Monty Bennett survives proxy fight – for now

UPDATED 5/16/24 at 3:06 PM

Monty Bennett survived a proxy fight at Ashford Hospitality Trust, but he isn’t out of the woods yet. 

In the company’s annual shareholder meeting this week, Bennett did not receive enough votes to be re-elected to the board. Shortly after the vote, though, the surviving board members re-appointed him. 

The vote came after an activist campaign by New York investor Blackwells that alleged Bennett had been lining his own pockets with management fees while the companies suffered.

“The voting results are a conclusive indictment of the Board’s failure to act in the best interests of stockholders,” said Jason Aintabi, Blackwells’ chief investment officer. 

At first, Bennett seemed to have lost control of his hotel real estate investment trust. After the vote, Bennett turned in his resignation, as required by company bylaws. The surviving board members did not accept the resignation, however, restoring him to power. 

Ashford did not return a request for comment. “Blackwells’ activist campaign had no meaningful effect on the election,” the company said in a news release. The vote totals are not yet known, but the trust estimated that 7 percent of outstanding shares voted on Blackwells’ proxy card. 

Blackwells holds a small minority of shares in Ashford. Värde Partners, Castleknight, Vanguard and Brookfield are Ashford Hospitality Trust’s largest shareholders, each holding between five and seven percent of the company. 

While Bennett will stay on, the company’s CEO Rob Hayes will leave at the end of June. Stephen Zsigray, a corporate finance and strategy executive with the firm, will take his place. 

Bennett still has to fend off Blackwells at Braemar Hotels and Resorts, another of his hospitality real estate investment trusts. Braemar will host its shareholder meeting on July 30.

Blackwells wants to oust Bennett and the rest of Braemar’s board, arguing similarly that the REIT’s shares have plummeted in value while Bennett has earned millions of dollars from an advisory agreement. Blackwells holds 913,404 shares of Braemar, a stake worth $2.6 million at the current share price. 

Blackwells tried to buy Braemar in December for $4.50 per share, a 114 percent premium to the share price at the time. The deal never came together, and Blackwells instead nominated a new slate of board members. 

Braemar considers Blackwells’ nominations invalid and is challenging them in court. 

In its response to the Braemar lawsuit, Blackwells wrote, “Given that Braemar’s incumbent directors have overseen a nearly 90 percent collapse in Braemar’s stock price over the last decade, their fear of an open election against Blackwells’ highly qualified nominees is not surprising.”

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Under the advisory agreement, Ashford advises Braemar for an annual fee. 

Last year, Braemar paid Ashford $48.9 million for its services, according to the trust’s most recent annual filing. Bennett is the chairman of both companies’ boards, and the CEO and Chairman of Ashford Inc., which advises both.

Together, Braemar and Ashford own 105 hotels with more than 25,000 keys, according to Ashford’s website.

This story has been updated to show that Blackwells owns 913,404 shares of Braemar.