On August 3, 2009, representatives of the Shamrock Activist Value Fund met with both the CEO and the Chairman of Texas Industries (TXI) to discuss board seats. Shamrock has built up a 10% holding of all outstanding shares of TXI and understandably wants a voice in the company via three director seats they feel they deserve. However, despite Shamrock’s substantial holdings in the company, the Chairman, Mr. Rogers, “made it abundantly clear that he believes there is no place in the Texas Industries boardroom for the voices of its shareholders.”
Shamrock’s letter continues to describe the unfortunately paternalistic view toward shareholders by Mr. Rogers:
Mr. Rogers and his current Board behave as if only they know, and only they are capable of acting in, the best interests of the Company and its shareholders. This simply underscores Mr. Rogers’ misplaced belief that Texas Industries is his own personal fiefdom. It appears that Mr. Rogers fails to recognize that the shareholders own the Company, and that he and this Board are elected to serve only at the pleasure and in the interests of the shareholders. Perhaps this attitude is why the Company’s performance lags its peers, hundreds of millions of dollars of the Company’s funds have been “invested” in ill-timed capital expansion projects that have failed to generate any incremental profits, and there appears to be no credible plan to address these shortcomings.
In particular, Mr. Rogers summarily rejected our three director nominees. His dismissal was not based on their merits, but instead appeared rooted in Mr. Roger’s personal opinion that our three nominees are not sufficiently independent because they were nominated by a shareholder, and not by him and his fellow Board members.
Behavior like this by executives and board members boil my blood. It suggests to me that the executives and directors have extremely low opinions of not just Shamrock, but all the other shareholders who own the majority of the company. This behavior says to me they are arrogant and greedy and only working to protect their own interests and could care less about the company and its shareholders.
I wish the best of luck to Shamrock in their efforts to obtain their board seats and to help this company compete better against its peers.