CalPERS Seeks Annual Board Elections for Hospitality Properties Trust
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The California Public Employees' Retirement System (CalPERS) is seeking shareowner support for a proposal asking that all directors of Hospitality Properties Trust (NYSE: HPT) be elected annually.
Proposal No. 3, a nonbinding shareowner resolution at the May 15 annual meeting, asks HPT to eliminate its declassified board, which staggers the election of directors who each serve three-year terms. The current classified board structure allows shareowners to only vote on a portion of the board at any given time, making it difficult for them to hold directors accountable for company performance.
"CalPERS believes fully accountable corporate governance structures produce, over the long term the best sustainable returns to shareowners," Eric Baggesen, senior investment officer of CalPERS Global Equity, said in a letter to shareowners.
CalPERS owned approximately 615,000 shares of HPT as of March 17, 2009.
In March, CalPERS named Hospitality Properties Trust to its 2009 Focus List of underperforming companies, citing a board structure that is used by only 43% of real estate investment trusts in the Russell 1000 Index. The company trailed the stock returns of industry peers by 36.3 percentage points over the five years ending March 31, 2009. The Newton, Massachusetts real estate fund buys, owns and leases hotels.
If the company adopts the proposal, it should not affect the unexpired terms of directors elected to the board at or prior to the 2009 annual meeting.
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