Crown Castle: Elliott sends letter to the Board of CCI; discloses $2 billion position & calls for operational and strategic review of fiber business (103.58)
- Elliott Investment Management, which manages funds that collectively have an investment of approximately $2 billion in Crown Castle (CCI) released a letter and presentation detailing its perspectives on the Company's history of underperformance and calling for significant changes.
- Elliott outlined the following steps it believes are necessary to set the Company on the right course:
- New Executive and Board Leadership: Crown Castle has demonstrated minimal self-reflection on whether its strategy is working and has displayed little regard for conflicting data and analysis. For these reasons, comprehensive leadership change is necessary to address this consistent, long-term underperformance.
- Strategic and Operating Review of Fiber Business: It is evident that profligate fiber spending has pushed Crown Castle's financial profile far away from its stated 7% to 8% dividend growth rate (despite CEO Jay Brown's false refrain that fiber enhances the dividend). All aspects of the fiber strategy must be re-evaluated, including whether Crown Castle is the best owner of its fiber business.
- Optimized Incentive Plan: The Board and its Compensation Committee have continued to dismiss a ROIC-based management-incentive program, which has enabled aggressive capital deployment without any penalty for delivering a woeful ROIC. Management must be held accountable for capital allocation.
- Improved Corporate Governance: Crown Castle has a troubled track record on corporate governance, with a history of reactive entrenchment activity when challenged. For example, Crown Castle enacted extraordinarily shareholder-unfriendly amendments to its bylaws in 2021, compromising the ability of shareholders to exercise their fundamental right to nominate directors and seek change in the boardroom, which we believe violate Delaware law.