CCI - Crown Castle Co-Founder Ted B. Miller Files Lawsuit to Invalidate Crown Castle's Unlawful Cooperation Agreement with Elliott | Benzinga
Asserts That Crown Castle's Cooperation Agreement Struck Prior to Company's Nomination Window Disenfranchises Shareholders and Entrenches Board
Cooperation Agreement Granted Two Board Seats and Does Not Require Elliott to Retain Equity Ownership in Company, Thereby Misaligning Elliott's Incentives with Long-Term Interests of Company and Shareholders
Urges Crown Castle to Immediately Put Cooperation Agreement to a Shareholder Vote to Restore Transparency and Credibility
HOUSTON, Feb. 28, 2024 /PRNewswire/ -- Ted B. Miller, co-founder of Crown Castle Inc. (NYSE:CCI) ("Crown Castle" or the "Company") and his investment vehicle Boots Capital Management, LLC ("Boots Capital") today filed a complaint in the Court of Chancery of the State of Delaware (the "Court") seeking to invalidate the cooperation agreement between Crown Castle's Board of Directors (the "Board") and Elliott Investment Management, L.P. (together with its affiliates, "Elliott") announced on December 20, 2023. Under the terms of the cooperation agreement, Elliott and the Company appointed two new directors, Jason Genrich, Partner at Elliott, and Sunit Patel, Chief Financial Officer of Ibotta Inc. (collectively, the "Elliott Directors"), to the Board. Elliott received substantial governance rights without the customary provision that it be required to maintain an equity ownership position in the Company.1
Mr. Miller stated: "The Crown Castle Board's short-sighted decision to enter into this fundamentally unlawful cooperation agreement just prior to the Company's nomination window is yet another example of the Board's poor governance, lack of accountability, hostility towards its shareholders, and track record of flawed decision making, all of which have resulted in the destruction of tens of billions of dollars in shareholder value. Moreover, the terms of the cooperation agreement granted Elliott certain governance rights without requiring it to maintain an equity ownership position in the Company, grossly misaligning Elliott's short-term profit incentives with the long-term interests of Crown Castle and its shareholders. Submitting the cooperation agreement to a shareholder vote is a necessary step to help restore the Company's credibility with investors and forestall costly and distracting litigation, which could delay a sale of the Company's fiber assets and further erode shareholder value. However, given the Board's continued refusal to put the unlawful cooperation agreement to a shareholder vote, we have filed this lawsuit to defend the rights of Crown Castle's shareholders."
The complaint alleges the following:
- The cooperation agreement directly infringes upon the Board's powers and responsibilities, and substantially restrains the Board's ability to use its own best judgment on key management matters in violation of Section 141 of the Delaware General Corporation Law and confers outsized concessions upon Elliott, including a commitment to include the Elliott Directors on the Board's slate in the 2024 election and guaranteed Elliott representation on key Board committees.
- The terms of the cooperation agreement are invalid and unenforceable as a matter of Delaware law, as reflected most recently in the February 22, 2024 written opinion by Vice Chancellor Travis Laster, in the case West Palm Beach Firefighters' Pension Fund v. Moelis & Company.2
- The Company breached its own bylaws through its entry into the cooperation agreement, which impermissibly constrains the Board's authority on key governance matters in direct violation of certain of its bylaw provisions, a matter further reaffirmed in the recent Laster opinion in the Chancery Court.
- Elliott and the Elliott Directors knowingly aided and abetted the director defendants' breaches of fiduciary duty outlined in the complaint and provided them with substantial assistance.
Mr. Miller added, "It is unconscionable that the Company's current Board has just ...