Real Estate

Bennett Holds Position at Ashford Amid Proxy Battle

Monty Bennett retains position at Ashford Hospitality Trust after proxy battle, highlighting shareholder activism's impact on corporate governance.

By Tal Alexander

5/16, 14:53 EDT
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Key Takeaway

  • Monty Bennett retains his position at Ashford Hospitality Trust after a board decision, despite losing shareholder vote influenced by Blackwells Capital's campaign.
  • CEO Rob Hayes to depart by end of June; Stephen Zsigray named successor amidst ongoing disputes with Blackwells over management and fees.
  • Bennett faces further challenges from Blackwells at Braemar Hotels and Resorts, with accusations of financial mismanagement and a significant stock price decline.

A Tumultuous Proxy Battle at Ashford Hospitality Trust

Monty Bennett, a prominent figure in the hotel real estate investment trust (REIT) sector, recently faced a significant challenge at Ashford Hospitality Trust's annual shareholder meeting. Despite surviving a proxy fight initiated by New York investor Blackwells Capital, Bennett found himself in a precarious position when he did not secure enough votes for re-election to the board. However, in a surprising turn of events, the remaining board members quickly re-appointed him, highlighting the complex dynamics at play within the company. This incident underscores a broader narrative of power struggles and governance issues within publicly traded companies, particularly those in the volatile hospitality sector.

The Power of Shareholder Activism

The proxy battle at Ashford Hospitality Trust, led by Blackwells Capital, brings to light the increasing influence of activist investors in corporate governance. Blackwells' campaign accused Bennett of prioritizing personal gains over the company's well-being, a claim that resonated with a significant portion of the shareholders. Despite the trust's dismissal of Blackwells' impact on the election outcome, the fact that Bennett's re-election was contested signals a growing discontent among investors. This scenario is reflective of a larger trend where activist shareholders are more willing to challenge management teams they believe are not acting in the best interests of the company.

Implications for Corporate Governance

The reappointment of Monty Bennett to the board, despite the shareholder vote, raises important questions about corporate governance practices and the balance of power between a company's management, its board, and its shareholders. The situation at Ashford Hospitality Trust illustrates the potential for conflicts of interest when individuals hold significant roles across multiple entities within a corporate structure. Bennett's dual role as chairman of the boards of both Ashford Hospitality Trust and Braemar Hotels and Resorts, as well as CEO and Chairman of Ashford Inc., which advises both REITs, exemplifies the complexities and potential governance issues inherent in such arrangements.

The Ongoing Struggle at Braemar Hotels and Resorts

The proxy fight at Ashford Hospitality Trust is not an isolated incident. Bennett faces a similar challenge at Braemar Hotels and Resorts, another hospitality REIT under his leadership. Blackwells Capital's attempt to overhaul Braemar's board by nominating a new slate of directors underscores the activist investor's broader strategy to instigate change within Bennett's sphere of influence. The legal battle over the validity of Blackwells' nominations at Braemar further complicates the situation, highlighting the contentious nature of shareholder activism and its potential to disrupt corporate operations.

Street Views

  • Jason Aintabi, Blackwells Capital (Bearish on Ashford Hospitality Trust and Braemar Hotels and Resorts):

    "The voting results are a conclusive indictment of the Board’s failure to act in the best interests of stockholders."