Whitestone REIT (NYSE: WSR) (“Whitestone” or the “Company”) today
issued a shareholder letter from independent Board Chair David
Taylor and Chair of the Nominating and Corporate Governance
Committee, Nandita Berry.
In their joint letter, Ms. Berry and Mr. Taylor
detail the challenging and decisive actions they took as change
agents to terminate the former CEO James Mastandrea for cause,
revitalize corporate governance, and oversee the successful ongoing
value creation plan under the new management team executing on
Whitestone’s reset strategy.
Ms. Berry, Mr. Taylor and the entire Board at
Whitestone request that shareholders protect their investment by
voting the WHITE proxy card “FOR ALL” of
Whitestone’s highly qualified trustees standing for election at the
upcoming Annual Meeting scheduled to be held on May 14, 2024.
The full text of the letter follows:
May 7, 2024
Dear Fellow Shareholders:
Our 2024 Annual Meeting is only 7 days away. At
this year’s meeting, you will have an important decision to make
regarding the composition of the Company’s Board that could define
the future of Whitestone and impact the value of your
investment.
Your Board has nominated for reelection 6
trustees who have overseen Whitestone’s reset strategy which has
catalyzed outperformance in shareholder returns in the period since
the termination of former CEO and Chairman James Mastandrea.
Erez Asset Management (“Erez” or the
“Dissident”) has nominated 2 candidates, Ms. Catherine Clark and
Mr. Bruce Schanzer. You were likely as stunned as we were to see
Mr. Schanzer’s presentation to Erez’s prospective investors (link)
in late 2023, detailing his scheme to take over Whitestone in
coordination with terminated CEO, Mr. Mastandrea. Mr. Schanzer’s
deception to us and our shareholders in blatantly denying his ties
to the terminated CEO is dismaying enough. But his campaign’s
attempt to link us to Mr. Mastandrea’s past regime and Board
leadership, given this background, is also aggravating.
We write to you directly to set the record
straight. Specifically, we want to share with you how we took
action to initiate a leadership transition, revitalize governance
and oversee a successful turnaround strategy at Whitestone.
Board Composition and Leadership in
2017-2018
When we joined the Whitestone Board in March and
September of 2017, the corporate governance and leadership
structure of the Board looked dramatically different from the
current governance and Board structure at Whitestone. Then-CEO Mr.
Mastandrea also served as Chairman of the Board, and exerted tight
control over the Board, often making unilateral decisions that were
deleterious to the Company’s strategy and performance. Even as new
trustees, we recognized that change was needed. The Board
approached Mr. Mastandrea with succession plan discussions early in
our time on the Board, against which he strongly pushed back.
Coupled with onerous terms in his employment agreement and the
force he exercised as combined CEO and Board Chair, Mr. Mastandrea
resisted any discussions of an orderly succession plan.
CEO Termination and New Board Leadership
Under David Taylor and Nandita Berry
In the fifth year of our Board service in 2022,
both of us assumed leadership roles in Whitestone’s Board.
Together, we made the difficult but necessary decision to terminate
Mr. Mastandrea as CEO in January 2022 for cause. We took on formal
responsibilities as Board leaders in the same year, with David
Taylor’s appointment as Independent Chairman and Nandita Berry’s
appointment as Chair of the Nominating and Governance Committee.
Immediately, we oversaw the appointment of new CEO David Holeman
and the management team as they launched Whitestone’s reset
strategy to improve the Company’s operating performance, balance
sheet, corporate governance and transparency with our investors. We
are gratified that the market has recognized our strong
performance, with our total shareholder returns outperforming
relevant indices and peer groups since January 18, 2022, validating
the reset strategy's ability to deliver value for all
shareholders.
Comprehensive Governance Enhancements
and Board Refreshment
Under our leadership as Chairs of the Board as
well as the Nominating and Governance Committee, we have undertaken
significant governance enhancements. In two short years, we
immediately terminated the poison pill, provided shareholders the
right to amend bylaws, and began our efforts to refresh the Board.
We appointed/nominated 2 highly qualified independent trustees,
Mss. Amy Feng in 2022 and Julia Buthman in 2023. We considered
numerous candidates sourced from both search providers and our
network, but Mss. Buthman and Feng’s collective skills and
experience in capital allocation, expertise in debt markets,
operational acumen, technology, investor relations and
entrepreneurship, directly complemented the Board’s priorities to
further accelerate our strategy. These new trustees also strengthen
our Board’s diversity – an important criterion of the Nominating
and Governance Committee’s search focus, as the Committee continues
to refresh the Board’s composition to more thoughtfully reflect the
consumers of Whitestone’s predominantly service and
convenience-base tenants, the majority of whom are women.
Our Uncompromising Independence and
Commitment to Shareholder Interests
The facts and history of our Board service
provide clear evidence of our strong independence. We both were
dismayed when we realized that Mr. Mastandrea was not the same
person whom we thought we knew, especially as he constantly
resisted succession plans discussed by the Board. Though we were
junior members of the Board, we took a tough stance as agents of
change and, after an internal investigation, made the decision to
remove him as CEO for cause. Although it was a difficult endeavor,
we persisted and challenged his entrenchment, which can be gleaned
from the scorched-earth litigation tactics Mr. Mastandrea employed
after he was terminated.
Erez’s cunning attempt to align us with Mr.
Mastandrea’s former regime not only contradicts this documented
history of our actions, but also represents their cynical effort to
deflect the more problematic relationship between Mr. Schanzer and
Mr. Mastandrea. In its April 26, 2024 letter (link), Erez even
tries to blame us for recruiting trustee Najeeb Khan in early 2017,
who resigned from our Board in 2019 and has recently been sentenced
for crimes committed at his Indiana based payroll processing
company. This flies in the face of all logic and facts, as 5 of 6
members on our Board were not even on the Board that appointed Mr.
Khan, and the lone trustee on that Board then, David Taylor, was
only a few months into his own appointment, was not a member of the
Nominating and Governance Committee, and therefore could not have
led the recruitment process for a new director. These failures were
the product of Mr. Mastandrea’s leadership, but we understand that
Erez and Mr. Schanzer do not want to hold him accountable given
their apparent close relationship.
The facts and record of our service and sweeping
governance enhancements enacted since our Board leadership
demonstrate our resolute commitment to the best interests of all
our shareholders.
Conclusion and Commitment to Our
Shareholders
We are proud to have played a role in catalyzing
positive change and stronger performance at Whitestone as your
fiduciaries. As we demonstrate, Whitestone has been undergoing a
profound series of transformations since 2022, including at the
Board and management level. Under our new leadership of the Board
and CEO David Holeman, Whitestone’s Board and management team put
in place our reset strategy, which is producing results as
demonstrated by the Company’s outperformance since we oversaw a
challenging leadership transition.
In this time of important transition, Erez’s
distracting campaign led by Mr. Schanzer, who has ties with the
discredited terminated CEO, threatens to disrupt our momentum that
is continuing to drive real value for our shareholders.
In this context, we feel compelled to set the
record straight for you as you decide on the future direction of
Whitestone. We serve without egos and at the pleasure of
shareholders. We were and remain change agents on a Board that
needed to take decisive action to oversee forceful leadership
change and manage a successful reset. As we steward the transition
of our business, we will continue to refresh our Board with new
trustees whose knowledge and skill sets complement ours, and whose
character and principles can successfully continue the execution of
our strategy. Once we source new trustee candidates who will
continue to build value for our shareholders, we look forward to
turning over the Board leadership to the new leaders of the
Whitestone Board with the same sense of gratitude we have in having
witnessed Whitestone emerge from turbulence to begin creating value
for our shareholders again.
In closing, we believe it is critical we
preserve our commitment and new strategy which are delivering
results consistent with the high standards of performance, value
creation and governance integrity that you expect of us: We ask you
to support our Board with a vote on the WHITE card for all 6 of our
nominees.
On behalf of the Board and management, thank you
for your support.
David TaylorChair of the Board
Nandita BerryChair of the Nominating and
Governance Committee
About Whitestone REITWhitestone
REIT (NYSE: WSR) is a community-centered real estate investment
trust (REIT) that acquires, owns, operates, and develops open-air,
retail centers located in some of the fastest growing markets in
the country: Phoenix, Austin, Dallas-Fort Worth, Houston and San
Antonio.
Our centers are convenience focused:
merchandised with a mix of service-oriented tenants providing food
(restaurants and grocers), self-care (health and fitness), services
(financial and logistics), education and entertainment to the
surrounding communities. The Company believes its strong community
connections and deep tenant relationships are key to the success of
its current centers and its acquisition strategy. For additional
information, please visit www.whitestonereit.com.
Important Additional Information and
Where to Find It
Whitestone REIT has filed a definitive proxy
statement on Schedule 14A (the “2024 Proxy Statement”) and a
WHITE proxy card with the U.S. Securities and
Exchange Commission (the “SEC”) in connection with the solicitation
of proxies for its 2024 Annual Meeting of Shareholders (the “2024
Annual Meeting”). SHAREHOLDERS ARE STRONGLY ENCOURAGED TO READ THE
2024 PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS
THERETO), THE WHITE PROXY CARD, AND ANY OTHER
DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION. Shareholders may obtain a
free copy of the 2024 Proxy Statement, any amendments or
supplements to the 2024 Proxy Statement and other documents that
the Company files with the SEC from the SEC’s website at
www.sec.gov or the Company’s website at
https://ir.whitestonereit.com/corporate-profile/default.aspx as
soon as reasonably practicable after such materials are
electronically filed with, or furnished to, the SEC.
Certain Information Regarding
Participants in Solicitation
Whitestone REIT, its trustees and certain of its
executive officers may be deemed to be participants in the
solicitation of proxies from Company shareholders in connection
with the matters to be considered at the 2024 Annual Meeting.
Information regarding the direct and indirect interests, by
security holdings or otherwise, of the persons who may, under the
rules of the SEC, be considered participants in the solicitation of
shareholders in connection with the 2024 Annual Meeting is included
in the 2024 Proxy Statement, which was filed with the SEC on April
4, 2024. To the extent securities holdings by the Company’s
trustees and executive officers as reported in the 2024 Proxy
Statement have changed, such changes have been or will be reflected
on Statements of Change in Ownership on Forms 3, 4 or 5 filed with
the SEC, which can also be found through the Company’s website
(https://ir.whitestonereit.com/corporate-profile/default.aspx) in
the section “Investor Relations” or through the SEC’s website.
These documents are available free of charge as described
above.
Investor and Media Contact:David MordyDirector
of Investor RelationsWhitestone REIT(713)
435-2219ir@whitestonereit.com
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