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In rare case, REIT board overrules shareholders Add to ...

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Canadian shareholders rarely ruffle feathers over board member appointments. When it comes time to vote, they often do so overwhelmingly in favour of management’s nominees – so much so that it’s unusual to see someone get less than 80 per cent support.

Which is why the latest news out of Partners Real Estate Investment Trust is all the more surprising. After months of upheaval, the REIT sought shareholder support to nominate a new board of directors designed to steady the ship. At the vote last week, four appointees sailed through, garnering 97 to 98 per cent shareholder support, but one, Marc Charlebois, received only 46 per cent support.

Respecting shareholders’ wishes and complying with rules that state he must get a majority of votes in favour of his appointment, Mr. Charlebois tendered his resignation.

This alone is rare. But it only gets more interesting. Instead of simply accepting his resignation, Partners’ other board members conferred and decided to keep him, citing Mr. Charlebois’ “valuable independent real estate expertise”– including serving as chief operating officer of Calloway REIT – and his role in Partners’ recent strategic review. (He was already on the board and was looking to be re-appointed last week.) Such a decision can be made according to the REIT’s own rules.

The speculation on Bay Street is that there is more to the story, and that Mr. Charlebois’ vote total might have been affected by Ron McCowan, who was, until recently, the REIT’s chief executive but resigned after a questionable deal was brought to light. Mr. McCowan still holds the largest number of shares, and if there is bad blood between the two, he might have withheld his votes for personal reasons.

However, individual voting results can’t be made public, so it’s hard to know for sure. A call to Mr. McCowan has yet to be returned. Partners REIT declined to comment beyond its press release.

Either way, it’s rare to see something like this play out, and it only puts another asterisk on Partners’ rocky run. Investors can only hope that the new board's election might finally be the start of a stable era.

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