CommonWealth REIT (NYSE:CWH) today announced that its Board of Trustees has, as a result of its continued shareholder engagement activities, made several significant changes to its governance, as follows:
- The Board amended CWH’s Bylaws so that shareholders who own a minimum of $2,000 worth of common shares for at least one year may make Trustee nominations and shareholder proposals at CWH's June 2014 annual meeting. In addition, the Board streamlined the so-called “informational requirements” for making Trustee nominations and shareholder proposals to facilitate shareholder participation.
- The Board has endorsed, and will submit to a shareholder vote at the June 2014 annual meeting, an amendment to CWH’s Declaration of Trust to adopt a “plurality voting standard” in contested Trustee elections. The current applicable Declaration of Trust provision, which has been in effect since CWH’s formation in 1986, requires a majority of shares outstanding for all contested Trustee elections.
- The Board has accelerated its prior commitment to de-stagger the CWH Board by presenting a proposal to shareholders to amend CWH’s Declaration of Trust at the June 2014 meeting, even prior to resolution of its disputes with Corvex Management LP and Related Fund Management, LLC (“Corvex/Related”). Because this change may be adopted while the Corvex/Related hostile takeover attempts continue, the Board will recommend to shareholders that the “de-staggering” of the Board be phased-in over a three year period, starting in 2014. In other words, assuming shareholders adopt this change at the 2014 annual meeting, one-third of the Trustees will be elected in 2014, two-thirds of the Trustees will be elected in 2015, and the entire Board will be subject to annual elections starting in 2016. To facilitate this change, CWH has opted-out of provisions of the Maryland Unsolicited Takeover Act, or MUTA, which require a classified or staggered Board.
- In response to shareholder suggestions, effective immediately, the Board has eliminated the so-called “dead hand” provisions of CWH’s 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.
Also, as announced earlier this year, the Nominating and Governance Committee of the Board (which is comprised solely of Independent Trustees) continues to work with the executive search firm Korn / Ferry International to identify potential Independent Trustee candidates to increase the percentage of Independent Trustees on the CWH Board. The Nominating and Governance Committee has interviewed several well qualified candidates that have been identified by Korn / Ferry International during the last few months, and it expects to soon announce the appointment of additional Independent Trustees to the Board.