With TXI’s annual meeting in Dallas only days away, company leadership has admitted that in recent weeks it has had private settlement discussions with its third-largest (representing a 10.2 percent stake) and most belligerent shareholder, SAVF, with respect to proxy proposals
Source: Shamrock Activist Value Fund, Burbank, Calif.; Texas Industries, Inc., Dallas; CP staff
With TXI’s annual meeting in Dallas only days away, company leadership has admitted that in recent weeks it has had private settlement discussions with its third-largest (representing a 10.2 percent stake) and most belligerent shareholder, SAVF, with respect to proxy proposals. According to TXI, despite significant concessions offered by TXI to SAVF, the negotiations broke down. We are certainly disappointed with Shamrock’s lack of interest in a cooperative agreements, said TXI CEO Mel Brekhus, in a statement that went on to note that SAVF’s demands go beyond its public proposals, would result in benefits to SAVF that are far out of proportion to its interests in TXI, and are not in the best interest of shareholders.
SAVF, which is backed by Walt Disney nephew, Roy Disney, was quick to respond: We had hoped our good faith settlement talks could have resulted in the adoption of appropriate change at Texas Industries. But the management and board of Texas Industries once again appears more concerned with preserving their position than being responsive to the concerns of shareholders. [The] statements by CEO Mel Brekhus are not only inaccurate and disingenuous but a thinly-veiled attempt to distract shareholders from the fact that two of the nation’s leading proxy advisory firms–RiskMetrics Group and Proxy Governance, Inc.–unanimously and independently recommended that shareholders vote for our three nominees and for our three corporate governance resolutions. Unfortunately, Mr. BrekhusÌ÷ comments are consistent with our view that the management and board of Texas Industries fail to communicate transparently with shareholders.
The three SAVF shareholder proposals concern annual elections of all directors, rather than staggered three-year terms; a majority vote in uncontested director elections; and, requiring shareholder approval of all poison pill rights plans, designed to deter coercive takeover bids. According to SAVF’s statement, [TXI’s] proposal for our three nominees to join the board was contingent on the three TXI incumbents remaining in office. The board also informed us that it would not implement two of our three corporate governance resolutions relating to the prompt de-staggering of the board and submitting the company’s poison pill to a shareholder vote.
Since announcing its nomination of three board candidates and three corporate governance shareholder proposals, SAVF has gained the public support of two of the company’s largest shareholders. Southeastern Asset Management, Inc., which holds more than 9 percent of the outstanding TXI shares, announced September 1 it will vote for all three nominees and all three proposals. About two weeks later, Nassef Sawiris, who beneficially owns almost 15 percent of TXI common stock, indicated he also will vote with SAVF. In addition, the nation’s largest public pension fund, the California Public Employees Retirement System (CalPERS), also publicly announced on October 1 that it plans to follow the lead of Shamrock, which invests $200 million for CalPERS. The latter’s TXI stake is considerably smaller than that of SAVF, Southeastern Asset or Sawiris.