December 28, 2018

Proxy Access: Second Use of Access Bylaw to Nominate Director!

Well, it’s been over two years since the first filing of a Schedule 14N at National Fuel Gas. You’ll recall that was Gamco’s failed attempt to utilize proxy access. But we finally have a second Schedule 14N filed yesterday for “The Joint Corp.” By looking at the name, I thought this company would have something to do with legalized marijuana. But it’s actually a chiropractic franchise

The Interesting Back Story for this Schedule 14N

From what I can glean, here’s the back story for this Schedule 14N at “The Joint Corp”:

1. A shareholder proposal to adopt proxy access was approved – with 96.05% support – at the company’s annual meeting on June 1st of this year (there were a lot of broker no-votes – nearly one third). A few months after, the board amended the bylaws to adopt proxy access. As you can see from the company’s proxy statement, the board had not made a recommendation for – or against – the proposal. According to this Form 8-K, the board implemented proxy access in August on standard terms (3% – 3/20% – 20).

2. The director nominee, Glenn Krevlin, is listed as a ‘greater than 10%’ stockholder (aggregated with funds he controlled at Glennhill Capital, an activist hedge fund) in the most recent proxy. Note the ‘proxy access’ shareholder proposal mentioned in #1 above was filed by a different shareholder. According to the Schedule 13Ds filed by Glennhill, it began selling its stock soon after the proxy was filed and was below 5% within a couple of weeks. (This might be due to Krevlin winding down some funds he was associated with.)

3. This Schedule 14N was filed by the brother of the corporate secretary for The Joint Corp! (The brother is the trustee of the actual filer.) Might have been an interesting holiday for that family.

4. One last intrigue: the brother/trustee who filed this Schedule 14N had served on the board of the company until March 2017. When he left the board, this is what that Form 8-K said: “On March 14, 2017, Steven P. Colmar resigned from the board of directors of The Joint Corp, effective as of March 17, 2017. While Mr. Colmar’s letter of resignation did not cite any specific disagreements with management, in prior communications with the Company and various members of its management and board of directors, Mr. Colmar expressed disagreements about the Company’s strategic direction and management’s ability to execute upon it.”

Broc Romanek