By Joshua Burd
Four directors at Mack-Cali Realty Corp. opted Wednesday to not stand for re-election, clearing the way for a dissident investor group to take control of four seats on the company’s board.
The real estate investment trust announced that directors David S. Mack, Nathan Gantcher, Alan G. Philibosian and Vincent Tese had withdrawn from the running, citing an effort “to accelerate the company’s ongoing process to refresh its board of directors.” As a result, four nominees backed by Bow Street LLC — which had launched a proxy fight after it unsuccessfully tried to buy Mack-Cali’s office portfolio earlier this year — were expected to be among 11 who would win board seats during the Jersey City-based REIT’s annual meeting on Wednesday.
“Over the past several weeks, members of the Mack-Cali Board have met with many of our stockholders and heard their views, including their desire for change, and the board has heeded their wishes,” said William L. Mack, chairman of the Mack-Cali board of directors. “Today’s actions will accelerate the comprehensive process to refresh the board and further improve corporate governance that the company has been pursuing for the past several years.
“We thank David Mack, Nathan Gantcher, Alan Philibosian and Vincent Tese for their invaluable contributions to the company as directors on the Mack-Cali board. We welcome the company’s newly elected directors to the board and look forward to working collaboratively with them to continue to create value for our stockholders.”
The new board members backed by Bow Street, which owns 4.5 percent of the REIT’s outstanding shares, include Alan Batkin, Frederic Cumenal, MaryAnne Gilmartin and Nori Gerardo Lietz. Bow Street floated the slate in March, seeking to gain a position on the board, after Mack-Cali rejected its $2.4 billion offer for its top waterfront and suburban office buildings.
Mack-Cali has said that Bow Street’s offer was “a grossly inadequate, unworkable and self-interested proposal” that undervalued its office portfolio and threatened the viability of its residential business. But the company subsequently invited Gilmartin and Cumenal to join its board and said last month that it intended to appoint at least one of them to the new strategic review committee.
Bow Street on Wednesday said it had emerged victorious based on preliminary results of proxies submitted to the independent Inspector of Election for Mack-Cali’s 2019 Annual Meeting of Shareholders.
“Shareholders have spoken loudly and presented the company with a clear mandate for change,” said Akiva Katz and Howard Shainker, managing partners of Bow Street. “Now, the real work begins. Alan, Frederic, MaryAnne and Nori are excited to roll up their sleeves and work alongside their fellow directors to ensure that a robust strategic alternatives process leaves no stone unturned in creating meaningful value for all shareholders.
“We have no doubt that with truly independent directors and renewed oversight in the boardroom, Mack-Cali shareholders will finally reap the long-overdue benefits of their investment. The positive governance changes Mack-Cali announced today are the direct result of the unwavering determination of shareholders to hold the board accountable. We thank all shareholders for their overwhelming support.”
Mack-Cali on Wednesday announced plans to take other steps in light of the vote. That includes opting out of Maryland’s unsolicited takeovers statute, which permits the board to reclassify itself without a shareholder vote, by board resolution.
The REIT will also rescind the so-called Mack Agreement, which enables the Mack family to nominate up to three directors to the Mack-Cali board. The company said it will move forward with its previously announced strategic review committee, which will review its overall direction and available alternatives for maximizing stockholder value, including a potential sale of the company or certain assets.
“As an advocate of change, I know every process has benefits and detriments,” said Michael J. DeMarco, Mack-Cali’s CEO. “The steps announced today will allow the company to be responsive to the wishes of our stockholders. I believe when our stockholders and the proxy advisor services look at the body of change in the board and stockholder rights, we will be viewed as one of the best companies in our sector.
“We will continue to maintain an active and productive dialogue with all of our stockholders as we continue to execute on our strategic plan and build a stronger and more focused company that creates long-term value for stockholders. The company’s management team looks forward to working with the entire board, including the newly elected directors, to advance Mack-Cali’s Waterfront Strategy and ongoing portfolio transformation.”
DeMarco, who echoed William Mack’s farewell to the outgoing directors, has spearheaded the company’s efforts since 2015 to improve the overall quality of its portfolio. That has included taking aggressive steps to shed noncore office buildings and ramp up its pipeline of luxury multifamily projects.