this kind of asset a separate from the cash flows of the company. They have a value. There have been many scholarly efforts to try to estimate the value of votes. Friend of mine, stop a faucet, Boston College has done a huge amount of work in, trying to kind of calibrate or estimate. What the cost of a vote should be. Yeah, I'll actually add that, it's an issue. When there are lawsuits that were invaded but you can't figure out what the, what the financial result is right. And so so over the years there's been a lot of thought, put into, you know, what are votes worth kind of a part from the basic assets of the company. and they had this idea had its A culminated a little bit in a little business that got off the ground. Barely last year and closed within a few months called the shareholder vote exchange. And I kind of knew the young guys who created it and they were creating a Marketplace and actual place where you could offer cash for votes. Now, the question becomes, who would this be interesting to? Well, probably be interesting to activists so, instead of, or in addition to trying to persuade Are other shareholders to kind of vote for my program. Vote for my directors. Charlotte exchange was going to facilitate the actual Commerce in these in these votes. They were going to create a place where people who would not normally vote their shares, they would just kind of, you know, throw the proxy away, or they didn't care that deeply about it. Where they could, you know, in exchange a little bit of money, sort of convey their voting right over to somebody else. Somebody would be an activist like me. So again, instead of just trying to persuade a shareholder, another shareholder like through my proxy solicitor. Oh, you know, my case is better. My directors are superior, the current guys are bums, right? You know, well, I just say, okay, what's your vote worth? How much you want to, how much you want for it? And so Cheryl vote exchange went and got a small number of mostly, I think retail shareholders to kind of a post their ownership and their votes on the full exchange and they were trying to then find activists really activists to To then buy them like in the middle of a proxy contest. And it only was trading for a few months, the volume was. I think in the very low millions of dollars, right? And and they finally, they finally had a shut it down, but there was actually one of the kind of so to speak, use case that was being proposed, which was a companies might find this interesting if they were having a problem like getting a quorum or trying to, You know, find Cheryl to vote. So they were saying maybe we could compensate Cheryl shareholders to attend a meeting and vote. Now, that idea from the company side is actually done in some other way. So like, there's plenty of public companies that offer kind of Swag. Yeah. Right. They'll plant it right. They'll give you a tote bag or something. Or in Tesla's case, it was good at a tour of the factory. Yeah. Get a tour of the factory. Exactly. Trying to get his competition, right. Yeah, right. So there was sort of these two use cases first You know, in a proxy contest, you know, activists and potentially companies, we can talk about that trying to compensate shareholders for their Vote, or in a non-controversial, but nonetheless situation, you know, unusual situation, where the company just, you know, really is having a hard time finding shareholders are persuading them to, you know, show up to an annual meeting. Maybe they could count the same time too. And then the shoulder voting exchange actually tried to do a little both. As I said it didn't get very far. There was some Market structure issues there that didn't work out well for them. So for a few months time it was It was kind of fun to follow, but didn't I said, did didn't really go very far so I mean. Worried about the legality of, this kind of thing. That's something we should talk about. Whether it's in fact, legal. To. Buy and sell votes. It sorted depends like everything in law, my read and I and I think you may you've thought about this too. Is that in at least in Delaware originally a place. I've studied this or looked at this. It is legal for one shareholder. To convey his vote to another shareholder in exchange for money. okay, there is there is nothing in Delaware law either. There's no there's nothing on the bush stats. There's no statute and there's really nothing in case law that prevents or precludes one shareholder from selling its vote to another. And that actually, you know, that makes sense. You've seen shareholder agreements where, you know, part of the consideration in a deal is to, you know, vote a certain way. So embedded in there is is the idea that we're going to pay you for your vote though? The the pricing on that is usually kind of opaque. Okay. So the legality of, you know, from one shareholder to another is, is Delaware loss. It is it worth silent and probably very permissive here. And I don't know if you it's a little bit bigger because they have expressed concern, if the consideration separates the economic interests from this year's. So there are all kinds of Arrangements where like the promise of the vote is sort of in the expectation that this has something to do with the value of the shares. So the Cheryl isn't really separating their economic and like they haven't actually had, but there's been some concern that you, the consideration would be such that you decoupled, economic interests of the shares from the voting power, and that is, I can't say that they made it. Clear, that is a red line, but if there's a red line, it's something like, probably there. Yeah. But there is now, the now we have to look at the case of can companies compensate shareholders for their votes and I think the answer is trending toward maybe not Legal legally, that is pretty companies. Can't you share all the resources if particularly like, in a proxy contest? Yeah, they can't. Yeah. So, you know, if it's something non-controversial, you know, the Second Use case that you're all the vote exchange explored, you know, just trying to round up votes for a quorum, you know, I guess the cache is, you know, paying paying shareholders for that. It's not a whole lot different than giving a tote bag full of stuff. um, But in a controversial situation, if you're trying to like sort of direct and there was one case, I think Hewlett Packard was a big case in where I think it was Carly fiorina was trying to get that compact. Yeah. And started started making promises to compensate some big shareholders to vote for her or vote for her version of the deal and I think that got on the wrong side of one of the chancellors is my recollection. Yeah, see, yeah, that's the thing that like that, that Delaware would again draw the distinction between, you know, not undermining the shareholder franchise, like trying to get a quorum is probably on the right side of things and there have been some other cases where like it was just weird like the corporate resources needed to be expended because that it wasn't trying to undermine the boat. But yeah, that's very different than trying to essentially swing proxy contest which would undermine the franchise and that's probably, yeah. And that's definitely gonna be, I think a very real line, right? So there's now there's a whole separate discussion worth having in a little bit of time that we have here about whether that's supposed that some of the things we say, we think our legal in fact, would be legal that is legal for one shareholder to buy votes from another and it's not really legal for, at least, in a pride. And I'm only care about practicing contest. I don't really care about Quorum at most companies. That's, that's my view. That's the company is problem. They, if they can't figure out who their child up in a meeting, they got bigger problems. Aspect of this that shareholder vote exchange. And I've also thought about is what kind of disclosure oblig And and that's not really clear either. So if I were a shareholder and I were in a proxy, Con and I were an activist buying shares from another share buying votes, Pardon Me From Another shareholder. What do I have to disclose about that activity? And that's really interesting and that's very unclear first. I believe that's a matter of SEC regulation. Yeah, I would assume that you would form, if you, if you hit it, you know, the percentage, the five percent line, where you have to disclose, you know? Like if I had a contract with you, that you would vote your shares, the way I instructed because I gave you money, we were presumably before forming a group and there would have to be some kind of 5% disclosure I think the SEC the potentially. But on the other hand, And again, this is all indeterminate, there's there's really sec. I don't think he's ever come over. but, My I'm curious, whether that act, the act of buying of compensating a shareholder for their vote. In fact is the act of soliciting vote. Oh, that's and that necessarily the act of forming a group. Because so that listening so listening is very specifically not covered by, you know, 13 D form, 13d disclosure and so forth. Otherwise every time, but there are lots of rules though about like, you know, if you're soliciting votes, there are a lot of rules about filing proxy statement. Absolutely, right. Right. But the actual Act of compensation, you mean, because every time you active action compensating, but it's yeah, it was possibly considered solicitation and that something else not group formation because, you know, look, you going back to my early or anecdote about how you know, rather than jumping up and down in front of a shareholder with my proxies list. They're trying to persuade them. If I just gave money, Okay, every time my proxy solicitors succeeds and attracting a vote. From a another shareholder. We're not for me, they're not part of my group. Well, we're just, it might be because if you but because a contract to vote a certain way, again, Mike count as forming a group. But even if it's not even if it's a solicitation, there's a lot of rules about disclosure about absolutely, you still end up disclosing, you would just it would be a different kind of the highway solicit and Whom I practice leaders and the proxy matures have found so on and so forth. That's, that's absolutely. Those are all about all very well, very well regulated. But then the open question is, is whether the act of buying votes is squarely within the definition of what it means to actually do the soliciting or whether it's something else. And I don't know and we're gonna have to think about it. I would be really? Yeah, I am. Well I think the SEC well at least this is they see. We'll see what happens when the Trump Administration takes over this is he tends to take his proud of you if it's already as possible. So yes. But the other thing that I'll mention about this issue that complicated is that there are a lot of things you can do to buy votes that aren't buying votes and that creates the problem because like, why do you draw the line here rather than there? So there's buying boats, but shareholder shows, like literally paying money for boats but what you can do very easily is borrow share's. Sure that you know how about borrowing shares and not sure selling them just borrow them and then you have the vote and then and this is come up before. Or so, um, you know, like for example, there's a Fairy famous case where there was an activist shareholder that held shares in a Target company and for the merge. And they wanted the merger to go through because of their target Holdings. So, they borrowed shares of the acquirer so that they could vote the shares or I think actually know. They didn't, they might have bought the shares but then, like, got rid of all the economic interests with various derivatives solely for the purpose of voting, to support the merger, right? But the merger that was not going to be great for the acquirer. They wanted it because they wanted they wanted on the target set. So there is really a different ways you can use derivatives to functionally, get rid of your financial interest in the company and still have the most. And so the question is like, well why should we prohibit like this, kind versus that kind or like, shouldn't we have a sort of grand theory of economic interests, trying to this year's but it's very hard to do. Right. So anyway, so this is this is I think there's a future for this, I am convinced. Okay, what now that shareholder vote exchange is no longer around to actually facilitate A Marketplace in transactions, I foresee there will be like, sort of speak off Market. That's, you know, where I could, you know, get my proxy solicitor or I could, you know, just myself. Go to shareholders and say, just one by one. Negotiate deals with big block holders and say how much for your shares. And assuming I can get comfortable, I think it's legal to do that. It might be a bit. But again, I still think you're gonna end up having, you're gonna run into 13 D trouble. Yeah, right. Exactly. Whether I have to disclose that, that activity is a different story and that sets aside completely at the Optics. Yeah, the idea of it makes people uncomfortable at the very least, like, unless you're planning on literally getting to a majority that way all the other shareholders who you haven't bought, if they if they thinking like, wait, why does he have to pay money specifically for this? Can't be a good transaction. Yeah. So there's, there's an interesting little, little order of events. Where, you know, maybe I'm a, you know, I I've persuaded through my solicitor, you know, 45% of the vote. So I need, I'm making that number up, so vote for me, and then I just need that next. That next five percent. I start paying money for that 5%, the first 40, Making on this that it's worth it, you know. So exactly. So there's there's some very delicious strategic and tactical Nuance that needs to be worked out here. But it's, it's a fascinating legal and economic situation. I actually set up a company to try to do this at one point. It's called unbundle acts and we have other things that we took in another direction to this point but there's a whole whole little venture just come back to it. We were going to we're gonna create an exchange originally but then Cheryl the Verde exchange kind of got going. So we moved on to some other stuff but if we can talk about on bundle exit, some other point in time. So anyways, so that's why I've been thinking about that fun. Yeah, that's a fun puzzle. It's a puzzled academics for quite a while, but oh yeah. Absolutely. Yeah. All right. Well indeed we will so thanks and it's been terrific kind of covering what flavors have been in Jerry we like and how much are See hosted by and Lipton and me, Mike Levin. I'm an independent activist investor and advisor to investors about their activist situations and is the Michael M. Fleischman professor in business, law, and Entrepreneurship at Tulane law school, and an affiliate of two lanes, Murphy Institute, you can find me Mike at the activist investor.com and Anne has Law dot tulane.edu. Our podcast as always is produced and distributed by freefloat media, thanks for listening and We'll talk again.