Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
The information set forth in the Explanatory Note and in Item 8.01 is
incorporated herein by reference.
The Board has affirmatively determined that each of Ms. Millstone-Shroff and
Ms. Owen is "independent" under the rules of the New York Stock Exchange and the
rules and regulations of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). At the time of filing of this Current Report on Form 8-K, the
Board has not determined whether it will name Ms. Millstone-Shroff or Ms. Owen
to other committee(s) of the Board and, if so, to which committee(s)
Ms. Millstone-Shroff or Ms. Owen will be named.
Each of Ms. Millstone-Shroff and Ms. Owen will receive compensation consistent
with that received by the Company's other non-employee trustees. A description
of the compensatory arrangements for non-employee trustees will be included in
the Company's proxy statement on Schedule 14A for the 2021 Annual Meeting, which
will be filed with the U.S. Securities and Exchange Commission (the "SEC") prior
to the 2021 Annual Meeting.
In connection with this appointment, the Company will enter into an
indemnification agreement (the "Indemnification Agreement") with
Ms. Millstone-Shroff and Ms. Owen similar to the indemnification agreement
entered into with all other members of the Board, the form of which is filed as
Exhibit 10.19 to the Company's Form 10-K for the year ended December 31, 2016.
There are no arrangements or understandings between each of Ms. Millstone-Shroff
and Ms. Owen and any other person pursuant to which Ms. Millstone-Shroff and
Ms. Owen, as applicable, was appointed as a trustee other than with respect to
the matters referred to in the Explanatory Note. There are no transactions in
which each of Ms. Millstone-Shroff and Ms. Owen has or will have an interest
that would be required to be disclosed pursuant to Item 404(a) of Regulation S-K
under the Exchange Act at this time.
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Also on January 5, 2021, the Company announced that Gary E. Pruitt will retire
from the Board, effective immediately. The retirement of Mr. Pruitt was not due
to any disagreements relating to matters concerning the Company's operations,
policies or practices and the Board is greatly appreciative of Mr. Pruitt's many
years of service and substantial contributions.
Item 8.01 Other Events.
The information set forth in the Explanatory Note is incorporated herein by
reference.
The Cooperation Agreement provides that from the date of the Cooperation
Agreement until the earlier of (x) December 31, 2021 and (y) the date that is 30
calendar days prior to the notice deadline under the Company's organizational
documents for the nomination of non-proxy access trustee candidates for election
to the Board (the "Cooperation Period"), Elliott shall cause all of the common
shares, $0.10 par value, of the Company (the "Company Common Shares") that
Elliott or any of its controlling or controlled affiliates, or affiliates under
common control with it, has the right to vote (or direct the vote) as of the
applicable record date to be voted: (i) in favor of each trustee nominated and
recommended by the Board for election at the 2021 Annual Meeting or, if
applicable, any other meeting of shareholders of the Company; (ii) against any
shareholder nominations for trustee that are not approved and recommended by the
Board for election; (iii) against any proposals or resolutions to remove any
member of the Board; and (iv) in accordance with recommendations by the Board on
all other proposals or business that may be the subject of shareholder action,
subject to certain exceptions.
Elliott also agreed to standstill restrictions covering various conduct and
activities, including with respect to third parties, during the Cooperation
Period, the specifics of which are set forth in the Cooperation Agreement. The
standstill restrictions fall away under certain circumstances specified in the
Cooperation Agreement.
The Cooperation Agreement also includes certain procedures regarding
replacements for Ms. Millstone-Shroff and Ms. Owen during the Cooperation
Period, various Committee-related items and a mutual non-disparagement covenant.
The foregoing summary of the Cooperation Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Cooperation Agreement, a copy of which is attached as Exhibit 99.1 and is
incorporated herein by reference.
On January 5, 2021, the Company issued a press release announcing advances to
its board refreshment process, including the appointments of
Ms. Millstone-Shroff and Ms. Owen to the Board, the formation of the Committee
and the Company's entry into the Cooperation Agreement with Elliott. A copy of
the press release is attached as Exhibit 99.2 and is incorporated herein by
reference.
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Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. All statements
in this Current Report on Form 8-K, other than statements of historical fact,
are forward-looking statements which may be identified by the use of the words
"expects," "believes," "anticipates," "should," "estimates" and similar
expressions. These forward-looking statements involve known and unknown risks
and uncertainties, which may cause our actual results and performance to be
materially different from those expressed or implied in the forward-looking
statements. Factors and risks that may impact future results and performance
include, but are not limited to, those described in Part 1, Item 1A, "Risk
Factors" in our most recent Annual Report on Form 10-K filed with the Securities
and Exchange Commission (the "SEC") on February 25, 2020 and in our other
filings with the SEC including: general risks associated with the ownership and
operation of real estate, including changes in demand, risk related to
development, expansion and acquisition of self-storage facilities, potential
liability for environmental contamination, natural disasters and adverse changes
in laws and regulations governing property tax, real estate and zoning; risks
associated with downturns in the national and local economies in the markets in
which we operate, including risks related to current economic conditions and the
economic health of our customers; risks associated with the COVID Pandemic or
similar events, including but not limited to illness or death of our employees
or customers, negative impacts to the economic environment and to self-storage
customers which could reduce the demand for self-storage or reduce our ability
to collect rent, and/or potential regulatory actions to (i) close our facilities
if we were determined not to be an "essential business" or for other reasons,
(ii) limit our ability to increase rent or otherwise limit the rent we can
charge or (iii) limit our ability to collect rent or evict delinquent tenants;
risk that even after the initial restrictions due to the COVID Pandemic ease,
they could be reinstituted in case of future waves of infection or if additional
pandemics occur; risk that we could experience a change in the move-out patterns
of our long-term customers due to economic uncertainty and the significant
increase in unemployment in the last 30 days. This could lead to lower
occupancies and rent "roll down" as long-term customers are replaced with new
customers at lower rates. We observed such a trend during the recessionary
circumstances of 2009; however, to date we have not seen any material change in
the move-out patterns of long-term customers; risk of negative impacts on the
cost and availability of debt and equity capital as a result of the COVID
Pandemic, which could have a material impact upon our capital and growth plans;
the impact of competition from new and existing self-storage and commercial
facilities and other storage alternatives; the risk that our existing
self-storage facilities may be at a disadvantage in competing with newly
developed facilities with more visual and customer appeal; risk related to
increased reliance on Google as a customer acquisition channel; difficulties in
our ability to successfully evaluate, finance, integrate into our existing
operations and manage properties that we acquire directly or through the
acquisition of entities that own and operate self-storage facilities; risks
associated with international operations including, but not limited to,
unfavorable foreign currency rate fluctuations, changes in tax laws and local
and global economic uncertainty that could adversely affect our earnings and
cash flows; risks related to our participation in joint ventures; the impact of
the legal and regulatory environment, as well as national, state and local laws
and regulations including, without limitation, those governing environmental
issues, taxes, our tenant reinsurance business, and labor, including risks
related to the impact of new laws and regulations; risks of increased tax
expense associated either with a possible failure by us to qualify as a REIT, or
with challenges to the determination of taxable income for our taxable REIT
subsidiaries; risks due to a November 2020 California ballot initiative (or
other equivalent actions) that could remove the protections of Proposition 13
with respect to our real estate and result in substantial increases in our
assessed values and property tax bills in California; changes in United States
federal or state tax laws related to the taxation of REITs and other
corporations; security breaches or a failure of our networks, systems or
technology could adversely impact our operations or our business, customer and
employee relationships or result in fraudulent payments; risks associated with
the self-insurance of certain business risks, including property and casualty
insurance, employee health insurance and workers compensation liabilities;
difficulties in raising capital at a reasonable cost; delays and cost overruns
on our projects to develop new facilities or expand our existing facilities;
ongoing litigation and other legal and regulatory actions which may divert
management's time and attention, require us to pay damages and expenses or
restrict the operation of our business; and economic uncertainty due to the
impact of war or terrorism. These forward-looking statements speak only as of
the date of this Current Report on Form 8-K. All of our forward-looking
statements, including those in this Current Report on Form 8-K, are qualified in
their entirety by this statement. We expressly disclaim any obligation to update
publicly or otherwise revise any forward-looking statements, whether because of
new information, new estimates, or other factors, events or circumstances after
the date of these forward looking statements, except when expressly required by
law. Given these risks and uncertainties, you should not rely on any
forward-looking statements in this Current Report on Form 8-K, or which
management may make orally or in writing from time to time, neither as
predictions of future events nor guarantees of future performance.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Financial Statements and Exhibits
99.1 Cooperation Agreement by and among Public Storage, Elliott
Investment Management L.P., Elliott Associates, L.P. and Elliott
International, L.P., dated January 5, 2021.
99.2 Press Release issued by Public Storage dated January 5, 2021.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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