After a formal process that lasted about a month, three nominees of a dissident group are poised to be elected as trustees Granite REIT, an entity with a market cap of $2.36 billion,
The official appointment will occur on Thursday when Granite holds its annual meeting in Toronto. At that session, Peter Aghar, Samir Manji and Al Mawani will be named as the new directors.
The three — who were nominated by the dissident group — Connecticut-based FrontFour Capital and Vancouver-based Sandpiper Group — will replace three incumbents: Wesley Voorheis, (who was also the chairman), Peter Dey (the vice-chairman) and Brydon Cruise. Wednesday the three advised Granite REIT that they “will not be standing for re-election.”
They made that decision because they didn’t receive sufficient support when the proxies representing the views of shareholders were returned. The three, but particularly Voorheis and Dey, had been singled out by the dissidents.
“At Granite they orchestrated the most lucrative Board compensation package in the entire REIT space for their own benefit, putting their interests ahead of the actual owners of the REIT,” the dissidents said. They added that in their roles as trustees and directors “they have collected over $4 million in board fees since 2011.”
The two leading proxy advisory firms, ISS and Glass Lewis also recommended that Granite’s unit-holders support the three dissident nominees and not Voorheis, Dey or Cruise.
The dissidents made a case for change because of Granite’s “inaction and a failure to achieve (its) long term strategic objectives of balance sheet utilization, tenant diversification, and expense reduction.” Accordingly they made the case that Granite hadn’t achieved “its full unit price potential and maximum value.”
The dissidents presented “a five step action plan” that included, adding directors “with core real estate and principal expertise;” cutting general and administrative expenses and board compensation by $10 million by the end of 2017; increasing leverage; and pursuing consolidation opportunities in its three markets: Canada, the U.S. and Europe.
The units closed at $50.28 on Wednesday, down $1.23. Over the past 12 months the units have traded in the range $38.09 – $52.32