Delaware Court of Chancery Grants Expedition and Discovery in Hearing on Crown Castle's (CCI) Last-Minute Expansion of Board

The Delaware Court of Chancery yesterday granted expedited discovery into a breach of fiduciary duty claim against the Board of Directors of Crown Castle Inc. (NYSE: CCI) ("Crown Castle" or the "Company") for expanding the number of board seats in the critical, late stages of an ongoing proxy contest by investment vehicle Boots Capital Management LLC ("Boots Capital").

In a hearing yesterday, Vice Chancellor J. Travis Laster said that Boots Capital had presented a colorable claim that Crown Castle's Board's actions contravened their fiduciary duties under Delaware law when the incumbent directors expanded the number of seats from 12 to 13 after the appointment of a new CEO on April 10.

There is threat of irreparable harm in changing the rules in the midst of a proxy contest, Vice Chancellor Laster further noted in the court hearing.

The Court granted expedited discovery and a preliminary injunction hearing to be scheduled in early May, at which point the Court will assess Boots Capital's preliminary injunction motion, which will seek potential remedies including a potential delay of the May 22 annual meeting.

Vice Chancellor Laster had previously ordered, on March 8, that Crown Castle and its Board should give prior notice to Boots Capital if they were to undertake any material corporate action that would affect the proxy contest.

Boots Capital believes the Board willfully ignored the directives of the Court, which resulted in its latest challenge.

Boots Capital supports the appointment of Steven J. Moskowitz as new Crown Castle CEO. But when adding Mr. Moskowitz as both executive and new director, the Board did not reduce the board's overall size, electing to retain director and interim CEO Anthony Melone, who had been in his role since January 16. That action expanded the number of directors to 13 in the critical, late stages of the proxy contest, thus changing the rules and affecting the fairness of director elections.

Crown Castle continues to pay Mr. Melone extra compensation as a Special Advisor to the President and CEO, in addition to its continued payment of prior CEO Jay Brown, who was awarded a six-month consulting contract upon his resignation in January.

"The misguided corporate governance at the Crown Castle Board of Directors is on naked display for shareholders to see," said Ted B. Miller, who co-founded the company and as part of his comprehensive plan to restore value at the company has nominated himself and three other highly qualified directors. "Directors are so eager to protect their jobs that they have willfully ignored corporate governance principles, and have again damaged their trust and credibility ahead of a shareholder election. We are tireless in improving Crown Castle because we know the company can be great. But it cannot be great unless this self-serving behavior is stopped immediately."

"We call on shareholders to urgently tell the Board that its actions are unacceptable. It is time for change so value creation can begin in earnest."

On February 20, 2024, Mr. Miller nominated a slate of four highly qualified director candidates who collectively would bring more than five decades of successful global tower industry experience to the Crown Castle Board. Mr. Miller and the nominees have presented a detailed and actionable plan to the Board to optimize the value of Crown Castle's fiber assets, digitize its tower portfolio, materially improve its operations and go-to-market strategy, rebuild its management team with experienced executives, repair its broken company culture, and deliver significantly improved financials to restore and drive shareholder value. In addition to this detailed operating plan, Mr. Miller and the nominees have led and shared with the Company a six-month due diligence process with 25 prospective buyers and financing sources to increase the speed and certainty of completing a sale of Crown Castle's fiber assets this year, before potential tax benefits of over $1 billion expire at the end of 2024.

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