Barnwell Industries Reiterates Willingness to Amicably Resolve Proxy Contest with Ned Sherwood
62min read Barnwell Industries (NYSE: BRN) finds itself at a critical crossroads as activist investor Ned Sherwood’s proxy contest enters its final stages. With the shareholder vote looming, the company has doubled down on its commitment to resolving the dispute through dialogue while defending its governance record. The outcome could reshape the oil and gas firm’s trajectory—and its stock’s valuation.
The Proxy Battle Heats Up
Sherwood, who controls nearly 30% of Barnwell’s shares, has demanded a complete overhaul of the board, accusing current leadership of mismanagement. His grievances include a staggering 87% decline in cash reserves since 2016, dropping from $15.9 million to just $1.96 million by late 2024, alongside a stock price languishing at $1.70—a $17 million market cap. The activist investor also highlights a $2.3 million write-down on a $5.3 million Texas oil venture, which he claims reflects poor due diligence.
Ask Aime: Are you prepared for Barnwell Industries' upcoming proxy battle?
In response, Barnwell has kept the door open for negotiations, stating it “remains willing to engage in constructive discussions” to avoid costly litigation. This stance contrasts with Sherwood’s insistence on replacing the entire board with his slate of five nominees, who collectively boast 172 years of industry expertise. The company’s refusal to include Sherwood’s candidates on its proxy card—deemed invalid under its bylaws—has escalated tensions, with a Delaware lawsuit now pending.
Ask Aime: "Will Barnwell Industries' proxy battle lead to a board overhaul?"
Glass Lewis Tips the Scales
A pivotal moment came when proxy advisory firm Glass Lewis recommended against ousting three incumbent directors, calling their removal “unwarranted.” The firm cited Barnwell’s “clear strategy” and governance record, a blow to Sherwood’s campaign. Institutional investors, which often follow such recommendations, now face a split: back the board or side with Sherwood’s urgent reform agenda.
The Sherwood Group, however, has framed the contest as a fight to halt a “decades-long decline.” Its plan includes slashing costs—closing Hawaiian offices, consolidating Calgary operations, and reducing legal expenses—while leveraging a $49 million tax loss to reposition Barnwell as a “pseudo-SPAC.” Meanwhile, Barnwell argues that Sherwood’s legal challenges, funded by shareholder dollars, risk further draining resources.
Financials Paint a Dire Picture
The numbers underscore Sherwood’s case:
- Cash Burn: Under CEO Alexander Kinzler, cash reserves have plummeted 87% since 2016.
- Dividend Shortfall: Shareholders received just $0.07 per share in dividends over eight years, despite $4.70 per share in generated cash flow.
- Legal Costs: At least four law firms retained since January 2025 have added to expenses.
The Clock is Ticking
Shareholders must act by May 13 to submit consents for Sherwood’s slate. Barnwell has enlisted proxy solicitor Okapi Partners to revoke prior consents, while Sherwood’s group pushes its “BLUE consent cards.” The May 29 shareholder meeting will decide whether Barnwell’s board survives or yields to a new vision.
Conclusion: A Crossroads for Value Creation
Barnwell’s fate hinges on whether shareholders prioritize stability or urgent change. Glass Lewis’s endorsement gives the board a lifeline, but the financial data—shrinking cash reserves, stagnant dividends, and rising legal costs—suggests investor patience is thin.
If Sherwood wins, Barnwell could pivot toward cost discipline and strategic repositioning, potentially unlocking its $49 million tax asset. Failure to act, however, risks prolonged underperformance. With shares at $1.70—a 90% drop from their 2016 high—the market is already pricing in deep uncertainty.
Investors should scrutinize two key metrics:
1. Cash Reserves: A rebound from $1.96 million would signal operational improvement.
2. Shareholder Returns: Any dividend increase or buyback plan post-election will indicate which faction prioritizes long-term value.
The proxy contest is more than a boardroom battle—it’s a referendum on whether Barnwell can revive its oil and gas prospects before its cash runs dry. The May 29 vote will determine which path it takes.
