Summit Hotel PropertiesInc. has received a nonbinding shareholder proposal calling on the companyto opt out of the Maryland Unsolicited Takeover Act and to mandate that opting backinto the act would require a majority vote of stockholders.
Under the act, the company's board is permitted, without shareholderapproval, to adopt various takeover defenses, including classifying itself, expandingits size while filling new vacancies via directors' votes only and requiring a two-thirdsvote for the removal of a director.
"The statute essentially acts as a poison pill," theshareholder said, adding that such defenses, if adopted by Summit's board, may haveadverse effects on stockholder value as it could discourage acquisition offers thatcould benefit shareholders, according to an April 5 filing.
After weighing the "speculative concerns" raised bythe proposal against the benefits of keeping flexible access to the statute andprotecting the interests of all shareholders, Summit Hotel said its board believesthat the proposal "is not in the best interests" of the hotel REIT orits stockholders. As such, the board recommends that shareholders vote down theproposal at the company's 2016 annual stockholder meeting slated for May 19.
The proposal was submitted by Teamster Affiliates Pension Plan,which beneficially owns about 0.02% of Summit's outstanding common stock.