Fermi, management rights disputes flare up again the day before earnings release… the board states "the special shareholders' meeting was not convened"

Fermi ($FRMI) once again faces management control disputes and board restructuring issues on the eve of releasing its earnings. The largest shareholder, Toby Nugabauer, is pushing for an extraordinary shareholder meeting and a change in the board, but the company counters that no valid temporary shareholder meeting has yet been held, and tensions are escalating.

Fermi announced it will release its Q1 2026 earnings at 7 a.m. on the 14th (Eastern Time) and hold a conference call at 9 a.m. the same morning. Relevant materials will be publicly available in advance on the investor relations (IR) website, with online streaming and replay services provided. The market seems to be more focused on the management control dispute and the future of the “Matador Project” than on the earnings figures themselves.

Nugabauer’s side pushes for an extraordinary shareholder meeting and board change

The core of this conflict is co-founder and former CEO Toby Nugabauer. He claims that himself and related parties hold about 40% of the shares and has submitted preliminary proxy materials including a proposal for an extraordinary shareholder meeting on May 29 and the appointment of five director candidates. Nugabauer’s camp advocates for a “dual-track” strategic review, including mergers and acquisitions (M&A), to maximize the value of the Matador Project.

He presents several supporting points. He explains that agreements such as the 99-year land lease with the Texas Tech University System, which secures about 2 gigawatts (GW) of power, obtaining approximately 6 GW of clean air permits, around $1 billion in financing including Mitsubishi UFJ Financial Group (MUFG)’s $500 million, licensing procedures with the U.S. Nuclear Regulatory Commission (NRC), collaborations with Modern Construction, and long-lead equipment orders are all underway. In Korean won, $1 billion is roughly 14.98k trillion KRW, and $500 million is about 749.2 billion KRW.

Board opposes management restructuring

In contrast, Fermi’s board strongly opposes, stating that Nugabauer attempted to regain control of the company after being dismissed. The company emphasizes that the board, acting under fiduciary duty, removed him from the CEO position and terminated his contract for “just cause.” It also clarifies that the claim that a temporary shareholder meeting has already been convened is false, and is taking steps to ensure procedural legitimacy at the board level.

During this process, the board has also been strengthened. Fermi states that following the conclusion of the director appointment process on May 4, Larry Kellerman was appointed as an external director. Kellerman has over 40 years of experience in the power industry and is considered to have expertise spanning regulated utility operations and technology-driven business innovation. However, he was also recommended based on Nugabauer’s designated rights. He states he will represent all shareholders.

Larry Kellerman is also Fermi’s Chief Power Officer. According to the company, he led the design of a 17 GW data center power infrastructure in the Amarillo area of Texas. His experience at Goldman Sachs, El Paso, iSquare Capital, among others, suggests that this appointment goes beyond a simple board addition and is viewed as a review of the execution of the Matador Project.

The financial side has also been reorganized. Fermi announced the appointment of Rob L. Massen II as interim Chief Financial Officer (CFO) on April 30. With over 20 years of experience in finance at publicly listed companies, the company states this personnel change aims to attract talent, strengthen governance, and fully advance the Matador Project.

Business strategy and additional disputes

Earlier, after releasing “Fermi 2.0” on April 22, Fermi provided an update on its business, stating it has received positive feedback from potential tenants, the Texas Tech University System, suppliers, contractors, and financing partners. Meanwhile, regarding Nugabauer’s demand to sell the company immediately after being dismissed on April 17, the board clearly stated that a sale is currently not in the best interest of shareholders. Instead, they are considering multiple options including executing Fermi 2.0, strategic investments, joint ventures, and other transactions.

Another point of contention involves a real estate investment trust (REIT) request. According to company information, Nugabauer and his family believe that if the company chooses to adopt REIT status in 2025 or 2026, solutions such as donating shares to comply with the “5/50 rule” might be considered. This relates to regulations designed to prevent excessive minority shareholder holdings in REITs, and it may surface again in future governance and capital policy discussions.

From current trends, Fermi ($FRMI) has moved beyond just quarterly performance, entering a stage where “management control,” “Matador Project,” and “financing” are intertwined. The upcoming Q1 earnings release and conference call are likely to be evaluated by the market more on the blueprints proposed by the board and the largest shareholder than on the numbers themselves. Whether the company will stick to an independent growth strategy or shift toward value realization through external deals remains highly watched.

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