One person committees, and how activists think

Welcome to shareholder Primacy for a free flow media. A podcast about activist investing security slaw on all the ways. The financial and legal world's intersect and Collide in real life. I'm here with and lift in a lot professor at Tulane in New Orleans, who teaches and researches Securities and business law. She of course, holds up the legal end of our little Enterprise here. And that's Mike Levin an activist investor who lives and works in Chicago. He covers the financial side of our podcast. Yes. And what do you say today? We delve a little bit into the idea of a one-person board committee. Whatever that means. And however, odd, it might sound to some of us happy to talk about that. That should be fun, too. All right. To Echo a famous TV character. What's all this? I hear about one person board committee And you wrote actually wrote a neat post about it at the business law blog that you maintain about special Committees of one. And we talked about that and we thought it'd be kind of fun to explore how this works and what it means. So to lay a little bit of groundwork for ourselves, let's talk for a minute about a special committee what what that kind of implies and means, yeah, Awards. A board is made up of some number of people. It can be any number, but in a public company, it may be kind of large Aid or nine or ten and to count as official board action, the whole body has to act. But sometimes boards would prefer to act by a smaller group, a committee, have a smaller number of people examine an issue and the committee might then either have full authority to act for the board instead of the board or it may just report its findings to the board for further board action. Okay, so so it's it's a way to kind of get business done. I mean we've we're off familiar with board committees and so forth and now special committees are on the table, right? Go ahead. Yeah. So there are two basic reasons for why board wants to do this. One is specialization, I mean, it's just it's hard to get things done in a large group. If you have a labor intensive cap task negotiating a merger setting comp all that, it's just easier to handle. So we see Camp committees in charge of executive pay, we see nominating communities in charge of nominating people. All right, good? So it's specialization division laborers as we Economist call it, right? But that's, that's actually less interesting than the second. Person right purposes. We cleansing. Meaning you use a committee at the full board is conflicted so you create a committee and that committee is presumably untainted by the conflict to handle whatever the issue is. All right. And we would see that I've been on special committees for deals and so forth. I mean, when would that be one with that? Give an example of when you'd see that. Okay, so in general, if you're a director, you're conflicted. I mean, the legal standard is, you are conflicted. If you either have a direct financial interest in a transaction, or if you're just a little Close to someone else who has a direct Financial interests your friends or your your mother to each other, whatever it is. so, during whether to buy a piece of Land directors. That director is a financial interest and is conflicted. And if another director is the first director's cousin, then probably that cousin is also conflicted. Now if only one board member has a conflict, they might just simply recuse themselves and then it only stay outside the room, like exactly. You have to leave. Well, we talked and voted about. Well, I mean, but, take care of a One. But if a lot of board members are conflicted, or especially if a majority of the board is conflicted and we start to have a problem. Okay. And what problems does the conflicted? Board kind of create. Well, I mean the biggest university understand that In the law, the only time. problem is, if it's just not as spontaneous. Slave if nobody sues, it's not a problem but it does become a problem of a shareholder. Susan, once there's a lawsuit, it matters a lot, whether the board was conflicted when it decided on a course of action. So one issue is derivative litigation, this is kind of complicated but when it comes down to is sometimes shareholders Sue to vindicate, some right of the corporation, the shareholders aren't claiming their own rights were invaded, they claim that the corporations rights were right and the shareholder is suing on the corporate behalf. And when that happens this is ultimately a lawsuit on the corporations. We have the board gets to decide whether this litigation is even worth pursuing. Whether there's a legitimate claim here with a payoff, is worth the expense. But only if the board is unconvicted, if a majority of the board is conflicted about this litigation, the shareholder can proceed no matter what the board thinks. But aside, even from derivative litigation suing on the corporation's behalf, right? Suppose the shareholder is suing to indicate their own rights and that might happen if the shareholder was merged out and received cash. Stock in a different entity that doesn't count as a corporate harm. That's a harm to the individual shareholder. I was holding stock and now I have cash and I don't want cash, or I want more cash in that situation. Yeah. If a shareholder Sues, and unconvicted board will get a lot of deference from a reviewing court and the shareholder will have difficulty pursuing that claim, but if the board was conflicted, Either one of two things. In this fourth, the board was conflicted. One possibility, is that the course of action was approved upon full disclosure by majority of shareholders? If that happens, it makes up for the conflict. But only work, they had a vote, the shareholders approved, it doesn't matter if the board was conflicted is as long as the shareholders had fallen. So the vote clenched, the decision, the vote, instead of exactly the cleansing mechanism here is the shareholder vote, but if there's no shareholder vote, then if a shareholder sues, a reviewing Court will vary carefully, examine this challenge transaction to determine if it was entirely fair to the shareholders, right. That's time consuming. It's a long process. There's Discovery there's a trial and it consumers result in a very significant damage award. All right now, how does then? I giving these conflicts in ways that shareholders in some instances like me who would be on the main event of a derivative suit resolve it then. Let's talk about special committees and how they they fit in and then talk about controlling shareholders. So let's talk about this special, how the special committee is kind of address the problem you just laid out. Okay, so right, so special committee, it's fairly straightforward, imagine you're aboard, you know that this is the legal landscape, if you're conflicted in a shareholder Seuss, you either need a shareholder Vote or you're gonna have this onerous entire standard of an entire review entire fairness review. So, you know this if you're a majority conflicted, if you know you're conflicted, you may um, you may just decide to see shareholder approval but that has to be, as I said on full disclosure and sometimes litigation reveals. Whoops, there wasn't full disclosure and you may not be entirely clear, what counts as full disclosure in advance. It's a little bit there that somebody could dig up some fact that you maybe accidentally forgot to include and the products. It. So instead, the easiest thing, for the board to do is create a special committee and have the special committee decide on a course of action. And ideally, of course, that's special committee will be made up of unconvicted directors. But as you said the rules that we've talked about this before are a little different for controlling shareholders, when a controlling shareholder engages in the transaction with its controlled company. That will often be a conflicted transaction because the controller is representing itself on one side of the deal and kind of controlling the company as the counterparty on the other side of the deal like if the controlling shareholder buys out the minority. So if what if one of the minority shareholders, brings a direct claim to challenge that Trends action, it's going to get this owner is entire fairness review by a court, unless the controlling shareholder both, get shareholder approval and negotiates the deal with an unconvicted special committee, that's for the special committee that and that's where comes in for patrolling shareholders. So, even Even a board without a controlling shareholder, might be conflicted and want to have a special committee, but it's almost necessary for a controlling shareholder conflicted transaction if they want to avoid entire fairness review, right? And yeah, I'm sorry. Yeah, well, the the issue and this, it's not just, as you may not be 100% confident that you've disclosed all the information you need to disclose for a court looking at this. After the fact, it's not always obvious in advance who's going to be viewed as conflicted by reviewing court. And the main reason for that is, it's not always clear as hoop counts as too close to someone with a financial interest. So remember, you're conflicted. If you have a financial interest or if you're close to someone else who has Financial interests, blood relatives, sister, your brother, your mother, all that, that's a problem. But what if it's not a blood relative, what if it's just? So when you've done business deals with before or how extensive do those deals need to be, what if you see each other, You parties. Okay. What if your next door, neighbors? What have you gone on vacation together? It's not obvious. What counts as Too Close especially in recent years. So in the very recent years, Delaware courts have become much more suspicious of these kinds of ongoing, social and business relationships, and have been increasingly willing to call them out as compromising a board members Independence. So here's the problem, you're aboard, you know, there's a conflict, you set up a committee of unconvicted board members, you may not be entirely sure that a court will agree that. I mean if you understand you've been on the same board for you know, many years you've all kind of hung out at board meetings and maybe socialize a little bit right? And all being on this. Yeah because of course all board social. So how much is too much? Now on the one hand we might say maybe the board should have thought of that before stacking itself with people objective. But, you know, like you could say, well board. That's your problem. You should have more independent people, but on the other hand, the University of people who are Qualified to serve as public company boards. It's not unlimited, they tend to travel in similar Circles. Of course, they're going to have relationships. Are they? At least they were at least they recruit for they fish in the same Pond? You know, we can argue about if they, how to make the pond bigger. But today, you can argue that how to make the pond bigger. But there are real strengths also to, I mean, there are definitely drawbacks, but they're all. So strange, because people who have done deals together before have business relationships, before may have very good working relationships and that makes a true father, exactly, but they're not great. It necessarily police in Conflict, transactions. The thing is that aboard does more than police conflict. Transactions, they do other things. So, what do you select for? So sometimes when there's this uncertainty, about who's independent, a board will go out and actually hire a whole new direction to serve just on a committee. Like this is your job to be like video but other times they'll put together a committee that just seems at unconvicted. So that's what the right. okay, so this takes us to the specific situation of which we'll get to in a second over this of a one-person comedian, which we have talked, which we talked about in the well. But but there was There's nothing there's nothing inherently like illegal or wrong with the one person Commander know. Okay, so this is like you have to understand like the Chain of Thought that goes into this. So let's say you've put together your committee, you've done the best you can in terms of finding independent people. Now a shareholder sues, it turns out that the court concludes one person on that committee was conflicted but a majority were unbiased just suggestion from Delaware up. Until now has been that the special committees work will stand and it will still cleanse the board as a whole as long as a majority of the committee was like, was independent. And exactly, however, we Define that and how are the facts? I mean, there might be exceptions like if one conflicted person was also the chair and steering that, that's not good. But if they were just one end up independent on conflicted person and the rest of the committee was okay. Then the committee may be okay. So but then with brings us to the issue of single matter. So where does the board? You're constructing your committee. You need to use unconvicted people but you some of them are conflicted. So how many do you put on your Committee in Delaware, there's no rule you can have as many or as few as you like, all the other states different on this. For example, California, you have to Have at least two, but in Delaware, you can have any number of people on the committee but Delaware courts have always expressed The View that putting one person on a committee is suboptimal why? Because the special committee is supposed to be this bulwark against the conflicts of the larger board and the sense and I think this is just human nature. It's hard for a single person to stand against the other board members and resist. Something the board members want to do board members are collegial, they travel in the same circles and it's hard for one member to block a transaction at the others favor, or Worse recommend shareholder litigation against the others. So, a special committee that has two or three people has a kind of strengthened numbers ability to resist that person. Compared to one where you're this one. And if there's an analogy here, when you're like a one, you know, when an activist is looking at joining a board and you're a single Remember, you're the only person on a board of, you know, 2468 or 10 or whatever number, it becomes a lot harder when you got a friend on the board. Yeah, so when you got a friend on this special committee. Yeah, it's just, it's just easier to stand firm. So, Delaware is actually said, if you're special committee is just one person that person must be and this is the quote like Caesar's wife above reprogram, command. The suggestion is something like a single member committee gets special scrutiny, but we're not sure how much more special scrutiny. They get, we don't know how much boards are penalized for. This just recently, there were two different cases where single member committees examined derivative, litigation a shareholder, whether a shareholder should be permitted to pursue a claim on the corporation's behalf. And both of these single members special committees, two different companies, concluded to the utter shock of. Absolutely no one. Then, of course, there was no value to pursuing litigation against Both cases, Delaware Court said that was totally fine and dispersed to this one person special committee. so, So, and the special committee that got us going on. This was the one at our favorite. Yeah. But right. Yeah. But what happened? What was the one at Tesla? So there was a special committee. What actually know you sorry. There's like you've got to understand what happened here, right? Yeah. There. Um, so all this cash is out in match. So this is the decision by the Delaware Supreme Court, which involved a corporate restructuring that conferred special benefits on a corporate controlling shareholder. The controlling shareholder went through the whole process of negotiating. The deal with a three-member committee and they got public shareholder approval. But later when a shareholder sue, the court found after the fact that one member of the committee was conflicted because he Worked for the controlling shareholder and had served as director at essentially. That's, that's a conflict. I would. Yes. So he Wasn't a cloud as judgment and the Delaware Supreme Court. Now held for the first time that when we're talking at least about controlling shareholder deals, the kind of deal that needs both independent committee approval and shareholder approval should. Yeah. Right to avoid fairness review that they had in those deals, the presence of even one tainted director is enough to take the entire committee so it's not majority of the committee anymore. One of them will kill it. So it's not clear that this would extend to other situations with a special committee. It may only be for controlling shareholder transactions, it's not entirely clear but it definitely now applies to control. So, on the one hand that makes perfect sense. If the idea is these committee members sure each other up, then having one cuckoo in the nest, is gonna ruin that effect, right? But on the other hand, if you're a board and you are not when 100% sure who counts, as independent, the logical thing to do is just put only one person on the committee like I know this one person is independent, I know Right. Okay. And Delaware allows it and Delaware says you can never one person committee. All right. So don't record mouth. All this language about being Suspicious of one person committees but if they don't actually follow through and and actually like, say well, what was only one person? I don't trust it. Then you've got you've created this incentive to create a one person committee, even though we've just said, it's better, if they're at least two people. And that's so that was that was my question and then and then that brought us to the and Tesla's one person committee. Wasn't really wasn't, wasn't part of The litigation, I mean sort of splatters over our favorite corporate governance here. Tesla held a shareholder vote to ratify. Elon musk's pay after it was rescinded. And, and also, to move the company to Texas. And those proposals were originally examined, and recommended, by a single member. Special committee was supposed to be two directors and because they were only going to examine the move to Texas, but then, let me stop right there. So, the first the original charter, the special committee, so they say special committee. You people need to research Uh, whether we should, we should attack. And so, and everybody knows that's a Theta compliant anyway. You tearing up and down that they had no idea what this Oh yeah. We don't know where this is going, but, okay. So there was a super two-person, special committee and then the CEO of the company. We're going to Texas. At all. So, and then they Added to the Charter. They said you got two things, you got to work on and the second was evaluating whether to ratify a story, right? Exactly. And at that point, one of the committee members decided that at least for a parents, say he would look to dependent on musk and he should drop out. And so, the whole thing actually went forward with just one person, a director named Kathleen, Wilson Thompson is the only person on this committee to determine whether to recommend. Both things. A move to Texas and rat a vote to ratify. Musk's pay as we all know, the shareholders voted in favor of both Tesla and they recommended Committee of one recommended recommended both of these things. Exactly. Now, It's not clear that the new shareholder vote ratified anything. We talked about that in a prior show. Chancellor McCormick has to decide that issue but one of the things she's going to have to consider when she considers whether the new vote ratified. Anything was, how much do we trust a single member special committee? Especially since this one Committee Member who may have no personal ties to us, but she did earn 135 million dollars. So McCormick may have questions like a big part of her like. Well, if I Part of her. Well, I think 135 million makes a difference. May have questions about whether this committee can really be trusted and all that, may fall back into her decision as to, whether the new vote was enough to ratify. Musk's Page. So the Plum to take us to the end, not the end, but is not that. Tesla had a one person committee. It's who the one person was what she did. And how conflicted she was or was not in making these decisions, but it's all part of it. Like again, even if she was like, Caesars, what you have, this problem, you still the structural problem of a one-person committee, maybe doesn't have the strength, no matter, you know, even if they aren't making 130, it's hard to do. It's a hard thing to do to stand up against a full board and a powerful defining company defining CEO. So, that's a problem with the 1% special Committee in general, which is Exactly why it's sort of weird that match was the Delaware Supreme Court put boards in this weird position where it's almost better to have a one-person special committee. Because at least, then they can be sure that they won't have any any conflicted members infecting the committee process. Wow. So even though we set out to talk and possibly joke slightly about a one person committee, this discussion really pertains to what kind of committee. Yeah. And and and whether that one person particularly a Tesla but it match and all sorts of other places, what kind of conflicts and and and what kind of process they go through. And so yeah, wow, exactly. That's that's very instructive. Well, how about should we take a little break? Let's take a little break. And we can return to talk in a little bit about how activists think about their efforts 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, snart covering companies and 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 and Lipton here with Mike Levin. So, Mike, I wanted to ask you because I'm just an academic and I deal with, you know, sort of theoretical and less practical. And I was wanted to ask you about the thought process of activist investors. So we both were at this panel at a conference, a few weeks ago, where this question came up, several times in the audience was company people, and they wanted to know from a real life in the flash activists that's you how it works. And I thought that was really interesting. So what is it that activists look for in deciding whether even to invest in one company or another company? So that was that was a fun conference that was and Nashville. It was great. Yeah, there were a lot of questions from company people like What do you do? And so, um, the decision to invest that we have to take do this and kind of parts and pieces, but the decision to, you know, whether to even take a position, you would recognize as one of like value or like deep value investing. Okay, all the analytics all the Research revolves around. What kind of value prop? This isn't growth. This isn't this isn't a trading set. Strategist is all straight value and fasting meaning that based on whatever metrics whenever analysis, we do that, the underlying assets and cash. Flows are not priced in properly in the in the in the share price. So we're so from look, there's a jillians of people that do value investing. So that's the first Part of it. And and companies won't surprise most companies that find themselves in an activist situation that they're, they're share, price is undervalued a lot of probably CEOs walk around saying that's anyway. Yeah, prices except for occasionally write, He's special case. But then there's a second, there's a second dimension to this. Okay, and it's very very Loosely grouped Under The Heading of like corporate governance. okay, we're looking at what? Things. Related to the stewardship where the board or, you know, around how the company is kind of run. That that we think should change or that are obstacles. To achieving some of the value in that we think is possible, okay? So there's there's those kind of two Dimensions. It's it's the value proposition, then also the kind of corporate governance. Okay. So what is it about? Corporate governance that catches your attention as an obstacle to the company. So that yes. It tends sometimes it's, you know, really kind of mundane, it's kind of how vote's work or, you know, look at the biology, there's something there. Okay, but it tends to revolve around how the board. Leads manages supervises. Senior executive is the kind of decisions they make, when they're in charge of things, you know, because there's certain decisions that go to the board, like, you know, dividend policy or or, you know, cash returns so forth and then there's others where they're just, you know, how are they, how are they supervising man management? Um, but you know, we know. So another way to look at the value governance dichotomy to use a word is that if this were, if we know there's some sort of, you know, value play value trade, But the only thing standing in the way of value is like secular things in the industry sector, like macroeconomic factors or something. We're just waiting for some Trend. This wouldn't be an activist situation is to just be straight, you know, a long, a long long, only value investment, okay? But we know there's some things that management should be doing or the company should be doing better or differently strategically operationally in terms of their balance sheet in terms of the managed people. Who knows what? Okay. And and there's some governance, things are kind of getting in the way of that happening that the incentives are off. We frequently get into executive comp just like thing is, like executive comp is a fairly obvious where you might think the incidents. Are there anything else? Yeah, it could. Let's talk a little bit about executive comp before we leave that for a second frequently. The executive copy issue is not amount of pay. Which always gets a lot of people's attention. That's what all the SEC disclosures all about, in terms of pay ratio and pay for performance and so forth. That's all nice. We're more interested in how the campus structure, what kind of incentives are in place. What you're kind of bonus on. Okay, you know, everyone's, you know, more or less a fan and more Equity. But, you know, when equities getting handed out, you know, for basically hitting easy goals, right? That that's a problem. So there's an old saying, you know, it's not how much you're paid, but how, and we look at the how a pretty close. So that's an important element of governance because, you know, the boards, basically in charge your retaining and, and defining the house, there's, there's other kind of corporate governance aspects, you know, we're going to look at, you know, some stuff we talked about a little earlier, you know, about Catholics on the board. We're going to look at, they're kind of expertise. We're going to look at importantly, kind of how not just independent, like, on paper from SCC, definitions of Independence. But, you know, in a practical way, you know, they push back on decisions in the right way. Do they are? They overly defensive of a CEO when he when he doesn't deserve it? How are you getting this off from SEC filings or from other sources all sorts of or chatter? Well, I mean, I, I mean, I'll talk to former employees. I'll talk to competitors, I'll talk to Securities analysts. I'll read a lot of stuff, right? I have not ever gotten to the place where I've hired like, you know, private piss, right. I'm not trying to bait you into a confession of inside trading either, but there's a lot of sources of information. I talked to other shareholders And certainly try to assess what they think, what they've learned because they're, you know, there's some share those that just don't, you know, barely follow it, it's an index and there's others that follow up pretty close. Okay, so you've identified a company with a corporate governance problem. That is impeding value creation. Yes, that's in the country and then what? Then. Then we start to try it at talk. And again, there's going to be many different activists that have many different takes on this. So this is kind of one person, but I think I'm a little representative of a lot of folks that are at least just trying to make money because again in the end we're trying to convert this value investment and we're trying to, you know, bring it up to what we think it's worth or even more. Okay. And so we're going to want to start to, as we say engage Um and maybe start to maybe have a little discussion with me management. I don't I have very modest expectations for how those conversations go Management in many companies views all shareholders but particularly, you know, folks like me with the website called the activist investors as something of a nuisance in inheritance, right? And I understand that I don't agree, it should be that way but I get where they're coming from. So like I said, I have modest expectations for where that conversation is going to go. But I want to at least create a little bit of a I don't know. Paper trail a record or whatever that I have made it to try to convey some of our thoughts. And so on. Okay, at the same time, the other thing I'm doing is talking other shareholders, right? Okay. There are there's a lot you're building your stick. There's a lot you can do. And stay within, you know, not for him in a group, you know, not the evidence disclose stuff or whatever, where we can start to talk to other shareholders and that happens a lot, probably more than companies probably appreciate. Um because I wanted I want to, you know, I have a thesis for the value value investment. I want to make sure that others I want to pressure test it and sort of see if others what others think of it and no better place to go than other shareholders and maybe start to ask questions. Like you know, what do you think, what do you talk to management? What do you think of the board you know start to really you know, get gather some Intel about what you think, other shareholders might be willing to support, you know, this is well short of Forming a group, as well, short of soliciting anything. It's just conversation. Yeah, yeah, feeling out with people support, right? And then at some point You know, we'll go back to management and say look not only are we think this ought to happen if this company or do we think you ought to get back a bunch of cash? But we are highly confident, a lot of other shareholders agree with us because, you know, we're going to own, you know, a small percentage. Of the shares. And I've said this before I said this or a conference that, you know, there's very, very few activists investors. I can count them on one hand and they, you know, there's their name Ellie and where just on their own just through their investment, they can start to influence most of the time. Most activists even big ones that we recognize and even Elliot. I know they do this too. Are going to start to try to suss out and get figure out who supports what? And then our hope is that management wants to continue to talk. It may be start to talk about the leadership and you know put someone on a board. If we think that's what needs to happen. Most of the time or many times too many times that then is then needs to happen. Management starts to either get really defensive or just shut down, okay? And that's and that's when you that's Escalade, is your turn, it's kind of foolish. Because a couple things first. You know what, activists? Just thought very clearly about the steps, you know, thought way ahead about what they wanted to do. What they're prepared to spend money on. You know what, the bylaws will allow us to not allow us to do, okay? We got a whole, you know, not even, you're not even beginning to urge them without already planning for what happens when they try to shut you down. Exactly. And, you know, The other thing that's worth knowing is that you know for for you know, most activist, you know, it takes a lot of work to do an activist project proxy. Contests it's not, you know, it's not trivial okay? But it's still one company in our portfolio, not that much of our assets are there. It's, you know, a couple years from now. It's, you know, we if we succeed or fail, we may have, you know, stuff the investment, but moved on. But this is not that big a deal to us, and we don't care what people think. Anyway, that's what that's kind of what it takes to do this. Yeah, if you're a company, this is your whole, this is your career. Okay, and, you know, if we're prepared to, we don't like it, we don't do that, you know, willingly we're prepared to make a company look kind of bad, if they, if they just deserve it. You know, we're not going to do this once and League or two totally. But if someone doesn't even want to have a conversation, You know, we're going to tell other shareholders look, you know, we've really tried to be nice about this and discreet and do this in a very inexpensive and, and okay. So so the board is not responding to your efforts. You've shown them, you know, other shareholders or whatever and they're just trying to reuse you out. And at this point, that's when things get, you know, that's what we all learned at the conference from you was escalate escalated and many ways, that could be a proxy contest. So it could be You know, because again the boards, the center of this, we know that both from a legal and from a practical perspective, the board's kind of where the action is and we're going to want representation. We're going to want to know what's going on and so forth. So we may start nominating directors. There's also potentially changes in governance that will either help with the our board efforts or just on their own help with. Influence influencing company occasionally we saw this and we talked about this recent show, you know what, maybe a proposal or two would would help increasingly. We should talk about this some more at some point increasingly activists and companies are starting to sue each other more over this stuff. So you know part of the plan is looking, is there some sort of an opportunity? There's some sort of a need to litigate some of what we're seeing you know again we don't not, do they take that lightly? That's a that's an enormous hassle that's all possibility and you'll do I presume black books and Records requests where those come in the process, pretty early, you know, books and Records when you're trying to feel out what? Yes, I'll do a book. I mean, put it this way, if the discussions with the company are going well. Let's see. Yeah, we're kind of interested in what you're talking about, maybe we'll put someone in the board or something like that and you know, we're not going to get everything we want. But that's the art of compromise. I'm not going to do a books and Records request but you know if if there's some real information, I'm trying to find out including like a stock list stockholder list or you know minutes of board meetings or committee proceedings and so forth that'll help me with one or another part of my thesis. Yeah, I'm gonna, I'm gonna start looking for that. Um and I'm going to do that both because the information is really helpful but second that helps escalate that sort of tells a company that we're kind of serious and we're not going away, okay? I mean, the reason I find that interesting, I just have to say is because, you know, I read these decisions all the time on books and records of West and 99% of the issues in books and Records request that make it to a court. So that there is a decision, it's really a shareholder was thinking of fiduciary duty litigation, they aren't really using the tool for the purpose of what your purpose is the actual governance purpose. So I'm guessing that those are the cases that don't make it to court. Oh yeah. No. I mean we'll litigate. I've never been involved in where books and Records to 20 litigation I've been at my shared demands and so forth. Yeah but to the extent that I I'm familiar with activists 220 demands outside of litigation. I mean, outside of like a potential like the rivet of lawsuit. Yeah. Okay and it gets litigated, maybe we're trying to like figure out whether there are we have a proper purpose or what, you know. There's there's some Nuance in the 220 thing where I'm familiar with at least a couple of cases Where some activists have said, yeah, there's some information we want we, you know, but it rare, like I said, most of the activists stuff outside of a derivative suit planting doesn't really involve it. It doesn't end up in a great know, it's just interesting because, you know, like if you only look at the cases, you think, now, when you use this tool except oh, yeah. We just all the time and various States and so forth. But again, mostly it's You know, the basic ones that shareholder list, no one ever really gets that. You just give it up. Yeah, there have been the weird cases, but yeah. There have been some of those. We Podcast talking about. That. All right. So you've got this board. There's stonewalling you and now you're you've escalated your proxy contest. Maybe a lawsuit, maybe a proposal process, something like that. Anything else? Yeah, well um you know again the end game for us is is share price appreciation, you know, I don't, I don't necessarily I'm not dying to be on a board. I need the money, I'll do it. But, you know, we're so if there's a path forward to achieving that value great. Well, what kind of, you know, collaborate with your company, to try to do it, if they can continue to Stonewall sort of, it gets to a decision, you know, do I stay in the stock and continue to try to influence or we get out, you know? And and you know hopefully I've done my analysis early on that when I was looking at the governor's that, there's a chance to Prevail, you know, I'm not going to do this with a company with inside is controlling, you know, 45%. The vote or with some sort of horrible, staggered board or something that just has no, you know, a very limited path to influence. There's way too many companies to look at, in my value screen, To, to worry about that. So yeah, yeah. So I mean, just like, so imagine you're the board now, like you're the board, your face, you show up on the boards, right? And I've been on boards so yeah, you in. Good faith. Believe that you don't need this either. You think your share price is just fine or you recognize. There's a problem, but you also have a pet. You understand what you, you have your own plan. I like my plan. Yeah, exactly. So what would you advise a board dealing with you to make this go away without disrupting anything? But you know, like with, you know, not encourage things, get worse, you can't. It's hard. It's hard to make it go away. That's the thing. Is that is that you there's sort of a short terminal long term way to do this the short term Is. You know, try to listen again, you can tell the activist you're just one shareholder. You know, if you're confident that a lot of other people are agree with you, maybe then the premise of your question is wrong that maybe everything isn't okay. But if you're really that confident and you and you have empirical evidence for that kind of confidence, It would still behoove aboard to. Treat a shrewd activists who maybe only owns a couple percent with a little bit of difference, right? And say, look, you know, you're in the minority, you know, I you know we're pretty sure that no one's, you know, not everyone agrees with you even though you think they do. Okay, but let's try to stay in touch. I mean, as I say you can't have too many friends in this economy. Okay, but longer term path. To. You know, do a lot, you know, better engagement and you know, board Outreach and so forth and it really cultivate your shareholder base in a way that really kind of puts the activists on an island. Okay. That sort of makes them a lot less. Likely to be able to say I'm confident that other people's. Yeah. Okay, all right, all right, so and there's excellent. Well Anne, it's been terrific talking about these subjects. This is shareholder Primacy hosted by Ann Lipton and me Mike Levin. I'm an independent activist investor and advisor to investors about their activist situation. And as we have heard, is the Michelin Fleischman professor in business law and Entrepreneurship at Tulane law school. And also an affiliate of two lanes, Murphy Institute, you can find me Mike at the activist investor.com and at law Dutch tulane.edu. Our podcast is produced and distributed by free float media. Thanks to them. And thanks to everybody out there for listening and we will talk again soon.