Hunting for white truffles in SEC filings

One of the most common SEC filings that I run across is an 8-K disclosing that either a director or executive resigned. Invariably, the filing uses language that says there were “no disputes or disagreements” although that doesn’t always meet my sniff test, especially when it’s a sudden resignation. Still, unless you have some unique insider knowledge, it’s hard to know the real reason behind the sudden resignation.

But every now and then, you come across an 8-K like the one filed by Werner Enterprises (WERN) last Friday after markets closed. Not only does the company not use the oft-repeated “no disagreements” language, it actually details the disagreement and includes the letter that now-former director Vikram Mansharamani sent to the board.

If you believe the board’s version of events, Mansharamani asked to be considered for another three-year board seat after his term was set to expire on May 24, 2024, but a majority of the board’s Nominating Committee said no. If you believe Mansharamani’s version of events, he had “ongoing material disagreements” with the board, including about “related party transactions”.

As an outsider looking in, it’s hard to know which side to believe, although back in footnoted’s early days, I flagged Werner for needing an Excel spreadsheet to keep track of all of its related-party transactions.

What you do need to know is that resignation letters that cite specific disagreements are about as rare as white truffles. According to my friends at Verity, there have only been 60 of these over the past five years. As a result, it’s worth paying attention to these, even if it’s hard to know whose version of events is more accurate.