Corvex Management wants the new leadership of ARCP to commit to having a board with truly independent directors
Corvex Management, the activist hedge fund headed by Keith Meister boosted its stake in American Realty Capital Properties based on its latest 13D filing with the Securities and Exchange Commission (SEC).
Based on the filing, the activist hedge fund now owns 70,644,429 million shares or 7.8% stake in American Realty Properties. Corvex Management initially acquired 7.1% stake in the real estate investment trust (REIT) last December.
GrizzlyRock Value Partners was up 34.54% net for 2021. The fund marked 10 years since its inception with a 198% net return, resulting in an annual return of 11.5%. GrizzlyRock enjoyed 14.8% long alpha against the S&P 500 and 26.9% against the Russell 2000. Q4 2021 hedge fund letters, conferences and more The fund's short Read More
Corvex Management indicated in the filing that it had multiple discussions with the board of directors and advisors of American Realty Capital Properties regarding its demand for a board representation.
The activist hedge fund aims to help the board face critical decisions in the near-term particularly in the search for a new chairman and a new CEO. However, the board of directors of American Realty Capital Properties refused to commit to add a board seat for Corvex Management.
Corvex disappointed with ARCP’s board
Corvex Management attached a letter addressed to the board of directors of American Realty Capital Properties expressing its disappointment for rejecting its request for a board seat.
The activist hedge said it was not surprised by the decision because it is the “same board whose history of poor decision making failed to prevent all of the severely damaging actions of the previous management.”
Corvex Management pointed out its belief that a shareholder representation is very important for American Realty Capital Properties given the enormity of change that occurred in the company and to make sure that it will not repeat what happened.
“It is rare that a company has the golden opportunity to completely rebuild itself, and decisions regarding its structure, governance and leadership are ones that shareholders will have to live with permanently and must be weighed carefully,” wrote Corvex Management.
Corvex proposed ground principles for new leadership
In addition, Corvex Management also released an open letter addressed directly to potential candidates for chairman and CEO of American Realty Capital Properties.
In the letter, the activist hedge fund expressed its expectations, proposed ground principles, and the next steps that will be taken by the new leadership of the company.
Corvex Management believes that any candidate for chairman or CEO should be committed to produce a fresh opportunity for value creation by implementing the following principles:
- Remove any remaining ties with past affiliated entities and leadership
- Commit to having a board with truly independent directors including elimination if the current board members from all positions with the company
- Implement best-in-class corporate governance consistent with the standards of ISS and Glass Lewis
- Immediately stop windfall payments to board members William Stanley and Thomas Andruskevich, which fly in the face of modern corporate governance, cause a horrible misalignment of incentives with shareholders and create an environment ripe for quid pro relationships with incoming leadership
- Hold the 2015 annual meeting as promptly as possible to give shareholders the opportunity to vote for the new board