While this injunction is dead in the water, the group has legally won the right to use UIRT shareholder information to jockey for more support, says Dennedy. The group wants to change UIRT by-laws so that incumbents and nominee trust managers are subject to the same election procedure. And it has two months to do so, for that is when the next annual meeting is to be held.
The current system requires nominees to receive upward of 4.3 million votes while incumbents can be elected with as little as 25.1% or about 2.2 million votes if a quorum is present at the meeting. In essence, non-incumbents have nearly double the vote requirements of incumbents, says Dennedy.
At the crux of the dispute is a move to oust UIRT leaders by the Committee to Restore Shareholder Value, which has been unhappy with the trust's financial results. Houston-based UIRT is publicly traded on the NASDAQ. The REIT owns 28 shopping centers nationwide and 50% interest in another shopping center. According to financial reports, the per share range has been $3.50 to $6.188 in the last 52 weeks. In January, it had been announced that dividends would shrink.
"UIRT's by-laws have a dual standard of election thresholds for nominee trust managers. We feel strongly that this dual standard entrenches incumbent trust managers and flies in the face of good corporate governance," says David Glatstein, president of Southwest Securities Group Inc. "Unfortunately, we were left with no choice but to seek judicial intervention to remedy this inequity."
Dennedy says no other actions are attached to this litigation and no monetary compensation is being sought as a remedy. "This is an attempt to level the playing field," he says. Last December, UIRT named three new trust managers to the board's litigation review committee in an attempt to reach an amicable resolution.
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