PHILADELPHIA--(BUSINESS WIRE)--UNITE HERE announced today that proxy advisory firm Institutional Shareholder Services (ISS) recommends shareholders of Gaming and Leisure Properties, Inc. [NASDAQ: GLPI] support a shareholder proposal that would reform the way the company’s directors are elected. The shareholder proposal is included on the proxy ballot for GLPI’s Annual Meeting of Shareholders to be held June 15.
The resolution recommends that nominees to the board receive a majority of the votes cast in order to be seated. Under GLPI’s current bylaws, a nominee can be elected with as little as a single vote in uncontested elections. The shareholder proposal also recommends that GLPI adopt a director resignation policy providing for the replacement of directors who fail to receive majority support.
“When directors can stay in office even after a majority of votes are cast against them, the process for electing directors is broken,” says JJ Fueser, Deputy Director at UNITE HERE.
There is a growing consensus on the benefit of a majority vote standard in uncontested director elections. “A majority vote standard transforms the director election process from a symbolic gesture to a meaningful voice for shareholder,” writes ISS. Ernst and Young reports that in 2016, similar proposals received the support of 68% of votes cast, on average. 89% of S&P 500 companies have adopted a majority vote standard. The Council of Institutional Investors has begun advocating for a consequential majority vote standard in director elections, and is asking directors of Russell 3000 companies with plurality voting to adopt such a standard.
UNITE HERE has been a leader in corporate governance reform at GLPI. In 2015, 72% of shares were cast in favor of UNITE HERE’s proposal to declassify the board. In 2016, after a similar management proposal was overwhelmingly supported, GLPI began the process of board declassification.
UNITE HERE notes that GLPI needs accountable directors who are familiar with the unique characteristics of triple net REITs. Accountability is particularly important at GLPI for two reasons: 1) Gaming REITs are untested by business downturns or sustained periods of rising interest rates; and 2) GLPI lacks tenant or industry diversification. GLPI is primarily dependent upon just two tenants – Penn and Pinnacle. Given the newness of GLPI and its business model, shareholders need a means of democratic change.
UNITE HERE represents hospitality workers and is a member of the Council of Institutional Investors. Its members are beneficiaries of pension funds with over $60 billion in assets. Since 2012, UNITE HERE has pursued a program of improving shareholder rights at hospitality REITs, (see www.hotelcorpgov.org).