Crescent Weighing SEIU Proposal

FORT WORTH-The Service Employees International Union has won shareholders’ approval to declassify the board of trust managers for Fort Worth-based Crescent Real Estate Equities Co. as part of a nationwide strategy that targets corporate governance. The catch is the action isn’t binding.

The Washington, DC-based SEIU is a longtime owner of 140 shares of Crescent stock. Steve Abrecht, director of SEIU’s Capital Stewardship Program, tells GlobeSt.com that the mission isn’t to get a seat on the board, but rather to gain annual elections instead of staggered three-year terms for trust managers. The SEIU proposal passed at this week’s shareholders’ meeting in Dallas along with the re-election of trust managers Richard E. Rainwater, chairman of the board; Anthony M. Frank, chairman of Belvedere Capital Partners; and William F. Quinn, president of AMR Investment Services Inc.

John Goff, Crescent’s vice chairman and CEO, said in a prepared statement, “We appreciate SEIU’s interest in our company; Crescent takes all matters affecting corporate governance very seriously. The board of trust managers has considered this issue in the past and our shareholders can be assured that it will be given full consideration in the future.”

Crescent is not under any timeframe to vote on the declassification, which was placed before the shareholders under rule 14a-8 of the SEC Act of 1934. Abrecht says Kodak shareholders supported a similar proposal four years in a row and still there’s been no action.

In a supporting statement for the Crescent challenge, the SEIU dismisses concerns that annual elections could oust all incumbents. “If the owners should choose to replace the entire board, it would be obvious that the incumbent trustees’ contributions were not valued,” according to the proposal. He says staggered elections is an “entrenched provision” that keeps shareholders from gaining control of the board and “makes a corporation less accountable to its shareholders.”

Just this year, Abrecht lobbed 12 challenges to Corporate America, mostly large REITs, on behalf of three SEIU Master Trust funds. Some challenges claimed “poison pills” and others played out like Crescent’s. Among those commercial real estate companies facing or having faced SEIU proposals are Arden Realty Inc. of Los Angeles, the largest office building owner in Southern California; Equity Office Properties Trust of Chicago; and Duke Realty of Indianapolis. Abrecht says talks with the management of Liberty Property Trust in Philadelphia resulted in change without taking it to a shareholders’ vote.

As for the EOP challenge, it was lobbed at disclosure of related-party transactions. Abrecht says the “first-time resolution” carried support from 42% of those shareholders eligible to vote. “We’ll be coming back next year,” he vows, “not just at Equity Office but others too.”

The SEIU has a two-fold stake: investors and commercial building workers, a unionized force of 200,000 nationwide in properties of all types. The SEIU is part of the Council of Institutional Investors, a 130-member organization of large public, labor funds and corporate pension funds with assets exceeding $2 trillion and an 18-year watchdog of investment issues affecting the size or security of plan assets.