Rent-a-CEO: Inside Gilmartin’s short-term gig at Mack-Cali
She’ll remain chair of the REIT’s board after her stint, and CEO of MAG Partners
After a massive shakeup of Mack-Cali’s board, MaryAnne Gilmartin is temporarily stepping in as the New Jersey-based real estate investment trust’s CEO.
Gilmartin, through an agreement between Mack-Cali and her company MAG Partners, will serve as CEO for six months or until the company finds a replacement, whichever happens first, according to filings with the Securities and Exchange Commission. Mack-Cali, in turn, will pay MAG Partners a monthly fee of $150,000 and offer a one-time cash sign-on bonus of $300,000 and a completion bonus of $200,000 at the end of Gilmartin’s term, according to filings. An activist investor had pushed for the resignation of Mack-Cali CEO Michael DeMarco since earlier this year.
MAG Partners has also been offered a fully vested stock option to purchase up to 230,000 shares of common stock at $14.39 per share, and up to 100,000 shares of common stock at $20 per share. Gilmartin is still serving as chair of Mack-Cali’s board, which will lead the search for a permanent CEO.
“I think this is going to be an awesome gig. There are many many people who have been sidelined for lots of reasons. Or have just been looking for something new, given that the world order has shifted,” Gilmartin said in an interview Monday. “I’m wildly confident that we will have a great selection of talent.”
Gilmartin said she’s not “stepping away in any significant way” from MAG Partners, the development firm she launched last year as a spinoff from the partnership she formed with L&L Holding nearly two years prior. Her team — largely made of Forest City alums — will continue to handle day-to-day operations. MAG Partners is one of several firms looking to develop part of the former Amazon site in Long Island City. Most recently, the company signed letter of intent for a ground lease with Trinity Real Estate to develop a 150,000-square-foot boutique office at 122 Varick Street.
Mack-Cali, meanwhile, has been shifting its strategy from operating suburban offices to acquiring multifamily and office properties on the Hudson County waterfront. In December, the REIT agreed to sell its entire suburban office portfolio to a joint venture led by Onyx Equities in a deal valued at $288.5 million. Last March, it unloaded a 56-building portfolio in Westchester and Fairfield for $487.5 million.
Gilmartin was one of four board directors who had criticized Mack-Cali’s leadership in May, amid the REIT’s proxy fight with investor Bow Street. Gilmartin — along with three other board directors backed by Bow Street — said other members of the board put a “rubber stamp” on decisions favored by ousted CEO DeMarco, Bloomberg reported at the time. Bow Street, which owns a 4.9 percent stake in Mack-Cali, ultimately won eight of the nine board of director seats last month. Gilmartin was named chair.
In a March letter to shareholders, Bow Street had called for DeMarco to resign, accusing him of various missteps, including ignoring viable bids from companies interested in acquiring Mack-Cali. A representative for Bow Street declined to comment. DeMarco, who replaced Mitch Rudin as CEO in 2017, couldn’t immediately be reached.
Daniel Ismail, an analyst at Green Street Advisors who covers Mack-Cali, said the CEO switch was expected by investors, given the recent shakeup of the board. He expects activist investors to continue pushing for a sale or merger of the company. He noted that Gilmartin has experience working for a public REIT, Forest City, which was also sold shortly after she left the company.
“There’s probably a lot that can be reconfigured,” he said. “But in this environment — in the middle of a pandemic — many of these large strategic things are going to be difficult, as is looking for a permanent CEO.”
When asked about her goals as interim CEO, given her criticism of previous leadership, Gilmartin pointed to the reconfigured board, which aims to create an “independent transparent board that focuses on governance and strategy.” She sees herself as an intermediary between management and the board and says she is focused on company culture.
“There is no direction yet as to the board’s thinking on strategy because the board has really just been reconstituted,” she said. “There’s no great reveal yet because the work has really yet to be done.”
Rich Bockmann contributed reporting.
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