UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ x ]
Check the appropriate box:
[x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-12
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(Name of Registrant as Specified In Its Charter):
Chesapeake Lodging Trust. (NYSE: CHSP)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant):
UNITE HERE
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction
applies:
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PRELIMINARY PROXY STATEMENT
I. INDEPENDENT SHAREHOLDER SOLICITATION for Annual Shareholders
Meeting
Chesapeake Lodging Trust. (NYSE: CHSP)
[Date of meeting]
[Address of meeting]
First released to shareholders on _______, 2014
UNITE HERE
275 Seventh Ave.
New York, NY 10001
Tel: 212-265-7000
Fax: 212-265-3415
To Fellow Chesapeake Lodging Trust Shareholders:
We are writing to seek support from Chesapeake shareholders for
a set of non-binding proposals which, if adopted, could improve
Chesapeake's corporate governance practices, and our shareholder
value.
We believe that the ability of shareholders to hold the Board
accountable is a hallmark of good corporate governance. In order
for shareholders to secure a meaningful voice within
Chesapeake's leadership, especially as the U.S. hotel industry's
improved operating fundamentals spur merger activity, it is in
the interest of Chesapeake shareholders to vote in favor of our
proposals. Our first proposal, if adopted, would increase the
trustees' accountability to shareholders by ensuring each
elected trustee had the support of a majority of voting shares.
Our remaining proposals recommend our Company opt out of
Maryland's suite of "poison pill" statutes, which may depress
shareholder value by enabling our Board to set in place a range
of anti-takeover devices without shareholder approval.
SUPPORTING STATEMENT FOR SHAREHOLDER PROPOSAL TO ADOPT A
MAJORITY VOTE
(PROPOSAL NO. 1)
The election of trustees is a fundamental right of shareholders.
However when trustees are elected using a plurality vote
standard, as is now used by our Company, trustee elections are
less meaningful. Under the plurality vote standard, a nominee
for the board can be elected with as little as a single vote,
even if a substantial majority of the votes cast are "withheld"
from the nominee. For this reason, we believe that plurality
voting should only be used in contested trustee elections. We
recommend that our Company change its trustee election vote
standard to a majority vote standard, under which a trustee must
receive a majority of the votes cast to be elected. We also
recommend that the Board adopt a trustee resignation policy
requiring that trustees who do not receive the required vote for
election submit their resignations.
Our fellow shareholders should be aware that, even though our
Company's trustees do not have a lengthy track record of running
our Company and its short life has coincided with a period of
economic recovery, they do have a much longer history at
Highland Hospitality. As the CEO of Highland Hospitality, Mr.
Francis' executive team was comprised of Messrs. Douglas Vicari,
Rick Adams and Graham Wooten, all of whom are current executives
of our Company, and Messrs. Francis and Vicari are also trustees
of our Company.<FN1>
Highland Hospitality, a publicly traded real estate investment
trust, was taken private by real estate investment firm JER
Partners for $2 billion in 2007.<FN2> Messrs. Francis,
Adams and Wooten continued to serve as consultants and/or held
senior positions for the JER Partners' affiliate that acquired
Highland Hospitality for varying periods thereafter.<FN3>
Within the following three years, Highland defaulted on $868
million in mezzanine debt.<FN4> In the restructuring that
followed, JER Partners' $200 million of equity in the 28-hotel
portfolio is believed to have been wiped out.<FN5> Through
a consensual foreclosure in 2010, Ashford Hospitality Trust and
Prudential Real Estate Investors acquired Highland's portfolio
for $1.28 billion,<FN6> a 41% decrease in valuation
compared to JER Partners' acquisition three years prior. Current
Company trustees Messrs. Thomas Natelli and John Hill served on
the Highland Board until its sale in 2007.<FN7>
We believe it is always in the interests of long-term
performance when shareholders can directly and annually hold
Board members accountable; even more so when the track record of
several executives managing Highland during an economic downturn
raises red flags. In addition, our Company has not produced
long-term results nor weathered an economic downturn. In fact,
our Company's portfolio of hotels was acquired during an
opportune period when the hotel industry was on an upswing.
This proposal topic has gained widespread support among
investors. In fact, the proportion of S&P 500 companies that
have adopted some form of majority voting has increased from 16
percent<FN8> to 78.2 percent<FN9> from 2006 to 2012.
In addition, this proposal is aligned with the ISS 2014 U.S.
Proxy Voting Summary Guidelines which state:
"Generally vote for management proposals to adopt a majority of
votes cast standard for directors in uncontested
elections...Companies are strongly encouraged to also adopt a
post-election policy (also known as a director resignation
policy) that will provide guidelines so that the company will
promptly address the situation of a holdover
director."<FN10>
We urge shareholders to vote FOR this proposal to improve our
ability to hold the Board accountable.
SUPPORTING STATEMENT FOR SHAREHOLDER PROPOSALS TO LIMIT
ANTI-TAKEOVER PROVISIONS (PROPOSALS NO. 2-4)
These proposals urge the Board to take the actions required for
the Company to opt out of Maryland's Unsolicited Takeover Act,
the Business Combinations Act and the Control Shares Act
(collectively referred to as the "Acts") and require a majority
vote of shareholders to opt back in:
*The Unsolicited Takeover Act (Title 3, Subtitle 8 of the
Maryland General Corporation Law) permits the Board, without
shareholder approval, to implement various takeover defenses,
such as classifying the board retroactively, expanding the board
with vacancies filled only by vote of other trustees, and
requiring a two-thirds vote for removal of a trustee. Our
Company does not opt out of the Unsolicited Takeover Act.
*The Control Share Acquisition Act (Title 3, Subtitle 7 of
the Maryland General Corporation Law) prohibits holders of
"control shares" (either more than one-tenth, one-third or a
majority of the power to vote in the election of trustees) from
any voting rights with respect to the control shares except if
approved by at least a two-thirds shareholder vote. Our Company
currently opts out of the Control Shares Act, but the Board
retains the right to opt back in retroactively, without
shareholder approval.
*The Business Combinations Act (Title 3, Subtitle 6 of the
Maryland General Corporation Law) currently restricts "business
combinations" between the Company and a potential acquirer under
certain conditions for at least five years after the potential
acquirer acquires 10% or more of the Corporation's outstanding
shares. Our Company opts out of the Business Combinations Act,
but the Board retains the right to opt back in, without
shareholder approval.
These Acts behave as anti-takeover measures unless our Company
has opted out with a requirement that a majority vote of
shareholders approve any future opt-in. Research on such
anti-takeover statutes indicates that they fail to protect
shareholder interests. Empirical studies have shown that state
anti-takeover statutes harm shareholders by failing to maximize
profit and by leading to uncertainty for
shareholders.<FN11> Robust econometric data shows that
anti-takeover statutes increase agency managerial cost and
reduce shareholder wealth.<FN12> Further, studies have
shown that because they protect managers from removal, they
reduce incentives for managers to operate as profitably as
possible.<FN13>
The availability of a broad range of anti-takeover devices is
not merely an academic issue for our company: the US hotel
industry has witnessed improved operating fundamentals in recent
years. If the previous cycle is any indication, shareholders can
expect to see stepped-up merger activity in the coming years.
Not opting out of the Acts may adversely affect shareholder
value by discouraging premium-rich offers to acquire the Company
that could be beneficial to shareholders.
We urge you to vote FOR these proposals to maximize shareholder
value.
FULL TEXT OF PROPOSALS:
1.RESOLVED, that the shareholders of Chesapeake Lodging Trust
urge the Board take the steps necessary to amend the Company's
bylaws to provide that trustee nominees shall be elected by the
affirmative vote of the majority of votes cast at an annual
meeting of shareholders, with a plurality vote standard retained
for contested trustee elections, that is, when the number of
trustee nominees exceeds the number of board seats. Trustees who
do not receive the required majority vote for election must
submit their resignation.
2.RESOLVED, that shareholders of Chesapeake Lodging Trust urge
the Board take all steps necessary to cause the Company to opt
out of Maryland's Unsolicited Takeover Act (Title 3, subtitle 8
of the Maryland General Corporation Law, the "Unsolicited
Takeover Act") and to require approval by a majority of
shareholders casting votes before opting back in.
3.RESOLVED, that shareholders of Chesapeake Lodging Trust urge
the Board take all steps necessary to cause the Company to opt
out of Maryland's Control Shares Act (Title 3, subtitle 7 of the
Maryland General Corporation Law) and to require approval by a
majority of shareholders casting votes before opting back in.
4.RESOLVED, that shareholders of Chesapeake Lodging Trust urge
the Board to take all necessary steps to opt out of the Maryland
Business Combination Act (Title 3, Subtitle 6 of the Maryland
General Corporation Law) and to require a majority vote of
shareholders casting votes before opting back in.
We recommend a vote FOR these proposals urging the Company to
amend its bylaws.
II. PROXY VOTING:
PLEASE USE THE ENCLOSED BLUE PROXY CARD TO VOTE FOR THE
PROPOSAL. YOU WILL ALSO RECEIVE A PROXY CARD FROM MANAGEMENT. IF
YOU SUPPORT OUR PROPOSAL, DO NOT SEND BACK MANAGEMENT'S CARD.
ANY PROXY CARD YOU HAVE SIGNED IS CANCELLED OUT BY SUBMITTING A
LATER-DATED PROXY CARD.
We intend to solicit at least a majority of the voting power of
the outstanding stock. You can revoke any proxy vote prior to
the tally at the shareholders meeting by signing and submitting
a new proxy card, by sending written notice of revocation to the
proxy holder, or by appearing at the meeting and voting in
person. The record date for eligibility to vote is [DATE].
Our proposals are non-binding. Passage of the proposals requires
approval of a majority of votes cast. We seek no discretionary
voting authority for the meeting: we will vote your stock as you
instruct us. If you return the enclosed blue card but give us no
instructions, we will vote your stock FOR our proposals,
FOR ratification of the auditor and not vote on any other
matter. The Company's bylaws require advance notice before any
matter may be raised at the meeting, and therefore we do not
expect any matter to be raised at the meeting that is not
addressed in this proxy statement or the Company's proxy
statement. We incorporate by reference all information
concerning the board of trustees and voting procedures contained
in management's proxy statement at [PAGES].
III. INFORMATION ON PARTICIPANTS IN THIS SOLICITATION:
The participants in this solicitation will be UNITE HERE and its
staff, including Courtney Alexander, Jeffrey Nelson and Riddhi
Mehta-Neugebauer. These staff are located at the UNITE HERE
offices at 275 Seventh Avenue, New York, NY 10001-6708 and 33
Harrison Avenue, 4th floor, Boston, MA 02111, respectively.
UNITE HERE represents approximately 275,000 active
members throughout North America. This solicitation is conducted
by UNITE HERE, which owns 175 shares of Chesapeake Lodging Trust
stock and represents workers at three hotels owned by Chesapeake
for collective bargaining purposes. There is a long-standing
labor dispute at the Chesapeake-owned Le Meridien Hotel and the
Hyatt Fisherman's Wharf Hotel in San Francisco. These labor
disputes pre-date Chesapeake's acquisition of those hotels.
We do not seek your support in labor matters and do not believe
that enactment of the proposals would have any impact on such
matters. UNITE HERE will vote each proxy card it receives in
accordance with the shareholder's instructions. UNITE HERE will
not seek any discretionary voting authority for the shareholders
meeting: rather, it will vote stock solely as directed.
UNITE HERE will bear all solicitation costs (anticipated at
$10,000) and will not seek reimbursement from the Company. It
will solicit proxies by mail, phone, e-mail, fax and in person
using its regular staff, who shall not receive any additional
compensation, but they may also hire an outside solicitor. It
will reimburse banks, brokers, and other custodians, nominees or
fiduciaries for reasonable expenses incurred in forwarding proxy
material to beneficial owners.
IV. EXECUTIVE COMPENSATION/SECURITY OWNERSHIP OF MANAGEMENT AND
5% OWNERS/SHAREHOLDER PROPOSAL RIGHTS
We incorporate by reference the information contained in
management's proxy statement at [PAGES].
PLEASE RETURN THE ENCLOSED BLUE PROXY CARD TODAY, AS INSTRUCTED
ON THE CARD.
For more information, contact the UNITE HERE Research Department
at (212) 265-7000.
---------------------------------------------
<FN1> United States Securities and Exchange
Commission. Form 10-K Annual Report Chesapeake Lodging Trust.
2012. pg. 36.
(FN2> Ambroz, Jillian. "JER Jumps on Take-Private Bandwagon: Buys
Highland Hospitality in $2B Deal." CoStar
Group. April 24, 2007.
http://www.costar.com/News/Article/JER-Jumps-On-Take-Private-Bandwagon-Buys-Highland-Hospitality-in-$2B-Deal/89214
<FN3> United States Securities and Exchange
Commission. Form 10-K Annual Report Chesapeake Lodging Trust.
2012. pg. 36.
<FN4> Wei, Lingling and Kris
Hudson. "Hotel Chain Explores Bankruptcy." Wall Street
Journal. August 18, 2010. http://online.wsj.com
/news/articles/SB10001424052748703824304575435720021602794#
<FN5> PERE News. "Ashford, PREI JV acquires JER
hotel portfolio." PEI Media. March 11, 2011.
<FN6>Levitt, David M. "Ashford Venture Acquires
Highland Hotels in $1.28 Billion Foreclosure Deal." Bloomberg
News. March 11, 2011. http://www.
bloomberg.com/news/
2011-03-10/ashford-hospitality-venture-pays-1-28-billion-for-highland-hospitality.html
<FN7> United States Securities and Exchange Commission. Schedule
14A Proxy Statement: Chesapeake Lodging Trust. 2012. pg.
8-9.
<FN8> Allen, Claudia H. "Study of
Majority Voting in Director Elections." Neal, Geber &
Eisenberg LLP. (last updated Nov. 12, 2007).
http://www.ngelaw.com/files/
Uploads/Documents/majoritystudy111207.pdf ("when
this Study was initially published in February 2006, only 16%
of the companies in the S&P 500 were known to have adopted
a form of majority voting").
<FN9> Kistler, Bruce. "State of Play, A Snapshot
of US Corporate Governance in 2012," ISS Corporate Services.
July 19, 2012. ("the S&P 500 is the only index with more
than one-half of its constituents using a majority voting
standard").
<FN10> Institutional Shareholder Services Inc.,
"ISS' 2014 U.S. Proxy Voting Summary Guidelines." Institutional
Shareholder Services. December 19, 2013. pg. 20.
<FN11> Macey, Jonathan R., "State Anti-Takeover
Statutes: Good Politics, Bad Economics" Faculty Scholarship
Series. (1988). Paper 1739.
http://digitalcommons.law.yale.edu/fss_papers/1739
<FN12> Bebchuk, Lucian, Joan Coates IV and Guhan
Subramanian.
"The Powerful Antitakeover Force of Staggered Boards: Theory,
Evidence, and Policy," 54 Stanford Law Review (2002).
<FN13> Booth, Richard A. "The Promise of State
Takeover Statutes." Michigan Law Review Vol. 86, No. 7
(Jun., 1988), pp. 1635-1702.
---------------------------------------------
PROXY CARD
Solicited by UNITE HERE for Annual Shareholders Meeting
of Chesapeake Lodging Trust, [DATE].
The undersigned hereby designates Courtney Alexander, Jeffrey
Nelson and Riddhi Mehta-Neugebauer with full power of
substitution, as the proxies of the undersigned for the sole
purpose of voting all stock of the undersigned in the manner
marked below at the Chesapeake Lodging Trust annual shareholders
meeting for 2014. This proxy card grants no discretionary voting
authority: if matters come before the meeting other than the
items below, the stock of the undersigned will not be voted on
such matters.
1. ELECTION OF TRUSTEES
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
[ ] WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE. WRITE
NAME(S) OF NOMINEES BELOW:
UNITE HERE MAKES NO RECOMMENDATION ON THE TRUSTEES' ELECTION
2. TO APPROVE THE RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITORS FOR THE 2013 FISCAL YEAR
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
UNITE HERE MAKES NO RECOMMENDATION ON THE RATIFICATION OF THE
AUDITOR
3. ANNUAL ADVISORY VOTE ON EXECUTIVE COMPENSATION
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
UNITE HERE MAKES NO RECOMMENDATION ON THE RATIFICATION OF
EXECUTIVE COMPENSATION.
UNITE HERE URGES A VOTE FOR THE FOLLOWING SHAREHOLDER PROPOSALS:
4. RESOLVED, that the shareholders of Chesapeake
Lodging Trust urge the Board take the steps necessary to amend
the Company's bylaws to provide that trustee nominees shall be
elected by the affirmative vote of the majority of votes cast at
an annual meeting of shareholders, with a plurality vote
standard retained for contested trustee elections, that is, when
the number of trustee nominees exceeds the number of board
seats. Trustees who do not receive the required majority vote
for election must submit their resignation.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
UNITE HERE RECOMMENDS A VOTE FOR THIS PROPOSAL.
5. RESOLVED, that shareholders of Chesapeake Lodging Trust urge
the Board take all steps necessary to cause the Company to opt
out of Maryland's Unsolicited Takeover Act (Title 3, subtitle 8
of the Maryland General Corporation Law, the "Unsolicited
Takeover Act") and to require approval by a majority of
shareholders casting votes before opting back in.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
UNITE HERE RECOMMENDS A VOTE FOR THIS PROPOSAL.
6. RESOLVED, that shareholders of Chesapeake Lodging Trust urge
the Board take all necessary steps to cause the Company to opt
out of Maryland's Control Shares Act (Title 3, subtitle 7 of the
Maryland General Corporation Law) and to require approval by a
majority of shareholders casting votes before opting back in.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
UNITE HERE RECOMMENDS A VOTE FOR THIS PROPOSAL.
7. RESOLVED, that shareholders of Chesapeake Lodging Trust urge
the Board to take all necessary steps to opt out of the Maryland
Business Combination Act (Title 3, Subtitle 6 of the Maryland
General Corporation Law) and to require a majority vote of
shareholders casting votes before opting back in.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
UNITE HERE RECOMMENDS A VOTE FOR THIS PROPOSAL.
If no direction is made above, UNITE HERE will vote this card
FOR our proposals, FOR approval of the auditor and not vote on
any other matter.
Dated: _____________
SIGNATURE: ________________________________________
PRINT: _____________________________________________
NAME: _____________________________________________
TITLE (if shares not held in above name): ________________
Optional information so we can make sure your vote gets counted
and provide you more information about shareholder issues at
Chesapeake Lodging Trust (your information will not be put to
any other use):
Telephone: _________________
Fax: _______________________
E-mail address: _______________
This card can be voted at _____________.com, returned in the
enclosed envelope or by fax to _______________.