More Anti-REIT Takeover Moves

Continuing its efforts to stave off hostile moves to oust its board by New York investors, Newton, Mass., REIT Commonwealth, made changes to make it easier for shareholders to nominate board candidates.

The publically traded REIT also removed part of its anti-takeover provisions, and said it would eliminate them after the current shareholder solicitation by Corvex Management LP and Related Cos. had ended.

Investment firm Corvex and real estate developer Related Cos. have received permission in an arbitration decision to solicit Commonwealth shareholders to vote out the company’s current board. 

The investors have charged that the company makes investments geared to generate management fees for the Commonwealth-owned firm that manages the REIT's investments, Reit Management and Research LLC, rather than increasing the parent company’s value to shareholders. 

Last week, Commonwealth, which owns properties nationwide, reworked the management agreement between the parent and Reit Management.  For details and background, see ‘How to (Try to) Prevent a REIT Takeover,” on QuidnuncRE, HERE.

This morning, it announced more moves:

  • Commonwealth amended its bylaws easing restrictions on ownership for board nominations and shareholder proposals, as well as “streamlined” informational requirements, for next June’s annual meeting.
  • Its board announced backing for plurality rather than majority tallies for elections, which will be submitted to a shareholder vote at the June 2014 annual meeting.
  • It has accelerated a “prior commitment to de-stagger the CWH Board” in announcing that it will subject the new proposal to a vote at the June annual meeting.  If passed, it would have the entire board elected starting in 2016, after a three-year phase-in it says is needed because of the continuing hostile takeover moves.

The Commonwealth announcement also says that

[i]n response to shareholder suggestions, effective immediately, the Board has eliminated the so-called ‘dead hand’ provisions of [Commonwealth] shareholders’ rights plan (the ‘poison pill’), which prevents dismantling of the pill by a successor Board. As announced earlier this year, the Board intends to accelerate the expiration of the “poison pill,” which currently expires on October 17, 2014, to a date soon after the resolution of the disputes with Corvex/Related.

The company also continues to recruit independent directors. Specifically, it has responded to the outside calls for change—documented on the investor-sponsored website, ShareholdersforCommonwealth.com–by seeking more independent board members via its nominating and governance committee. 

The committee, the REIT says, consists solely of independent trustees, as its board members are termed under the REIT’s Maryland charter. 

The committee has enlisted executive search firm Korn/Ferry International to identify candidates to increase the percentage of independent trustees on the board. Those trustees issued the following statement in  today’s press release:

In response to shareholder suggestions, the Board continues to move forward to effect governance changes. The changes announced today provide shareholders with a clear path to effect any desired change at CommonWealth through customary channels, and without the disruptive and potentially value destructive impacts of the hostile takeover advocated by Corvex/Related.

Here is today’s Commonwealth press release on the company’s website.

 

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