Proxy advisory firms Institutional Shareholder Services and Glass Lewis urged shareholders in Global Net Lease Inc. (NYSE: GNL) and Necessity Retail REIT Inc. (NASDAQ: RTL), two formerly non-traded REITs externally managed by AR Global (the successor firm to American Realty Capital), to withhold support from several incumbent directors amid a battle with hedge fund Blackwells Capital.
“Given the multiple governance deficiencies of the company, shareholders are recommended to withhold support from both (James) Nelson and (Edward) Weil (at Global Net Lease),” ISS wrote. It also recommended withholding support from Weil and Lisa Kabnick at Necessity Retail REIT.
Representatives for the companies did not immediately respond to a request for comment and Blackwells declined to comment.
ISS noted that Weil sits on the boards of more than three publicly traded companies while serving as CEO of at least one publicly traded firm. Large shareholders are often critical of people sitting on too many boards.
Weil is chief executive officer of AR Global and also serves as CEO of Healthcare Trust Inc., RTL and American Strategic Investment Co., all of which are externally managed by AR Global.
“Our concerns regarding the level of outside commitments of key directors (Weil and Nelson) add to our broader governance concerns at the Company and on the board,” Glass Lewis wrote.
The annual meetings are scheduled for May 18.
The proxy advisors noted that shareholders are prohibited from amending the bylaws and that the board has stuck by rules where directors do not have to stand for election every year, putting the companies out of step with most of corporate America. They also raised concern about the company’s defense tactics and renewal of a poison pill.
Blackwells and the companies are battling in Maryland and New York courts over the hedge fund’s effort to nominate its own candidates to the board.
Last week, Blackwells was vindicated by a New York federal judge who rejected claims by both AR Global-managed REITs that a joint venture conspiracy existed to make them adopt a new investment advisor.
As The DI Wire previously reported, Blackwells filed a lawsuit against AR Global in December 2022 which was followed by a countersuit. In October 2022, Blackwells originally charged AR Global with “corporate piracy of the highest order” in regards to their management of the formerly non-traded REITs after GNL rejected “a purported notice” from the stockholder that stated its intention to nominate two individuals to the company’s board of directors and to have six proposals considered at the company’s 2023 annual meeting of stockholders. Blackwells most recently launched a website, StopARGlobal.com, which details they claims of mismanagement by AR Global.
(Reuters contributed to this report.)
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