While public companies should welcome any input from shareholders, since it’s the shareholders who own the company, boards should be cognizant of balancing the interests of all shareholders in proportion to their ownership. In the case of the proposal made by Land & Buildings for MGM Resorts to convert to a REIT, Land & Buildings only owns 1 percent of outstanding shares, so the board should weigh the views of Land & Buildings in proportion to their ownership interest.
Regarding the slate of directors proposed by Land & Buildings, some of the directors would be valuable to have represented on the board. Although I think a good first step to improve governance at MGM should be to no longer have any executive of the company also serving as board member. A major responsibility of the board should be to hold management accountable, and it creates a conflict of interest to have management also serving on the board. Jim Murren should only serve as CEO of MGM.
The MGM REIT conversion is going to be a fun fight to watch, but I think Land & Buildings will need to recruit more shareholders to support their strategy, and ultimately, Kirk Kevorkian will need to provide an opinion.
