Barnwell Industries Holds Steady Amid Proxy Contest, Aims for Amicable Resolution

Barnwell Industries (NYSE: BRN) faces a pivotal moment in its ongoing proxy contest with activist investor Ned Sherwood, as the company reaffirms its willingness to resolve the dispute through dialogue while leveraging third-party endorsements and operational focus to retain control. With shareholder support for Sherwood’s dissident slate rising to 40%, the stakes have never been higher for the Honolulu-based oil and gas exploration firm.

The Proxy Contest Dynamics: A Delicate Balance of Power

The proxy battle centers on Barnwell’s boardroom, where Sherwood’s group seeks to replace three incumbent directors—Alexander C. Kinzler, Kenneth S. Grossman, and Joshua S. Horowitz—with its own nominees. While Sherwood’s support has climbed to 40% since early October, Barnwell’s board retains its legal and procedural advantages. The company’s press release on April 30, 2025, underscored its commitment to amicable resolution, stating it remains “willing to engage at any time” with Sherwood to avoid prolonged conflict.

However, the contest remains far from settled. Shareholder support for the dissident slate, though significant, still falls short of a majority, and the outcome hinges on votes cast at the November 10 shareholder meeting. Complicating matters is a Delaware Chancery Court case filed by Barnwell in March 2025, which challenges the validity of Sherwood’s nomination process. If the court rules in Barnwell’s favor, Sherwood’s slate could be disqualified entirely.

Glass Lewis’s Endorsement: A Strategic Boost

A critical turning point came when Glass Lewis, a prominent proxy advisory firm, recommended against replacing the three directors, calling their removal “unwarranted.” This endorsement carries substantial weight, as institutional investors often follow such recommendations.

Glass Lewis cited Barnwell’s proven track record and strategic direction as key factors in its decision. The recommendation likely stabilized investor confidence, as seen in BRN’s stock price rebound in late April ontvang. This underscores the importance of proxy advisors in shaping shareholder behavior, particularly in a closely contested vote.

Strategic Focus: Operational Performance as a Defense

Barnwell has emphasized its operational strategy as a counter to Sherwood’s challenge, stressing its focus on improving performance in oil and natural gas exploration. The company’s subsidiaries and asset portfolio remain intact, and management argues that its current leadership is best positioned to execute long-term value creation.

Yet, the proxy contest has already diverted resources: Barnwell warns that prolonged legal and solicitation efforts could strain finances and distract from core operations. This tension highlights the risks of activist campaigns, which often pit governance changes against operational continuity.

Shareholder Sentiment and Voting Mechanics

The voting process itself adds layers of complexity. Shareholders holding shares via brokers must provide explicit instructions to avoid “broker non-votes,” which could dilute both sides’ support. Additionally, if the Delaware court mandates a universal proxy card, shareholders may need to resubmit votes, further complicating the process.

Current support levels for Sherwood’s slate—40% as of October 18—suggest a growing but not yet decisive groundswell. Barnwell’s campaign to revoke prior consents via its proxy solicitor, Okapi Partners, continues, aiming to reclaim votes before November’s meeting.

Conclusion: A High-Stakes Tug-of-War

Barnwell’s position is bolstered by Glass Lewis’s recommendation and its operational focus, but the rising dissident support and legal uncertainty create risks. Investors should monitor two key metrics:
1. Shareholder revocation rates: Barnwell’s ability to reduce Sherwood’s support below 40% through targeted outreach.
2. Legal outcomes: A ruling in Barnwell’s favor in the Delaware case could invalidate the dissident slate, shifting the balance decisively.

The November 10 vote will determine whether Barnwell’s leadership retains control or cedes ground to Sherwood’s vision. With BRN’s stock price reflecting market uncertainty (see visual above), the resolution of this contest will likely influence the company’s valuation trajectory for years to come. For now, the board’s emphasis on amicable resolution—coupled with its procedural and advisory firm advantages—positions it as the slight favorite, but the battle remains fiercely contested.