Last summer both ISS and Glass Lewis had supported the Corvex and Related position in the earlier proxy consent solicitation that was voted on in June over the same issue.
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Even though Corvex, led by Keith Meister and Related Management, led by the CEO of The Related Companies Jeff Blau, prevailed then by a 70% voting majority this was later disallowed in November by an arbitration panel. The rejection was only on procedural grounds, however with a new vote being mandated by the panel and which is now taking place.
Yesterday Glass Lewis were equally as critical as ISS in examining the rearguard action being fought by the Portnoys to retain their current board, stating, “.…CommonWealth’s unaffected returns have been objectively poor by any reasonable methodology, the fees paid to RMR have been both exorbitant and disproportionate to the middling gains realized by investors and the board has more than once attempted to impose sharply regressive governance policies on CommonWealth’s independent owners.”In addition, Glass Lewis assessed the risks inherent to a wholesale removal of the board as being outweighed by the likely benefits, saying as follows, “…we consider the possible valuation and governance upside associated with a reconstitution of the board and subsequent elimination of the external management agreement vastly outweighs uncertainties. By extension, we continue to believe shareholders should support the current arbitration-enforced solicitation and effect the board change proposed and supported nearly a full year ago.”That is fairly unequivocal one would have to think and, as you would expect, Keith Meister and Jeff Blau were quick to put out their own press release with the Glass Lewis conclusions, and stipulating their own viewpoint…
“The two leading independent proxy advisory firms have now recommended the removal of all CommonWealth trustees, further validating our consent solicitation. These endorsements send a clear message – shareholders must put a stop to the nearly three decades of abysmal governance practices and end the value destruction at CommonWealth. We urge fellow shareholders to follow the strong recommendations from both Glass Lewis and Institutional Shareholder Services (ISS) and sign, date and return their GOLD consent card today.”
If Corvex and Related should prevail they have recruited billionaire real estate investor Sam Zell to their slate, as their proposed Chairman for the trust, and his partner at Equity Investments David Helfand who would become CEO. That is a strong team, and it is possible this time the Portnoys have been both out-gunned and out-manoeuvred. There is no shame in that and the shareholder vote itself will now tell us the conclusion to this story.