– USA, OH – 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.
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.”
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.
About 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.
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