DEFR14A: Barnwell Industries Reschedules Annual Meeting Amidst Contentious Proxy Battle

Barnwell Industries, Inc. has rescheduled its 2025 Annual Meeting to September 10, 2025, following multiple adjournments caused by a persistent proxy contest with the Sherwood Group.

Summary

• Barnwell Industries, Inc. (Barnwell) has rescheduled its 2025 Annual Meeting of Stockholders to September 10, 2025, from its original May 29, 2025 date.
• The rescheduling was necessitated by the Sherwood Group's repeated withholding of proxies, which prevented the company from achieving a quorum.
• A new record date of July 21, 2025, has been set for stockholders entitled to vote at the reconvened meeting.
• The Board of Directors recommends stockholders vote FOR its four highly qualified nominees: Kenneth S. Grossman, Craig D. Hopkins, Joshua S. Horowitz, and Philip J. McPherson.
• The Board urges stockholders to discard any green proxy cards from the Sherwood Group, as their nomination notice was deemed invalid by the Delaware Court of Chancery.
• Stockholders are also asked to ratify the appointment of Weaver and Tidwell, L.L.P. as the independent registered public accounting firm for the fiscal year ending September 30, 2025.
• The company estimates total expenditures for its proxy solicitation to be approximately $300,000, with about $250,000 already incurred.

Sentiment

Score: 3

Explanation: The filing details a highly contentious and costly proxy battle that has significantly disrupted the company's annual meeting process, led to multiple board changes, and incurred substantial expenses. While the company achieved a favorable court ruling, the ongoing dispute and associated instability create a negative outlook.

Positives

• The Delaware Court of Chancery ruled in favor of the Company, upholding the invalidity of the Sherwood Group's director nomination notice.
• The Board has reduced its size from five to four members, potentially streamlining governance.
• The Board's nominees are described as highly qualified, indicating a focus on strong leadership.
• The company is committed to working diligently to ensure long-term value for stockholders.

Negatives

• The 2025 Annual Meeting was repeatedly adjourned due to the Sherwood Group's actions to defeat a quorum, causing significant disruption.
• The Sherwood Group allegedly breached prior cooperation agreements (2021 and 2023) by engaging in solicitations and attempting to influence the Board and management.
• Allegations include the Sherwood Group attempting to intimidate board members, demanding operational changes (e.g., eliminating Hawaii personnel, replacing counsel, selling energy investments, terminating Alexander Kinzler), and causing damaged management morale.
• A conflict of interest arose from Sherwood's multi-million dollar investment in a Canadian oil and gas partnership formed and controlled by former director Laurance Narbut.
• The company has incurred substantial costs for proxy solicitation, estimated at $300,000, with $250,000 already spent.
• The Sherwood Group's alleged repeated failures to timely file Forms 4 indicate non-compliance with SEC regulations.

Risks

• The ongoing proxy contest and shareholder dispute with the Sherwood Group could continue to distract management and the Board from core business operations.
• There is a risk of continued difficulty in achieving a quorum at future meetings if shareholder activism persists.
• Forward-looking statements, including those related to drilling opportunities in Canada, are subject to risks and uncertainties.
• General risks outlined in the company's 2024 Annual Report and Quarterly Reports on Form 10-Q could materially affect actual results.

Future Outlook

Forward-looking statements in the filing include expectations regarding the company's ability to obtain a quorum at the Annual Meeting, successfully solicit proxies, execute on drilling opportunities in Canada, and its financial condition and strategies.

Management Comments

• "Your vote at the 2025 Annual Meeting is critical to Barnwell's future."
• "We strongly urge you to discard and NOT vote using any green proxy card sent to you by the Sherwood Group."
• "We will continue to work diligently in 2025 and beyond to help ensure that Barnwell delivers for our stockholders."
• "We look forward to hearing your perspectives at the 2025 Annual Meeting and throughout the remainder of the year ahead."

Industry Context

This filing primarily details a corporate governance dispute and proxy contest, rather than providing insights into broader industry trends. The company's core business activities in energy and water resources are not discussed in the context of industry performance or outlook within this document.

Management Changes

Corporate Governance

Legal Proceedings

• On March 26, 2025, the Company commenced a lawsuit against the Sherwood Group in the Delaware Chancery Court, seeking to invalidate their director nominees.
• On April 21, 2025, the Sherwood Group filed counterclaims against the Company and third-party claims against certain directors, seeking to enjoin the Company's actions.
• On April 28, 2025, the Delaware Chancery Court declined to grant the Sherwood Group's motion for a temporary restraining order against the Company's solicitation and meeting.
• On May 13, 2025, a trial on the merits was held by the Delaware Chancery Court regarding the defective Sherwood Nomination Notice.
• On May 21, 2025, the Delaware Chancery Court ruled in favor of the Company and the Board, holding that the Sherwood Group's nomination notice was invalid, a decision the Sherwood Group chose not to appeal.

Related Party Transactions

• In January 2025, Sherwood (or an affiliate) made a multi-million dollar investment in a Canadian oil and gas partnership formed and controlled by Laurance Narbut, a former director and Sherwood's representative on the Board. This was identified as a conflict of interest and an attempt by Sherwood to exert influence.

Stakeholder Impact

• Shareholders: Experienced disruption to the annual meeting process, faced ongoing uncertainty due to the proxy contest, and incurred costs associated with the dispute.
• Management: Suffered from damaged morale and distraction from core business operations due to the Sherwood Group's alleged intimidation tactics and demands for operational changes.
• Board of Directors: Devoted significant time and effort to managing the proxy contest, litigation, and corporate governance changes, diverting focus from strategic oversight.

Next Steps

• The 2025 Annual Meeting of Stockholders will be held on September 10, 2025, to vote on director elections and auditor ratification.
• Voting results will be announced shortly after the meeting and reported in an SEC filing within four business days.
• The Board will determine who will be appointed Chairman of the Board following the results of the 2025 Annual Meeting.
• Future benefit accruals for the Pension Plan and Supplemental Executive Retirement Plan (SERP) remain frozen.

Key Dates

Recommendation

The company is embroiled in a protracted and costly proxy contest with a significant activist shareholder, the Sherwood Group. This dispute has led to multiple adjournments of the annual meeting due to quorum issues, significant legal and proxy solicitation expenses (estimated $300,000), and alleged attempts by the activist shareholder to disrupt management and board functions. While the company successfully defended against the Sherwood Group's director nominations in court, the underlying animosity and operational distractions persist. The filing highlights a highly unstable corporate governance environment, with board members resigning and being removed, and ongoing attempts by the activist to influence the company's direction. This level of internal conflict and uncertainty presents a substantial risk to long-term shareholder value and operational efficiency, making the stock unattractive for investment until these issues are definitively resolved and stability is restored.

Keywords

Proxy Statement, Annual Meeting, Shareholder Activism, Corporate Governance, Board Election, Proxy Contest, Barnwell Industries, SEC Filing, Quorum, Director Nominees, Delaware Court of Chancery