Crown Castle Co-Founder's Board Challenges ‘Now Moot,’ Says Defendants’ Answer
Crown Castle co-founder Ted Miller’s complaint to invalidate the “cooperation agreement” the Crown Castle board entered into with “activist” investor Elliott Investment Management (see 2402290063) “is without merit,” said the answer Thursday (docket 2024-0176) from 12 defendants, including Crown Castle Chair Robert Bartolo, to the Feb. 27 lawsuit in Delaware Chancery Court.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Miller contends the agreement “conferred valuable concessions and control upon Elliott.” He sought to invalidate it because it includes “uncommon, noncommercial terms that raise significant questions" about the board's and Elliott's "incentives and loyalties.”
But the complaint “underscores” that Miller’s proxy campaign against Crown Castle “is focused on his own self interests,” not those of Crown Castle shareholders, said the defendants’ answer. His interests include getting himself and three “handpicked” nominees, including his son-in-law, appointed to the board, it said.
Miller also seeks to get himself installed as the company’s paid executive chairman “after spending more than 22 years away,” said the defendants’ answer. After previously calling for the board to act with urgency, Miller is seeking as part of this litigation a court order to impede progress on Crown Castle’s ongoing CEO search “and the strategic and operating review of its fiber business,” it said.
Miller’s complaint purports to be “modeled” on the Delaware Chancery Court’s Feb. 23 decision in West Palm Beach Firefighters' Pension Fund v. Moelis & Co., said the defendants’ answer. In that case, the plaintiff, a Moelis shareholder, challenged the validity of certain provisions in a stockholder agreement between Moelis and its CEO. The agreement gave the CEO extensive preapproval rights over the board’s decisions, plus the ability to select a majority of board members, and the power to determine the composition of any board committee.
The plaintiff in that case argued that the provisions violated Section 141(a) of the Delaware General Corporation Law (DGCL), which mandates that the business and affairs of a corporation be managed by or under the direction of a board, except as otherwise provided in the DGCL or in the corporation's certificate of incorporation. The court agreed with the plaintiff, holding that the preapproval requirements, three of the board composition provisions, and the committee composition provision in the stockholder agreement were facially invalid under Section 141(a) of the DGCL.
In the immediate aftermath of the court’s decision, Crown Castle announced that the company and Elliott had agreed to amend certain provisions of the cooperation agreement to conform to the court’s opinion in Moelis, said the defendants’ answer. The result is that there’s now nothing in the cooperation agreement between the Crown Castle board and Elliott that “frustrates” Miller’s ability to secure Crown Castle board representation, it said. Regardless of whether Miller’s challenge “was ever meritorious in the first place,” his claims are “now moot,” it said.