DEF 14A: Seritage Growth Properties Sets Date for 2024 Annual Shareholder Meeting

Seritage Growth Properties announces its 2024 annual meeting of shareholders to be held virtually on June 5, 2024, to vote on the election of trustees, ratification of the independent auditor, and an advisory vote on executive compensation.

Summary

• Seritage Growth Properties will hold its 2024 annual meeting of shareholders on June 5, 2024, at 10:00 a.m. Eastern Time, in a virtual format.
• Shareholders will vote on the election of seven trustees, the ratification of Deloitte & Touche LLP as the independent registered public accounting firm for fiscal year 2024, and an advisory resolution on executive compensation.
• The record date for determining shareholders eligible to vote is April 17, 2024.
• The Board recommends voting FOR the election of each trustee nominee, FOR the ratification of Deloitte & Touche LLP, and FOR the advisory resolution on executive compensation.
• The company has engaged Innisfree M&A Incorporated to assist with proxy solicitation for a fee of $20,000 plus expenses.
• The Board held four regular meetings and two special meetings during fiscal year 2023.
• Edward S. Lampert beneficially owns 13,484,162 Class A Shares, representing 24.0% of the outstanding shares.
• Hotchkis and Wiley Capital Management beneficially owns 4,839,080 Class A Shares, representing 8.6% of the outstanding shares.
• The Vanguard Group and related entities beneficially owns 3,548,668 Class A Shares, representing 6.3% of the outstanding shares.
• Zhengxu He beneficially owns 3,455,146 Class A Shares, representing 6.1% of the outstanding shares.
• Par Sanda and related entities beneficially owns 3,128,813 Class A Shares, representing 5.6% of the outstanding shares.

Sentiment

Score: 7

Explanation: The document is neutral in tone, providing necessary information for shareholders regarding the upcoming annual meeting and governance matters. The focus on the Plan of Sale introduces a slight element of uncertainty, but the overall sentiment is stable and informative.

Positives

• The Board is committed to a policy of inclusiveness and is committed to seeking out highly qualified women and minority candidates as well as candidates with diverse backgrounds, experiences and skills.
• Trustees and executive officers are prohibited from entering into any hedging or pledging transactions involving Company securities.
• The company has been committed to environmental, social responsibility and governance practices that serve our shareholders, our team and our communities.
• The company amended its declaration of trust to declassify its Board so that all of our trustees stand for election annually.
• The Audit Committee has recommended to the Board of Trustees that the audited consolidated financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Negatives

• The performance goals for the 2020 performance-based vesting restricted stock unit (RSU) awards were not achieved, and therefore, the underlying RSUs were forfeited by the NEOs.

Risks

• The company is currently executing a Plan of Sale, which involves selling all assets and dissolving the company, indicating potential uncertainty for the future of the business.
• The company's strategic review process remains ongoing, and the company remains open minded to pursuing value maximizing alternatives, including a potential sale of the company, indicating potential uncertainty for the future of the business.
• The company's executive compensation program did not use financial performance measures to link compensation actually paid to the Company's performance in 2024.

Future Outlook

The company is focused on maximizing the monetization of its assets under the Plan of Sale or otherwise and remains open minded to pursuing value maximizing alternatives, including a potential sale of the company.

Management Comments

• The trustees and officers of Seritage Growth Properties are pleased to invite you to attend the 2024 annual meeting of the Company's shareholders.
• The Board believes it is important to maintain flexibility in the future as to the Board's leadership structure, but firmly supports maintaining a non-management trustee in a leadership role at all times, whether as non-executive Chairman or Lead Independent Trustee.

Industry Context

This announcement is typical for publicly traded companies as they prepare for their annual shareholder meetings, covering standard agenda items such as the election of directors, auditor ratification, and executive compensation.

Comparison to Industry Standards

• The corporate governance practices outlined, such as having a majority of independent trustees and an audit committee, align with NYSE listing rules and are standard for REITs like Simon Property Group (SPG) and Public Storage (PSA).
• The executive compensation structure, including base salary, annual bonus, and long-term incentives, is common among REITs; however, the specific amounts and performance metrics vary based on company size, strategy, and performance, as seen in companies like Prologis (PLD) and Equity Residential (EQR).
• The engagement of a proxy solicitation firm like Innisfree M&A is a standard practice for public companies to ensure sufficient shareholder representation at the annual meeting, similar to what companies like Vornado Realty Trust (VNO) and Boston Properties (BXP) might employ.
• The disclosure of beneficial ownership by major shareholders is a regulatory requirement, and the ownership percentages reported are within the typical range for publicly traded REITs, although the concentration of ownership can vary significantly.

Corporate Governance

Related Party Transactions

• The company has an agreement with Winthrop Capital Advisors, LLC, where John Garilli serves as Interim Chief Financial Officer, and Winthrop provides property management services and property accounting support.
• Edward S. Lampert, former Chairman, and entities affiliated with him, beneficially own a significant portion of Holdco's outstanding common stock and approximately 24% of the Company's outstanding Class A Shares.

Stakeholder Impact

• Shareholders are asked to vote on key governance matters, including the election of trustees and executive compensation.
• Employees are subject to a Code of Business Conduct and Ethics, promoting ethical behavior and accountability.
• The Plan of Sale and strategic review process could impact employees, customers, and suppliers depending on the outcome.

Next Steps

• Shareholders are encouraged to vote their shares online, by telephone, or by mail prior to the Annual Meeting.
• The Board and Compensation Committee will consider the results of the advisory vote on executive compensation in future decisions.
• The company will continue to execute the Plan of Sale and consider value-maximizing alternatives.

Key Dates

Keywords

annual meeting, proxy statement, trustees, executive compensation, Deloitte & Touche LLP, shareholders, corporate governance, Seritage Growth Properties