San Juan Basin Royalty Trust · NYSE:SJT
San Juan Basin Royalty Trust — Proxy Contest (November 2016)
21 slides from San Juan Basin Royalty Trust's proxy contest presentation, Nov 1, 2016
Slide 1: Special Meeting of San Juan Basin Royalty Trust Unitholders to Replace Trustee
SOUTHWEST BANK Special Meeting of San Juan Basin Royalty Trust Unitholders to Replace Trustee Compass Bank with 30 - Year Administrator now at Southwest Bank
Slide 2: Summary
Summary • Southwest Bank and Robert Lansford (the “Southwest Bank Participants”) are undertaking this proxy solicitation to remove Comp ass Bank as trustee of the San Juan Basin Royalty Trust (the “Trust”) and to nominate and appoint Southwest Bank as successor tru ste e. • Advantages Of Southwest B
Slide 3: Trust History
Trust History • The San Juan Basin Royalty Trust (the “Trust”) was established in November 1980 by a Trust Indenture (the “Trust Indenture”) between Southland Royalty Company and The Fort Worth National Bank. Pursuant to the Trust Indenture, Southland Royalty conveyed to the Trust a 75% net overridi
Slide 4: Trustee Duties
Trustee Duties • Collect the monthly royalty income, review administrative costs for appropriateness, pay all expenses of the Trust and distribute remaining available income to the unitholders. • Perform all administrative duties under the Trust Indenture including oversight of the operator’s gas ma
Slide 5: Why is a Change in Trustee Needed Now?
Why is a Change in Trustee Needed Now? • Compass Bank and Current Principal Trust Officer Lack Royalty Trust Administration Experience (see pp. 6 - 9) • Compass Bank and Current Principal Trust Officer Lack Historical Knowledge Critical to Pending Burlington Litigation (see p.10) • Significantly Esc
Slide 6: Compass Bank Lacks Relevant Experience
Compass Bank Lacks Relevant Experience Compass Bank’s statements regarding its experience and ability to administer the Trust are misleading . • Compass Bank claims: » It has successfully administered the Trust for over 10 years FACT : For 9 of those 10 years, it was Ms. Anderson who led the adminis
Slide 7: Compass Bank Lacks Relevant Experience (cont'd.)
Compass Bank Lacks Relevant Experience (cont’d.) • Compass Bank claims: » It has the capability to administer royalty trusts FACT: The Trust is the ONLY royalty trust for which Compass Bank serves as trustee. Southwest Bank serves as trustee for 7 other royalty trusts and disbursing agent for one ot
Slide 8: Current Principal Trust Officer Lacks Relevant Experience
Current Principal Trust Officer Lacks Relevant Experience • Compass Bank quickly promoted Josh Peterson to replace Ms. Anderson in October 2015 after only 21 months of bank experience. • A publicly - traded entity in the midst of complex operator litigation is not the place for a principal trust off
Slide 9: Current Principal Trust Officer Lacks Relevant Experience (cont'd.)
Current Principal Trust Officer Lacks Relevant Experience (cont’d.) • Mr. Peterson’s experience prior to his rapid promotion to principal trust officer for the Trust in September 2015 includes the following: 2010 Received law degree from Texas Southern University — Thurgood Marshall School of Law Ap
Slide 10: Compass Bank Team Lacks Historical Knowledge Critical to Pending Litigation
Compass Bank Team Lacks Historical Knowledge Critical to Pending Litigation • Favorable resolution of the pending litigation between the Trust and the operator of the properties, Burlington, can result in the recovery of significant amounts by the Trust on behalf of the unitholders. – Many of the pe
Slide 11: Escalating Trust General & Administrative Expenses
Escalating Trust General & Administrative Expenses Since Lee Ann Anderson left BBVA Compass in October 2015, G&A expenses have increased. If Southwest Bank becomes Trustee, the synergies can potentially save unitholders up to 10% on G&A per year. 11
Slide 12: Demonstrated Conflicts of Interest at Compass Bank and BBVA
Demonstrated Conflicts of Interest at Compass Bank and BBVA • Southwest Bank is a qualified independent bank based in Fort Worth, Texas, with much less potential for conflict of interest than a large global bank based in Spain. • BBVA has an individual serving as BOTH a director of the trustee’s par
Slide 13: Why Southwest Bank is the Right Choice for Trustee
Why Southwest Bank is the Right Choice for Trustee • Continuity of Administration and Actual Royalty Trust Management Experience is Essential and Valuable (see p. 14) • Royalty Trusts are a Core Business for Southwest Bank (see p. 15) • Anticipated Administrative Cost Savings and the Addition of Uni
Slide 14: Continuity of Administration and Royalty Trust Management Experience
Continuity of Administration and Actual Royalty Trust Management Experience is Essential to Long - Term Unitholder Value • Southwest Bank is not advocating for a change, but rather a preservation of the continuity of administration by the team that has successfully led the Trust since its inception.
Slide 15: Royalty Trusts are a Core Business for Southwest Bank
Royalty Trusts are a Core Business for Southwest Bank • Southwest Bank has made the commitment to the administration of royalty trusts as part of its core business and is providing the resources and management leadership that are required by that commitment. – Southwest Bank’s royalty trust manageme
Slide 16: Anticipated Administrative Cost Savings and Additional Unitholder Services
Anticipated Administrative Cost Savings and Additional Unitholder Services • Southwest Bank will leverage its experience gained from the administration of multiple royalty trusts to recognize efficiencies, cost savings and valuable advantages in best practices for the Trust and the unitholders. • Sp
Slide 17: Anticipated Administrative Cost Savings and Additional Unitholder Services (cont'd.)
Anticipated Administrative Cost Savings and Additional Unitholder Services (cont’d.) • Southwest Bank’s royalty trust administration knowledge and experience will avoid Compass Bank’s obvious need for costly outside consultants and experts to conduct day to day operations. • Southwest Bank believes
Slide 18: Compass Bank's Self-Interested Actions
Compass Bank’s Self - Interested Actions • Far from being the fiduciary required by the Trust’s Indenture, we believe that Compass Bank is acting in its own self interest to preserve its own economic benefit rather than acting in the best interest of the unitholders. • Compass Bank has intentionally
Slide 19: Compass Bank's Self-Interested Actions (cont'd.)
Compass Bank’s Self - Interested Actions (cont’d.) • Compass Bank claims that Southwest Bank did not engage with it regarding its proposal to appoint Southwest Bank as the successor trustee prior to commencing a solicitation process for the replacement of Compass Bank. – FACT : Compass Bank rejected
Slide 20: Compass Bank's Self-Interested Actions (cont'd.)
Compass Bank’s Self - Interested Actions (cont’d.) – FACT : Compass Bank chose to expend Trust resources to discourage unitholders from exercising their right to even call the special meeting to provide a forum for unitholders to consider Southwest Bank’s proposals. Compass Bank has now chosen to co
Slide 21: Disclaimer
Disclaimer • In connection with their solicitation of proxies, Southwest Bank and Robert Lansford (the “Southwest Bank Participants”) have fi led a definitive proxy statement with the U.S. Securities and Exchange Commission (the “SEC”) with respect to the solicitation of p rox ies for the special me
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