Adams Express Company (NYSE:ADX) took some heat today from shareholders after the release of its proxy filing on September 6th. Karpus Management filed a 13D with the company containing a letter to the Board, which read:

"We have read your recently released preliminary proxy materials and are writing to you to express our dissatisfaction with the inherent shareholder disregard expressed in the materials.

In fact, while reading the preliminary materials, we found many instances where the proposed changes are argued to benefit the company's discretion in the long-run but find absolutely no compelling reason why it would be in shareholders' best interests to relinquish the key accountability measures listed in the proxy materials.

What's more, we can find no indication why it is that the Board is calling this special meeting altogether because in our belief it would have been more efficient and cost effective to have shareholders vote on these issues at the same time that they voted on the routine annual meeting matters back in March.

As an agent of the shareholders, the Board should be reminded that it is afforded the task of monitoring the activities of a Company's officers and/or managers and the overall performance of a Company so that it can enhance shareholder value. Given the circumstances before us, the Board appears to be failing in this task and also seems to forget about its duties to shareholders altogether."

The company is seeking to ammend its company charter in two ways:

• By requiring a larger 2/3 vote in order to convert the company from a closed-end mutual fund to an open-end fund. The difference is that closed-end funds are valued based on the demand for shares of their investment fund while open-end funds are valued based upon the NAV (net asset value) of the stocks that they hold. So, why is there anger over this by shareholders? Well, typically closed-end funds trade at a discount to their NAV (for a variety of reasons), so any conversion to an open-end structure would unlock this value for shareholders.
• By removing the rights of shareholders to ammend the company bylaws. Although the company notes that this technique has never been used on Adams Express, and is only used on rare occasions in the general market (when these provisions exist), it is a tool that activist shareholders could use to advance their own goals.
  

Clearly, it appears as if the company is worried about activist shareholders coming in and converting the fund from a close-end fund to an open-end fund to unlock shareholder value. This stock is worth keeping an eye on because if these provisions do not pass, that opens the door to potential activist shareholders to come in and try to unlock the stock's NAV value.

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