8-KShareholder MattersCorporate ChangesOther Events+1

ESSEX PROPERTY TRUST, INC. 8-K Report, Bylaw Amendment (May 23, 2016)

Filed May 23, 2016For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) has filed an 8-K report detailing significant corporate governance changes approved by its stockholders. The most impactful change for investors is the amendment to the company's charter, which reduces the super-majority vote requirement to amend certain charter sections to a simple majority vote. This change, effective May 18, 2016, makes it easier for the company to modify its charter in the future. Additionally, the company's bylaws were amended to implement an exclusive forum provision for certain litigation, directing such cases to specific Maryland state or federal courts. Further to these governance updates, the company has formally reclassified all authorized but unissued preferred stock (Series G and Series H) into shares of common stock available for future issuance. This reflects the prior repurchase, redemption, or conversion of all outstanding shares of these preferred stock series. The annual meeting on May 17, 2016, also saw the election of directors, ratification of KPMG as the auditor, and an advisory vote approving executive compensation.

Key Highlights

  • 1Charter Amendment: Reduced super-majority vote requirement to amend certain charter sections to a majority vote standard, effective May 18, 2016.
  • 2Bylaw Update: Implemented an 'exclusive forum' provision for specific types of litigation, directing them to designated Maryland courts.
  • 3Preferred Stock Reclassification: All authorized but unissued Series G and Series H Preferred Stock have been reclassified into common stock for future issuance.
  • 4Director Elections: All nine nominated directors were elected to serve until the 2017 annual meeting.
  • 5Auditor Ratification: KPMG LLP was ratified as the independent registered public accounting firm for the year ending December 31, 2016.
  • 6Executive Compensation: Stockholders cast an advisory vote approving the company's executive compensation.
  • 7Director Compensation Increase: Amended the Non-Employee Director Equity Award Program to increase annual equity grants for directors and the Chairman.

Frequently Asked Questions

This change makes it easier for Essex Property Trust, Inc. to amend its charter in the future. Previously, a super-majority (typically a higher percentage than a simple majority) was required for certain amendments, which could make changes difficult to pass. A majority vote standard generally provides more flexibility for the company to adapt its governing documents.

An 'exclusive forum' provision designates specific courts where certain types of lawsuits against the company or its directors and officers must be filed. Essex implemented this to centralize litigation and ensure it is heard in courts familiar with Maryland corporate law. This can help reduce the risk of inconsistent rulings and potentially manage litigation costs.

The reclassification of Series G and Series H Preferred Stock into common stock indicates that all previously issued shares of these series have been repurchased, redeemed, or converted. This action simplifies the capital structure by removing these specific preferred stock classes from future issuance possibilities, consolidating them into the authorized common stock pool.

The advisory vote on executive compensation was approved by the stockholders. This means that a majority of the votes cast were in favor of the compensation policies and decisions for the company's named executive officers, as disclosed in the proxy statement.