Posted: June 6th, 2018
DE-Tenants.org and the International Union of Operating Engineers (IUOE) recently called on shareholders of Douglas Emmett, Inc. (NYSE: DEI), a Los Angeles County-based Real Estate Investment Trust, to vote AGAINST the nomination of “independent” board member Thomas O’Hern, due to a notable undisclosed conflict of interest.
The past twelve Proxy Statements filed by Douglas Emmett Inc. have failed to disclose that Mr. O’Hern’s employer, The Macerich Company (NYSE: MAC), is a major tenant of Douglas Emmett, with a multi-million dollar lease. Mr. O’Hern, Senior Executive Vice President, Chief Financial Officer and Treasurer of Macerich, is also Chair of Douglas Emmett’s Audit Committee.
Further complicating matters, in March 2017, Macerich sued Douglas Emmett in Los Angeles County in a dispute over a five-year lease extension. The lawsuit was settled and dismissed under undisclosed terms in April 2018.
The IUOE maintained that Douglas Emmett shareholders have been deprived of relevant information about the full nature of the relationship between Douglas Emmett and Macerich before they have cast their votes to re-elect Mr. O’Hern as a director and as Audit Committee Chair. The shareholders heard the IUOE’s argument and many refused to support the re-election of O’Hern.
On May 31, 2018, at Douglas Emmett’s annual shareholder meeting, a sizeable number of shareholders withheld their support from O’Hern. Of the 156 million share votes cast, 108 million were cast in favor of O’Hern while 47 million votes were withheld. While O’Hern was re-elected to serve as a director until 2019, the sizable number of withheld votes—representing nearly 31%--made him the most unpopular corporate principal by a significant margin. The vote sends a strong message to Douglas Emmett Inc. that shareholders are dissatisfied with the company’s governance.
|Nominee||For||Withheld||Withheld as % of Cast Votes|
|Dan A. Emmett||147,766,895||8,717,132||5.57%|
|Jordan L. Kaplan||154,832,222||1,651,805||1.06%|
|Kenneth M. Panzer||148,057,454||8,426,573||5.38%|
|Christopher H. Anderson||154,646,428||1,837,599||1.17%|
|Leslie E. Bider||152,055,819||4,428,208||2.83%|
|Dr. David T. Feinberg||154,888,796||1,595,231||1.02%|
|Virginia A. McFerran||125,099,624||31,384,403||20.06%|
|Thomas E. O'Hern||108,675,613||47,808,414||30.55%|
|William E. Simon, Jr.||118,293,901||38,190,126||24.41%|
The 47 million votes withheld from O’Hern in 2018 marked a significant increase over the 29 million withheld in 2017, signaling an increasing lack of confidence in the Chair of Douglas Emmett’s Audit Committee.
The 47 million votes withheld from O’Hern in 2018 may not represent the full lack of confidence among outside shareholders. Douglas Emmett’s corporate principals including executives and directors own nearly 31 million of Douglas Emmett’s outstanding shares. Assuming all 31 million of the principal-controlled shares voted for O’Hern, they would account for a significant percentage of his 108 million favorable share votes. Removing the 31 million principal-controlled shares would significantly increase O’Hern’s withheld votes from 31% to 38% among outside shareholders including the likes of institutional shareholders.
Tagged: Tenant Issues - Lawsuits