Gaylord, Shareholders Reach Compromise

Gaylord Entertainment reached agreements with its two largest shareholders, TRT Holdings and GAMCO Asset Management, on Gaylord’s board nominees for the upcoming annual meeting and on amendments to its shareholder rights plan.

Gaylord will increase its board from nine to 11 directors with TRT nominees Robert Rowling and David Johnson; GAMCO’s Robert S. Prather Jr. and Glenn J. Angiolillo and current Gaylord directors Colin V. Reed, Michael Bender, E. K. Gaylord II, Ralph Horn, Ellen Levine, Michael D. Rose and Michael I. Roth.

Gaylord will also amend its shareholder rights plan to increase the ownership trigger from 15 percent to 22 percent and include a “qualifying offer” exception for fully financed offers that are:

• valued at least 25 percent above the company’s current and 12-month moving average stock prices;

• and receive tenders of at least 51 percent of shares not owned by the potential suitor.

TRT, owner of Omni Hotels, a Gaylord competitor in three cities, has agreed to support the board through May 15, 2011 and the standstill agreement includes non-disparagement provisions. In January,  Rowling, TRT’s chairman, cited "poor financial performance relative to peer group" and said when compared against 11 hospitality peers (in year over year performance), Gaylord ranked "the absolute worst" in several key metrics. He also cited "corporate waste" and said the "poster child for Gaylord's excess is its operation of a $15 million Gulfstream G150 private jet" that's not needed with only three hotels outside its corporate headquarters in Nashville.

Gaylord immediately disputed those charges and had "serious conflict-of-interest issues" with TRT’s interest because of Rowling’s Omni ownership. TRT owns just less than 15 percent of Gaylord shares (GAMCO owns 13.36 percent).

All sides, at least publicly, have seemingly made up. Comments from Gaylord and TRT were included in a press release Monday:

"We are pleased to have reached agreements with two major shareholders that are in the best interests of all Gaylord shareholders and will avoid the significant costs and distraction of a proxy contest," said Colin V. Reed, chairman and CEO of Gaylord. "We look forward to the insights and experience these four new directors will bring to the board and to working together to enhance value for all shareholders in today's difficult operating environment."

"We appreciate the efforts of management in working with us to reach this agreement and avoid a proxy contest," said Rowling. "We are looking forward to working with Colin and his team to continue building Gaylord and creating value for all shareholders.”

We’ll find out more at the annual board meeting in May.

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