CLEVELAND, Dec. 29, 2014 /PRNewswire/ -- Associated
Estates Realty Corporation (NYSE, NASDAQ: AEC) today made several
announcements, including changes to the composition of the Board of
Directors, the initiation of a business review and significant
enhancements to the Company's corporate governance profile.
Appointment of Doug Crocker to
the Board of Directors
Douglas Crocker II, Chairman of
Pearlmark Multifamily Partners and the former Vice Chairman and
Chief Executive Officer of Equity Residential (NYSE: EQR), has been
appointed to the Company's Board as an independent director,
effective immediately. The appointment of Mr. Crocker follows the
decision by Mark L. Milstein to
retire from the Board.
Mr. Crocker will serve as Chairman of the Finance and Planning
Committee of the Associated Estates Board, which, in consultation
with the Company's financial advisor, will conduct a thorough
review of the Company's assets, operations and business strategy.
Mr. Crocker will also be included on the Company's slate of
directors to stand for election at the 2015 Annual Meeting of
Shareholders.
Jeffrey I. Friedman, Chairman and
Chief Executive Officer, said, "Doug is a well-respected and
trusted leader in the apartment business and REIT space, and we are
pleased to welcome him to the Associated Estates Board of
Directors. His distinguished track record of success in our
industry makes him ideally suited to provide our shareholders,
Board and management with valuable insight and new perspectives as
we initiate a review of our business. The Board is looking forward
to working with Doug as we further enhance the Company's
competitive position and shareholder value. Doug's appointment
demonstrates our commitment to a stronger, more independent and
experienced Board that is focused on advancing the interests of all
shareholders." Friedman continued, "On behalf of the entire Board,
I want to thank Mark Milstein for
agreeing to step aside and make room for Doug Crocker to immediately join the
Board. We all appreciate his years of service and his
life-long commitment to Associated Estates."
"I am delighted and honored to join Associated Estates at such
an important time in the Company's history," said Mr. Crocker.
"Today, Associated Estates is poised for significant value
creation, and I look forward to working together with Jeff, the
Finance and Planning Committee and the other members of the Board
and management to capitalize upon and unlock the value inherent in
the Company's income producing properties and its ongoing
development projects."
Associated Estates Initiates Thorough Business Review
The Company has engaged Citigroup Global Markets Inc.
as a financial advisor to assist the Board in conducting a thorough
review of the Company's business. Mr. Crocker, in his
capacity as Chairman of the Finance and Planning Committee of the
Board, together with the other committee members, has been tasked
with overseeing this review of the Company's strategy, portfolio
and business.
"Our Board is committed to maximizing shareholder value, and
will undertake a thorough review of our opportunities to accomplish
that objective," commented Jeff
Friedman. "While the Board is not opposed to a
potential sale of the Company, we are opposed to selling the
Company for less than it's worth. Enlisting Doug Crocker, an accomplished executive with
extensive industry experience, to lead our Finance and Planning
Committee and their efforts, and engaging Citi to provide
additional analysis and advice, will ensure our review is both
impartial and exhaustive," Friedman continued.
"As we begin our review with the help of our financial advisors,
our intention is to analyze the Company's strategy, assets and
opportunities to optimize shareholder value. We will continue to
develop and refine our business plan with a singular focus on
maximizing value for all Associated Estates shareholders, and I am
confident we will achieve our objective," concluded Mr.
Crocker.
Board Approves Corporate Governance Enhancements
The Associated Estates Board of Directors has approved the
following actions to further enhance the Company's governance
standards:
- Seeking shareholder approval at the 2015 Annual Meeting of
Shareholders to eliminate the Company's 4.0% share ownership limit.
The Company has regularly waived this limit to allow institutional
shareholders to acquire shares in excess of the limit, but such
waiver will no longer be needed if this proposed change is approved
by shareholders;
- Redeeming the Company's shareholder rights plan; and
- Eliminating the Executive Committee of the Board, which the
Company has used in the past to declare dividends in between
regular meetings of the Board of directors.
"In taking these actions, we want to send the clear message to
our shareholders and the broader investor community that Associated
Estates remains committed to the highest standards of corporate
governance," said James Schoff,
Chairman of the Nominating and Corporate Governance Committee.
"Today's additional governance enhancements reinforce that
commitment. At the same time, the Board is being responsive to
feedback we've received from our shareholders, proxy advisory firms
and REIT industry best practices. The Company will continue to
review additional corporate governance enhancements, including
further changes to the composition of the Board of Directors, as
part of this commitment. We look forward to bringing on to the
Board two additional, highly-respected independent directors in
2015. To that end, Associated Estates has retained Ferguson
Partners to assist with this initiative," Mr. Schoff added.
These latest actions by the Board follow the numerous
enhancements the Company has implemented in recent years to elevate
its corporate governance policies and compensation practices,
including:
- Added a "clawback" provision to the equity based award
plan;
- Added a "double trigger" change-in-control feature to the
equity based award plan;
- Eliminated the evergreen provision and the tax gross up
provision in the CEO's contract;
- Adopted robust minimum share ownership requirements for
Directors and Section 16 officers;
- Modified the Directors' deferred compensation plan to
facilitate payment of deferred compensation (including cash) and
related earnings in shares upon distribution;
- Reduced the cash retainer portion and increased the equity
based component of Director's compensation; and
- Increased the percentage of independent directors to 86% (100%
of non-employee directors), each of whom is elected annually.
Recent Discussions with Land and Buildings
The independent directors and management continue to seek to
avoid the distraction and expense of a proxy contest with
Jonathan Litt at Land and
Buildings. Representatives of the Company and the Board have
had several conversations and in person meetings with Jonathan Litt and Scot
Sellers, one of Land and Buildings' director nominees.
With the goal of reaching a settlement that serves the best
interests of all shareholders, the Company indicated its
willingness to have two of Land and Buildings' director nominees
join the Board and participate in the business review.
Regrettably, Mr. Litt and Mr. Sellers have refused to work
collaboratively to reach any settlement, unless they and their
nominees are given control of the Company's entire Board.
"Land and Buildings' unwillingness to reach a settlement that
would see two of its nominees join the Board and participate in the
business review demonstrates that Land and Buildings has no
interest in working collaboratively with the Board to advance the
interests of all other shareholders," commented Mr. Schoff,
Chairman of the Nominating and Corporate Governance
Committee. "Instead, Land and Buildings appears to be
predisposed to imposing its will on the Company in seeking to take
total control of the Board of Directors through threats or a proxy
contest." Mr. Schoff added, "It was our preference to bring
Doug Crocker alongside two of Mr.
Litt's nominees onto the Board to benefit all shareholders."
Douglas Crocker II
Douglas Crocker II is Chairman of
Pearlmark Multifamily Partners. Previously, Mr. Crocker was
Vice Chairman of Equity Residential ("EQR"), and served as its CEO
from 1992 to 2003. Prior to EQR, he was a Managing Director
of real estate finance at Prudential Securities, CEO of McKinley
Financial Group and President of American Invesco. A graduate
of Harvard College, Mr. Crocker currently serves as a
director/trustee for the following companies: Acadia Realty Trust
(NYSE: AKR), Ventas, Inc. (NYSE: VTR), and CYS Investments, Inc.
(NYSE: CYS). In addition, Mr. Crocker is a current member of
the following organizations: the Board of Directors of the National
Multifamily Housing Council; the Urban Land Institute; the National
Apartment Association Education University; and the Real Estate
Advisory Committee at DePaul University.
Mr. Crocker has previously served as Chairman of the Board of
Directors of the National Multifamily Housing Council; Second Vice
Chairman and member of the Board of Governors of the National
Association of Real Estate Investment Trusts (NAREIT); Chairman of
the Multifamily Gold Council and member of the Board of Trustees of
the Urban Land Institute; board member of the Real Estate
Roundtable; Vice Chairman of the National Realty Committee; member
of the Real Estate Advisory Committee at the Wharton Business
School; member of the Real Estate Advisory Committee for the Center
for Urban Land Economics Research at the University of Wisconsin-Madison; member of the
Policy Advisory Board for the Fisher Center for Real Estate &
Urban Economics at the University of
California-Berkley; and Trustee of DePaul University.
In addition, Mr. Crocker previously served as a director/trustee of
the following public companies: Post Properties, Inc. (NYSE: PPS),
REIS Inc. (NASDAQ: REIS), and Reckson Associates Realty
Corporation.
About Associated Estates
Associated Estates is a real estate investment trust and a
member of the S&P 600, Russell 2000, and MSCI US REIT Indices.
The Company is headquartered in Richmond
Heights, Ohio. Associated Estates' portfolio consists
of 57 apartment communities containing 15,206 units located in 10
states, which include three committed acquisitions with 1,026 units
that are being managed during lease-up and five apartment
communities with 1,446 units in various stages of active
development. For more information about the Company, please visit
its website at AssociatedEstates.com.
Safe Harbor Statement
This news release contains forward-looking statements within the
meaning of the federal securities laws. These forward-looking
statements are intended to be covered by the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. These
statements are based on certain assumptions, as well as current
expectations, estimates, projections, judgments and knowledge of
management, all of which are subject to risks, trends and
uncertainties that could cause actual results to vary from those
projected. Factors which may cause the Company's actual results or
performance to differ materially from those contemplated by
forward-looking statements include, without limitation, those
described under the heading "Risk Factors" in the Company's Annual
Report on Form 10-K and in other filings with the U.S.
Securities and Exchange Commission (the "SEC"), and the
following: changes in the economic climate in the markets in which
the Company owns and manages properties, including interest rates,
the overall level of economic activity, the availability of
consumer credit and mortgage financing, unemployment rates and
other factors; risks of a lessening of demand for the multifamily
units owned by the Company; competition from other available
multifamily units, single family units available for rental or
purchase, and changes in market rental rates; the failure of
development projects or redevelopment activities to achieve
expected results due to, among other causes, construction and
contracting risks, unanticipated increases in materials and/or
labor, and delays in project completion and/or lease-up that result
in increased costs and/or reduce the profitability of a completed
project; the cost, distraction and results of litigation involving
the Company or activist shareholder campaigns to effect
changes at the Company; and risks associated with property
acquisitions and dispositions, such as failure to achieve expected
results. In regard to the business review the Company is
undertaking, there will be no updates until the review is complete
and there is no set timeframe for completion. Readers should
carefully review the Company's Annual Report on Form 10-K for the
year ended December 31, 2013, and the other documents the
Company files from time to time with the SEC. These forward-looking
statements reflect management's judgment as of this date, and the
Company assumes no obligation to revise or update them to reflect
future developments or circumstances.
Important Additional Information
Associated Estates, its directors and certain of its executive
officers will be deemed to be participants in the solicitation of
proxies from Associated Estates shareholders in connection with the
matters to be considered at Associated Estates' 2015 Annual
Meeting. Associated Estates intends to file a proxy statement with
the SEC in connection with any such solicitation of proxies from
Associated Estates shareholders. ASSOCIATED ESTATES SHAREHOLDERS
ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT AND
ACCOMPANYING WHITE PROXY CARD WHEN THEY BECOME AVAILABLE AS THEY
WILL CONTAIN IMPORTANT INFORMATION. Information regarding the
ownership of Associated Estates' directors and executive officers
in Associated Estates shares, restricted shares and options is
included in their SEC filings on Forms 3, 4 and 5. More detailed
information regarding the identity of potential participants, and
their direct or indirect interests, by security holdings or
otherwise, will be set forth in the proxy statement and other
materials to be filed with the SEC in connection with Associated
Estates' 2015 Annual Meeting. Information can also be found in
Associated Estates' Annual Report on Form 10-K for the year ended
Dec. 31, 2013, filed with the SEC on
Feb. 25, 2014. Shareholders will be
able to obtain any proxy statement, any amendments or supplements
to the proxy statement and other documents filed by Associated
Estates with the SEC for no charge at the SEC's website at
www.sec.gov. Copies will also be available at no charge at
Associated Estates' website at www.associatedestates.com or by
contacting Jeremy Goldberg, Vice
President of Corporate Finance and Investor Relations at (216)
797-8715.
For more information, please contact:
Jeremy Goldberg
(216) 797-8715
Andrew Siegel / Jonathan Keehner
Joele Frank, Wilkinson Brimmer
Katcher
212-894-4449
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SOURCE Associated Estates Realty Corporation