DEFA14A: Barnwell Cuts Quorum Amid Shareholder Dispute

Barnwell Industries, Inc. adjourned its 2025 Annual Meeting and reduced the quorum requirement to 33 1/3% due to an ongoing shareholder dispute with Mr. Sherwood.

Summary

• Barnwell Industries, Inc. convened and then adjourned its 2025 Annual Meeting of Stockholders on September 11, 2025, without transacting any other business.
• The 2025 Annual Meeting has been adjourned to be held on Friday, September 19, 2025, at 9:00 a.m. Hawaii Standard Time.
• The Board amended the Company's Bylaws to reduce the quorum requirement for the 2025 Annual Meeting from a majority of shares to thirty-three and one-third percent (33 1/3%) of issued and outstanding shares, on a one-time, limited basis.
• This action was taken because Mr. Sherwood allegedly
• purposefully defeated a quorum,
• forcing multiple adjournments of the meeting.
• The Board strongly recommends that stockholders use the WHITE proxy card to vote FOR ONLY the election of the four nominees proposed by the Board: Kenneth S. Grossman, Craig D. Hopkins, Joshua S. Horowitz, and Philip J. McPherson.
• The record date for the adjourned 2025 Annual Meeting remains the close of business on July 21, 2025.

Sentiment

Score: 3

Explanation: The filing indicates an ongoing and costly shareholder dispute that has led to multiple meeting adjournments, diversion of management resources, and a need for the board to take unusual steps like reducing the quorum. This reflects significant internal conflict and operational distraction, negatively impacting investor confidence despite the board's stated commitment to value creation.

Positives

• The Board is actively working to conclude the annual meeting and ensure a stockholder vote on directors.
• Barnwell remains open to engaging in constructive, good-faith settlement discussions with the Sherwood Group.
• The company aims to resolve governance matters collaboratively to avoid unnecessary distraction and preserve focus on long-term value creation by developing its Canadian energy assets.

Negatives

• Mr. Sherwood's actions in defeating a quorum forced multiple adjournments of the 2025 Annual Meeting.
• The dispute caused the company to incur additional costs over the past several quarters.
• Management's attention and resources were diverted from executing on its strategy for enhancing stockholder value.
• Stockholders were deprived of the orderly and timely election of directors.
• Mr. Sherwood rejected multiple settlement offers from the Board and countered with proposals that would grant him control of the Board.

Risks

• Risks related to the actions of the Sherwood Group.
• Ability to successfully solicit proxies from stockholders in connection with the 2025 Annual Meeting.
• Ability to defend against any potential claims by the Sherwood Group.
• Ability to execute on the company's strategy and business plan.
• Other risks set forth in Barnwell's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (as amended on Form-10-K/A filed on January 27, 2025) and other SEC filings.

Future Outlook

Current expectations are based on reasonable assumptions, but there is no assurance that these expectations will be achieved. Forward-looking statements are subject to various risks and uncertainties, including those related to the actions of the Sherwood Group, the ability to successfully solicit proxies, the ability to defend against potential claims, and the ability to execute on the company's strategy and business plan.

Management Comments

• The Board decided yesterday to amend the Bylaws to reduce the quorum requirement on a one-time, limited basis to transact business at the 2025 Annual Meeting from a majority of the shares of the Company issued and outstanding and entitled to vote to thirty-three and one-third percent (331/3 %) of the issued and outstanding shares of the Company entitled to vote, represented in person or by proxy.
• By purposefully defeating a quorum, Mr. Sherwood forced multiple adjournments of the 2025 Annual Meeting, depriving all stockholders of the orderly and timely election of directors, forced the Company to incur additional costs over the past several quarters, and caused management to divert attention and resources away from executing on its strategy for enhancing stockholder value.
• Barnwell remains open to engaging in constructive, good-faith settlement discussions with the Sherwood Group in pursuit of a resolution that represents the best interests of the Company and all stockholders.
• The Company believes that these governance matters should be resolved collaboratively and thoughtfully, wherever possible, to avoid unnecessary distraction and preserve focus on long-term value creation by developing its Canadian energy assets.
• Barnwell's Board of Directors (the Board) strongly recommends that stockholders use the WHITE proxy card to vote FOR ONLY the election of the four nominees proposed by the Board.

Industry Context

This announcement reflects a common challenge in corporate governance where activist shareholders engage in disputes with incumbent management or boards. Such disputes can be costly and distracting, potentially impacting a company's operational focus and investor confidence. The company's stated focus on developing Canadian energy assets suggests its primary operations are within the energy sector, where strategic direction and capital allocation are critical.

Comparison to Industry Standards

• Shareholder activism and proxy contests are common occurrences in publicly traded companies, particularly when a significant shareholder seeks board representation or control.
• The reduction of quorum requirements, while unusual, is a permissible measure often employed by boards to overcome deliberate obstruction by activist shareholders aiming to prevent a meeting from proceeding.
• The company's efforts to engage in settlement discussions are standard practice in such disputes, aiming to avoid prolonged and costly proxy fights.
• The board's recommendation for specific nominees and urging against opposing proxy cards is typical during contested or contentious annual meetings.

Corporate Governance

Legal Proceedings

• The company's forward-looking statements include risks related to its ability to defend against any potential claims by the Sherwood Group.

Stakeholder Impact

• **Shareholders**: Deprived of timely election of directors, urged to vote specific proxy card, potential for continued dispute affecting share value, potential for resolution to enhance long-term value.
• **Management**: Resources and attention diverted from executing strategy due to the dispute.
• **Company Operations**: Incurred additional costs due to adjournments, focus on developing Canadian energy assets potentially impacted by distraction.

Next Steps

• The reconvened 2025 Annual Meeting of Stockholders is scheduled for September 19, 2025.
• Stockholders are urged to vote using the WHITE proxy card for the Board's nominees.
• The company remains open to constructive settlement discussions with the Sherwood Group.
• Continue focus on long-term value creation by developing Canadian energy assets.

Key Dates

Recommendation

The ongoing shareholder dispute and the need for the board to take extraordinary measures like reducing the quorum indicate significant internal conflict and operational distraction. While the company states a focus on long-term value creation and is open to settlement, the current situation introduces uncertainty and costs. Investors should hold to monitor the resolution of the governance issues and assess the impact on the company's strategic execution, particularly regarding its Canadian energy assets. A 'sell' might be too aggressive without more financial data, but the current situation is not conducive to a 'buy.'

Keywords

Barnwell Industries, BRN, Proxy Statement, Annual Meeting, Shareholder Dispute, Corporate Governance, Quorum Reduction, Board Nominees, Proxy Solicitation, SEC Filing