Boston Globe: Union fighting a boardroom battle against Newton firm

Public companies are supposed to be answerable to shareholders, but those answers aren’t always what shareholders want to hear.

Witness the battle that hotel union Unite Here is waging against Hospitality Properties Trust, one of the Newton real estate investment firms overseen by Barry and Adam Portnoy.

The fight has gone on for a few years now. By the time HPT held its annual meeting June 15, Unite Here had key allies, including Institutional Shareholder Services (a major advisory firm for investors) and New York City’s comptroller’s office.  Read more. 

Hospitality Properties Trust board abolishes annual director elections, defying years of investor votes, reports UNITE HERE

Less than two months before Hospitality Properties Trust [Nasdaq: HPT] was to begin annual director elections for its entire board of directors – for the first time in its history – the board abruptly reversed course, reinstating multi-year, staggered terms for directors.

HPT’s move comes as a slap in the face to investors who voted for five years in support of annual director elections, then voted for three years to protect this right from a Maryland state law loophole. Read more

Citing a “Troubling Lack of Responsiveness” at Hospitality Properties Trust, ISS recommends shareholders vote the Blue Card, says UNITE HERE

UNITE HERE announced today that proxy advisory firm Institutional Shareholder Services (ISS) recommends shareholders of Hospitality Properties Trust (NYSE: HPT) vote the BLUE proxy card FOR the UNITE HERE’s proposal to opt out of Maryland’s Unsolicited Takeovers Act (MUTA) and require prior shareholder approval to opt in, thereby securing shareholders’ right to annual director elections at the June 1st annual meeting.

ISS recommends PNK shareholders vote FOR six proposals protecting shareholder rights in the event of a spin-off

NEW YORK–(BUSINESS WIRE)–UNITE HERE announced today that proxy advisory firm Institutional Shareholder Services, Inc. (ISS) recommends shareholders of Pinnacle Entertainment, Inc. [NYSE: PNK] support six shareholder proposals aiming to protect shareholder rights in the event of a spin-off. The proposals address shareholder rights at any spin-off company, including management’s proposal to spin-off real estate assets into a new REIT, or Gaming and Leisure Properties, Inc.’s (NASDAQ: GLPI) alternative plan to spin-off an operating company and then acquire the remaining real estate assets. UNITE HERE submitted the package of corporate governance proposals for the May 19 Annual Meeting.

Chesapeake Shareholders can have stronger rights as the hotel cycle matures, says UNITE HERE

NEW YORK–(BUSINESS WIRE)–Shareholders of Chesapeake Lodging Trust [NYSE: CHSP] have an opportunity to improve the REIT’s corporate governance by voting for 5 shareholder proposals solicited by UNITE HERE at the May 20 Annual Meeting. The proposals seek to prevent the imposition of anti-takeover measures without shareholder approval and to position the company to take advantage of strategic alternatives as the hotel cycle matures.

UNITE HERE urges Chesapeake Lodging shareholders to vote for improved corporate governance at the May 20 Annual Meeting

NEW YORK–(BUSINESS WIRE)–Shareholders of Chesapeake Lodging Trust [NYSE: CHSP] have an opportunity to improve the REIT’s corporate governance by voting for 5 shareholder proposals solicited by UNITE HERE at the May 20 Annual Meeting. The proposals seek to prevent the imposition of anti-takeover measures without shareholder approval.

In first vote of season, RLJ shareholders endorse right to amend bylaws

May 1, Bethesda. In its first test of the 2015 shareholder season, shareholders of RLJ lodging enthusiastically endorsed granting shareholders the right to amend bylaws. UNITE HERE submitted this proposal among over a dozen proposals brought forward this year as part of a wide-ranging effort to improve corporate governance standards at publicly traded lodging REITs. According to preliminary vote totals announced at the meeting over 67% of RLJ Lodging shares voted “yes” for this proposal.

During three years of engagement with lodging REITs over issues of shareholder rights and corporate governance, UNITE HERE has seen seven lodging REITs opt out of provisions of Maryland’s Unsolicited Takeover Act (MUTA), as well as ten further company-specific improvements to shareholder rights.

In the course of this work, a new challenge emerged. Without the right to initiate bylaw amendments (a right shareholders of Maryland-incorporated REITs do not have by statute), shareholder reforms can take years to achieve, and can be unilaterally undone by boards. At Hospitality Properties Trust (HPT), for example, shareholders had to vote in support of board declassification six consecutive years before it was implemented.

The ability to efficiently make lasting improvements to corporate governance is particularly important in a cyclical industry.   At the peak of the last hotel cycle, many REITs were taken private at substantial premiums; those who weren’t lost as much as 90% of their share value, and have in general not recovered to their previous peak prices.   The U.S. hotel industry is in its sixth consecutive year of improving fundamentals.

The right to amend bylaws is more common among other types of listed lodging companies: Marriott, Hyatt, Hilton, Morgans Hotel Group, La Quinta and Wyndham Worldwide (organized as c-corps) all allow shareholders to initiate bylaw amendments with voting thresholds ranging between 50+1% to 80% of shares outstanding.

Earlier this year, Sunstone Hotel Investors established the right of shareholders to make binding bylaw amendments. We hope that the right to amend bylaws – the right to make efficient and lasting improvements to corporate governance – becomes an industry standard at lodging REITs, much as opting out of the Maryland Unsolicited Takeovers Act has become. Shareholders at several REITs, including Diamondrock Hotels & Resorts (DRH) and Host Hotels & Resorts (HST), will have the opportunity to vote on this proposal over the next several weeks.

Is Hospitality Properties Trust Committed to Annual Director Elections?

After years of shareholder pressure to adopt annual director elections, Hospitality Properties Trust (HPT) is now seeking shareholder approval of a policy that would allow HPT to opt into Maryland’s Unsolicited Takeover Act (MUTA), permitting it to re-classify for up to 18 months before shareholders can vote.