Crown Castle founder-turned-activist handed strong defeat at shareholder meeting

• An activist effort by Crown Castle co-founder Ted Miller to win four director seats, including for himself and his son-in-law, got support from no more than 10% of voting shareholders in a preliminary tally, according to people familiar with the matter.
• Crown Castle staved off a campaign by Elliott Management in December through a cooperation agreement and leadership change, prompting Miller to begin his own campaign and file a Delaware lawsuit.
• Miller had previously attempted to work alongside or with the support of Elliott after the $71 billion hedge fund launched its second campaign in 2023, CNBC previously reported.

Crown Castle founder Ted Miller's bid to secure four board seats at the telecommunications giant was resoundingly rejected by shareholders on Wednesday, ending a closely watched, litigious process that pitted Miller against activist juggernaut Elliott.

Miller had put forward four candidates, including himself, for election. He had left Crown Castle more than 20 years ago, but argued that his candidates, which included his son-in-law, possessed strategic insight that Crown Castle's 12 incumbent directors, including Elliott partner Jason Genrich, lacked.

Shareholders rejected that argument, as well as his claims of poor governance. All 12 of the company's nominees, including Genrich, were elected to the $44 billion company's board.

The preliminary vote count showed that none of Miller's candidates garnered more than 10% of the shares voted, according to people familiar with the matter. The count is preliminary, and while the vast majority of shares voted have come in, a small number of votes remain to be counted, the people said.

Lawrence Elbaum, co-head of Vinson & Elkins' shareholder activism defense practice, told CNBC that Miller's campaign faced steep odds going up against a company that had already begun making meaningful changes at Elliott's urging.

"This campaign was over before it began," Elbaum said. "Trying to change up a board and business very recently repositioned — and then blessed — by Elliott will always be a losing proposition."

Miller and his investment firm Boots Capital took particular aim at a standstill and cooperation agreement between the company and Elliott, which was signed in December and resulted in Genrich and one other director joining the Crown Castle board.

Boots Capital sued Elliott and the company in Delaware court in February to invalidate the agreement, and saw early success. Such cooperation and standstill agreements are common practice when a company is seeking to placate an activist, but Boots described it as unsound governance and "hostility to shareholders."

Boots' effort gained some traction. Influential proxy advisor Glass Lewis said it would support Miller's campaign. The other major proxy advisor, ISS, sided with management's nominees.

Elliott's December cooperation agreement coincided with the departure of Crown Castle's prior CEO. It was the second campaign the activist had run at the company. A 2020 attempt ended without action.

The activist wanted Crown Castle to initiate a strategic review process for its underperforming fiber division, among other changes. The company announced that strategic review in partnership with outside advisors alongside the settlement with Elliott; it also began a CEO search process that concluded with the appointment of Steven Moskowitz in April.

Miller's efforts did have some impact. Boots' litigation prompted changes to the cooperation agreement between Elliott and the company, including that the activist would vote its shares proportionally to how other shareholders voted. That provision would not have altered the percentage of votes that Boots received, but the quantity.

"We thank our shareholders for the trust they have placed in our highly qualified board members as they oversee the creation of a stronger, more valuable Crown Castle," the company said in a statement. A representative for Miller did not immediately respond to CNBC's request for comment.