CommonWealth REIT said an arbitration panel denied a request by its largest shareholders to set an expedited special investor meeting to elect a new board, while finding that some of the company’s bylaws were excessive.
The panel scheduled a hearing for further consideration of the issues to begin on Oct. 7, the Newton, Massachusetts-based real estate investment trust said in a statement today.
Corvex Management LP and Related Cos., which began buying shares earlier this year and own about 9.6 percent of the company, sought to void a bylaw that CommonWealth adopted in March requiring that holders who tried to remove board trustees hold at least 3 percent of the stock for at least three years. The companies began seeking votes in April to oust the board regardless, and said they gained support from holders of more than 70 percent of the shares.
Corvex and Related sought an order declaring that its consent solicitation is proper and that CommonWealth should convene a special meeting of shareholders, which was denied by the arbitration panel, the landlord said.
The panel found that the changed bylaw is “unreasonably difficult to achieve,” CommonWealth said. Previous bylaws requiring that holders own at least $2,000 of stock for at least one year remain in effect pending a further order, the REIT said.
“We are gratified by the decision and look forward to October’s evidentiary hearing,” Keith Meister, the head of Corvex, and Jeff Blau, chief executive officer of Related, said in a statement today.
Corvex and Related claim the company’s management structure has led to conflicts and years of underperformance.
The investors have argued that the ownership of an external management firm, REIT Management & Research LLC, by company President Adam Portnoy and his father Barry, a company founder, has led to conflicts of interest and mismanagement at CommonWealth. Both Portnoys sit on CommonWealth’s five-member board and are owners of the external management company.