Stacey Corso is editor of Real Estate New York.
MELVILLE, NY-Shortly after a news source on the web blasted Reckson Associates Realty Corp.'s board of directors, the REIT, based here, announced a new plan that gives the independent board members more control over the board, which is heavily dominated by members of the Rechler family.
"We have a new plan that we put into place on May 29 at our annual meeting," Reckson's co-CEO Scott Rechler tells Real Estate New York. "All of the independent directors will have stock in the company that cannot be sold while they are directors."
Six of Reckson's 11 board members are independents, while the remaining five are members of the Rechler family. Currently, the five Rechlers--Donald, Scott, Mitchell, Gregg and Roger--control 15% of the stock in the company, Rechler says.
Although Scott Rechler would not specify how much stock the independent directors control, he says: "I believe they own some significant stock in the company. If you look at our independent board members, you would see that we have a very strong group.". The independent board members are Lewis Ranieri, Conrad Stephenson, John Klein, Herve Kevenides, Ronald Menaker and Walter Gross. And effective immediately, each of these directors will be required to hold an unspecified amount of stock in the company for the life of their terms as directors of Reckson's board.
"Realty Stock Review on the Web" criticized Reckson in early May for the nepotism on its board of directors, among other corporate governance issues.
"No way, no how is there a good reason to have that many family members on any company's board," the report states." Two Rechlers [Donald and Scott] as we see it, would be sufficient."
Then, Realty Stock Review recommended that Reckson elect a non-executive chairman or lead trustee, "whose name is not Rechler," to talk with investors and address corporate governance issues.
Less than a month later, the new stock plan for Reckson's independent board of directors was unveiled. In addition, Reckson elected American Stock Exchange president Peter Quick to serve as lead director and chairman of the REIT's nominating/governance committee of the board of directors.
"Peter Quick has a lot of respect from the investment community at large as well as our independent directors," Scott Rechler says. "That's why he was elected to this new post."
Currently three of the board's four committees--executive, audit and compensation--are controlled by the Rechler family. Quick's nominating governance committee is the only independently-controlled committee.
Reckson is consistently ranked among the most powerful companies on Long Island. Last year, it reported revenues of $526.4 million and $114.3 million in profits. The firm currently owns about 20.3 million sf of properties in the Tri-State area. This year, Reckson is embarking on a plan to sell approximately $600 million worth of non-core assets and use the cash for new real estate acquisitions.
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