Bruce and Charles Ratner are stepping down from the board of Forest City Realty Trust, the Cleveland-based real estate firm that owns the New York Times Building, New York by Gehry and the MetroTech Center.
The two executives, who represent the family interest in the almost century-old company, will exit as the company morphs into a more democratic venture.
Facing pressure from activist investor Scopia Capital Management, Forest City was urged to eliminate its dual-class stock structure, which gave the Ratner family voting control over the company. Forest City caved to the demand of investors.
As part of the reclassification of its share structure, Class B shares would be converted to Class A shares. According to a previous report from the Wall Street Journal, the Ratner family held 3.8 percent of Class A shares and 92 percent of Class B shares. This allowed the Ratners to appoint nine of the company’s 13 board members. With the reclassification of shares, the family’s voting power may be diluted to 10.2 percent.
Charles Ratner will retire after 50 years in the company. His departure takes effect on December 31.
“It has always been my intention to retire in 2016 at age 75 and with the strong leadership of President and CEO David LaRue, ongoing guidance and oversight of our majority-independent Board, and continued commitment from and involvement by members of the founding family, we have set Forest City on a strong path. I know the company is in good hands,” he said.
Forest City president and CEO David J. LaRue said, “It’s hard to overstate how much Chuck Ratner has contributed to Forest City. Our assets grew four-fold under his leadership, we created extraordinary, visionary real estate and he fostered a culture that made it all possible.
“I’m one of many Forest City associates who benefited from his leadership. I’ve known about his yearend retirement plan for some time and I’m grateful he was still here to help us strengthen our company by making these important changes.”
Meanwhile, Bruce Ratner, who has been a director in the company since 2007, will also step down from the board at the end of the year. He will continue working in the firm’s New York subsidiary.
The restructuring of the company’s leadership means that the Forest City’s 13-member of board of directors will have a majority of eight independent members.
Charles Ratner will be succeeded by James Ratner, who currently holds the position of executive vice president of development.
Meanwhile, Bruce Ratner will be replaced by an independent director. Advisory group Ferguson Partners has been hired to search for a candidate.
The Ratner family’s power to select board members is set to gradually decrease. As part of the changes to the company’s structure, the board will nominate James Ratner and three other Ratner family members during the 2017, 2018 and 2019 Annual Meetings of Shareholders. It will go down to two Ratner family members for the 2020 and 2021 stockholders meetings.