March 12, 2020 / 3:05 PM / a month ago

Bow Street tries to oust Mack-Cali CEO in second proxy contest

BOSTON (Reuters) - Investment firm Bow Street Capital called on Thursday for the ouster of the chief executive of Mack-Cali Realty Corp. and has nominated four directors to the real-estate investment trust’s board in a bid to take control of the 11 member board.

Bow Street, which owns roughly 4.5% of Mack-Cali, is agitating anew one year after it won four board seats. The firm feels that last year’s new directors were unable to sway legacy directors when big decisions needed to be made.

“The time has come for a change in leadership,” Bow Street’s managing partners Akiva Katz and Howard Shainker wrote to shareholders on Thursday, calling CEO Michael DeMarco’s “bullying demeanor and aggressive behavior” a liability for the company.

The company did not immediately respond to a request for comment. DeMarco was not available for comment.

Bow Street said DeMarco “misled” shareholders about acquisition approaches and that the share price recovered only after Bow Street’s four independent directors were elected last year.

“While we continue to welcome constructive engagement from the Company and the Board, shareholders can no longer trust Mr. DeMarco’s stewardship, and can ill afford yet another year of broken promises and value destruction,” the letter said.

The investment firm is laying the groundwork for a second proxy contest and has this year nominated Katz, one of the firm’s partners, as a director.

Besides Katz, Bow Street has nominated Howard Stern, Mahbod Nia and Tammy Jones, executives with real estate industry experience, as directors.

Last year, shareholders elected Alan Batkin, Frederic Cumenal, MaryAnne Gilmartin and Nori Gerardo Lietz to the board.

Targeting a CEO for removal is an unusually aggressive step but it has been seen more this year, according to researchers who study activist investing.

Most recently Elliott Management, one of the world’s biggest activist investors with $40 billion in assets, pushed to remove Twitter CEO Jack Dorsey two weeks ago, arguing that Twitter deserved a full time CEO. Dorsey splits his time between Twitter and Square, another publicly traded company where he is CEO. The two sides settled this week with Dorsey keeping his job for now, and the company adding three new directors, including Elliott’s Jesse Cohn.

Reporting by Svea Herbst-Bayliss; Editing by David Gregorio

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