DEFC14A: Barnwell Industries Faces Proxy Fight as Sherwood Group Seeks Board Control

Barnwell Industries is urging stockholders to vote for its director nominees amidst a proxy battle with the Sherwood Group, who are seeking to replace the current board.

Summary

• Barnwell Industries is holding its 2025 Annual Meeting of Stockholders on May 29, 2025, to elect directors and ratify the appointment of Weaver and Tidwell, L.L.P. as its independent registered public accounting firm.
• The Sherwood Group has nominated five director candidates in opposition to the Board's nominees.
• The Company believes the Sherwood Group's nomination notice is defective and is engaged in litigation regarding its validity.
• The Board recommends stockholders vote FOR its nominees and AGAINST any proxy cards sent by the Sherwood Group.
• The Company estimates that the total expenditures relating to the Company's proxy solicitation will be approximately $200,000.
• Okapi Partners LLC has been retained for solicitation and advisory services in connection with the 2025 Annual Meeting.

Sentiment

Score: 4

Explanation: The document is largely neutral in tone, presenting facts and recommendations related to the proxy contest. The presence of litigation and a proxy fight suggests underlying tensions and uncertainty, lowering the sentiment score.

Positives

• The Board is actively soliciting proxies to ensure its nominees are elected.
• The Company has retained Okapi Partners LLC to assist with the proxy solicitation process.
• The Board is recommending a slate of directors with diverse experience and skills.

Negatives

• The Company is engaged in a costly proxy contest with the Sherwood Group.
• Litigation has been commenced against the Sherwood Group regarding the validity of their nomination notice.
• The proxy contest could divert significant financial and operational resources from the Company and may negatively affect the stock price and overall financial and operational performance.

Risks

• The outcome of the litigation with the Sherwood Group is uncertain.
• A successful proxy contest by the Sherwood Group could lead to a change in control and potential disruption of the Company's operations.
• The proxy contest could divert significant financial and operational resources from the Company and may negatively affect the stock price and overall financial and operational performance.
• If the Sherwood Group Consent Solicitation is effective such that directors selected by the Sherwood Group thereafter constitute a majority of the Company's Board, any decision with respect to the 2025 Annual Meeting or the validity of any of the Sherwood Groups nominees set forth in the Defective Sherwood Nomination to stand for election at the 2025 Annual Meeting will be made by such directors then serving on the Board.

Future Outlook

The Company expects if a Valid Court Order is issued and an ongoing proxy contest between the Company and the Sherwood Group occurs, such contest will divert significant financial and operational resources from the Company and may negatively affect our stock price and overall financial and operational performance.

Management Comments

• The Board does NOT endorse any of the Sherwood Nominees and recommends that you use the WHITE proxy card to vote FOR only the five director nominees proposed by the Board, namely Alexander C. Kinzler, Kenneth S. Grossman, Joshua S. Horowitz, Craig D. Hopkins and Philip J. McPherson and as the Board recommends on all other proposals.
• The Board strongly urges you not to sign or return any green proxy card sent to you by the Sherwood Group.

Industry Context

Proxy contests are a common occurrence in corporate governance, often driven by disagreements over strategy, performance, or board composition. This situation reflects a struggle for control and direction of Barnwell Industries, similar to other companies facing activist investor pressure.

Comparison to Industry Standards

• The estimated cost of the proxy solicitation ($200,000) is within the typical range for smaller reporting companies facing contested elections.
• Retaining a proxy solicitation firm like Okapi Partners is a standard practice to ensure effective communication with shareholders and maximize voter turnout.
• The legal challenges and counterclaims are also common in proxy battles, reflecting the high stakes involved in controlling the company's direction.

Legal Proceedings

• The Company commenced a lawsuit against the Sherwood Group in the Delaware Chancery Court, seeking, among other remedies, declaratory judgment that the Defective Sherwood Nomination Notice was invalid and injunctive relief to enjoin the Sherwood Group from presenting its slate of nominees at the 2025 Annual Meeting due to the failure of the Sherwood Group to comply with the advance notice provisions of the Company's Bylaws.
• On April 21, 2025, the Sherwood Group filed an answer to the Company's complaint, counterclaims against the Company and a third-party complaint against Kinzler, Grossman and Horowitz in the Delaware Chancery Court, seeking, amongst other things, dismissal of all claims brought by the Company against the Sherwood Group, declaratory judgement that the Company's directors breached their fiduciary duties, and injunctive relief to enjoin the Company from (i) applying the Company's Bylaws to prevent the Sherwood Group from nominating its slate of nominees set forth in the Defective Sherwood Nomination Notice for election at the 2025 Annual Meeting and (ii) filing or distributing further proxy solicitation materials for the 2025 Annual Meeting until the Delaware Chancery Court has ruled whether the Sherwood Group complied with the advance notice provisions of the Company's Bylaws.

Stakeholder Impact

• Shareholders are directly impacted by the proxy contest, as the outcome will determine the composition of the Board and the future direction of the Company.
• Employees could be affected by potential changes in strategy or management resulting from the proxy contest.
• The proxy contest could divert significant financial and operational resources from the Company and may negatively affect the stock price and overall financial and operational performance.

Next Steps

• Stockholders should vote on the WHITE proxy card.
• The Company will continue to pursue litigation against the Sherwood Group.
• The Company will hold its Annual Meeting on May 29, 2025.

Key Dates

Keywords

proxy solicitation, annual meeting, board of directors, director election, Sherwood Group, nominees, litigation, Weaver and Tidwell, Okapi Partners, corporate governance