Midtown-based office landlord Paramount Group has defied its shareholders by reappointing a director who they voted to remove from the board.
Nearly 56% of shareholder votes were cast against re-electing Katharina Otto-Bernstein after she missed 40% of board meetings last year, including the annual stockholder meeting. Otto-Bernstein is a filmmaker and daughter of the founder of the real estate investment trust that owns several towers in Manhattan and San Francisco, including 1633 Broadway and 1301 Sixth Ave.
“Directors who do not attend their board and committee meetings cannot be effective representatives of shareholders,” Institutional Shareholder Services said in a report urging investors to vote against Otto-Bernstein at Paramount’s annual meeting on May 16.
Otto-Bernstein offered to resign after the board election, according to a regulatory filing. Paramount rejected her resignation, however, and reappointed her for another year to the board she’s served on since 2014.
The company said her absences were due to “scheduling conflicts” and it will “engage its stockholders on any issues that may have led stockholders to vote against Ms. Otto-Bernstein.” ISS said it expects directors to miss no more than 25% of meetings and scheduling conflicts are an acceptable reason for missing them only in a director’s first year.
In addition to voting to unseat Otto-Bernstein, a 50.3% majority of investors also gave a thumbs-down on the $20 million pay package awarded last year to CEO Albert Behler.
It is rare for board members to draw anything more than token disapproval. Last year directors got at least 95% of shareholder votes in two thirds of boardroom elections, according to PwC, and in only 0.3% of cases did they receive less than 50% support. Likewise, CEO pay packages are routinely waved through.
Paramount declined to comment. Otto-Bernstein did not respond to requests for comment made through her film-production company or the Upper East Side art gallery run by her husband, Nathan Bernstein. Paramount’s stock trades for about $4.50 a share, or two thirds below its pre-2020 level.
Otto-Bernstein has produced 20 films, according to IMDB, including an Emmy-nominated documentary about photographer Robert Mapplethorpe. She joins the ranks of what are known as zombie directors, or board members who hold seats even though shareholders have voted to boot them out. In 2020 MSCI found that 54 zombie directors “haunt” the boardrooms of 32 U.S. companies.
Otto-Bernstein’s father, German mail-order tycoon Werner Otto, acquired Paramount Plaza at 1633 Broadway in 1976 for $84 million. Otto’s heirs control 15% of the company’s shares and three board seats, one of which they’ve designated for Behler. Otto-Bernstein, 59, is a principal owner of ECE Group, an international shopping-center manager and developer, according to Paramount, and a board member of CURA Vermögensverwaltung, a real estate management firm.
Aaron Elstein , 2024-05-28 19:29:51
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