Billionaire Sam Zell, chairman of Equity Group Investments and his long-time associate David Helfand joined Corvex Management and Related Companies fight to change the leadership of CommonWealth REIT (NYSE:CWH), a real estate investment trust company.
Sam Zell agreed to serve as chairman
According to Forbes, Sam Zell agreed to serve as chairman and Helfand as CEO of CommonWealth REIT (NYSE:CWH) if Corvex and Related succeed in removing the existing board of the company.
Sam Zell emphasized his successful record in the real estate industry and aligning with shareholders in a statement announcing his decision to join Corvex and Related’s fight for governance changes at CommonWealth REIT (NYSE:CWH).
“One of our core operating principals is the alignment of interests between company leadership and shareholders. We are concerned about any attempts to preclude shareholder rights, and our companies are free of such impediments,” said Sam Zell .
Keith Meister and Jeff Blau, head of Corvex and Related, respectively emphasized, “We believe that once CommonWealth shareholders are given a choice between the Portnoys and their record of value destruction and Sam Zell’s record of value creation for shareholders, the choice is clear.”
Sam Zell and Helfand do not own any shares of CommonWealth REIT (NYSE:CWH) but were given an option to acquire as many as 4 million shares from the stockholdings in the company held by Corvex and Related if shareholders approve their nomination.
Corvex Management and Related Companies jointly control around 9.6% of the outstanding shares of CommonWealth REIT (NYSE:CWH).
Corvex and Related demand real governance changes
Corvex and Related are demanding real governance changes to the board of trustees of the real estate investment trust company. The investors started their activist fight on CommonWealth REIT (NYSE:CWH) early last year.
Corvex and Related submitted a consent solicitation calling for a shareholders’ vote on their proposal to remove the members of the board of trustees within 30 days of the conditional record date (Feb. 18) set by CommonWealth REIT (NYSE:CWH). Last June, the shareholders of the company that collectively owns over 70 percent of the outstanding shares of the company support the proposal to remove its entire board of trustees.
Adam and Barry Portnoy, a father and son team, control the operations of CommonWealth REIT (NYSE:CWH) through RMR, their external management company. The Portnoys are both members of the board of trustees of the real estate investment trust company.
Corvex and Related argued that the Portnoys through RMR managed CommonWealth REIT (NYSE:CWH) for their own benefit instead of ensuring the interest of the shareholders.
On the other hand, Adam Portnoy called the activist investors opportunists for attempting to take advantage of the weakened situation of the real estate investment trust company during an interview with Forbes last May. He said, “I think they’re using the guise of corporate governance to take on a company in a tough space going through a transition.”