ISS recommends shareholders vote AGAINST restrictive charter amendment at Chesapeake Lodging & FOR shareholder proposal strengthening shareholder right to amend bylaws, reports UNITE HERE

NEW YORK--(BUSINESS WIRE)--

Leading proxy advisor Institutional Shareholder Services (ISS) has recommended that Chesapeake Lodging (NYSE: CHSP) shareholders reject a restrictive charter amendment proposed by the company at tomorrow's annual meeting, contending "this desire to stifle debate is a red flag and a poor justification for denying all shareholders the opportunity to opine on proposed governance changes at the ballot box."

The company's proposed charter amendment would restrict the ability to propose binding bylaw amendments to shareholders holding .015% or more of shares outstanding (without regard to market value). This threshold is currently by our calculation approximately one hundred times higher than the market value ownership requirement under Securities and Exchange Commission Rule 14a-8.

Electronic voting concludes at MIDNIGHT TODAY.

ISS also recommended shareholders vote to support the shareholder proposal extending the right to initiate bylaw amendments to shareholders.

Six of approximately twenty lodging REITs currently allow shareholders to initiate bylaw amendments – a right that must be established in a company's governing documents for Maryland-incorporated companies like Chesapeake.

This season, shareholders at three additional Maryland-incorporated lodging REITs – Host Hotels, RLJ Lodging and Diamondrock Hospitality – voted overwhelmingly in support of management proposals establishing this shareholder right (without further exclusions). (In Delaware, where many hospitality C-corporations are incorporated, shareholders have this right by law (DGCL Sec. 109)).

ISS further notes that "it is unclear whether the bylaw, if adopted, would be enforceable if it were used to disqualify shareholder proposals or nominations under Rule 14a-8," being clearly in conflict of the SEC's $2,000 market value ownership requirement. "Shareholders, regardless of size, are capable of proposing business that resonates with a broad swath of shareholders, as evidenced by the 2015 vote," ISS wrote.

UNITE HERE urges Chesapeake shareholders not to afford institutional and retail shareholders with different rights, and vote down Chesapeake's restrictive amendment. We further urge shareholders to vote TODAY FOR shareholders' right to initiate bylaw amendments, rights that shareholders at Host, Diamondrock, RLJ and Sunstone, among other peers, will now enjoy.

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