Proxy advisor calls for 'no' vote on Ryman directors, E&Y

Company defends REIT conversion costs, directors' meeting attendance record

A leading proxy advisory firm has called for shareholders of Ryman Hospitality Properties to vote against four directors as well as the company's longtime auditor when they meet next week.

Institutional Shareholder Services says Ryman stockholders should deny Michael Bender, E.K. Gaylord and Michael Roth another term because they attended less than 75 percent of 2012 board and committee meetings "without a valid excuse" and because the company hasn't provided enough information as to why. ISS analysts also say Bender, Gaylord and Ralph Horn should not be re-elected because, as audit committee members, they approved an excessive amount of 2012 spending on non-audit work by Ernst & Young professionals.

Along those lines, ISS also says investors should push to replace E&Y, which has worked with Ryman and its predecessor for 11 years.

Ryman officials have responded to ISS' report by clarifying that only Bender did not meet the 75 percent attendance threshold for board and committee meetings. Had Bender been able to make one meeting held while he was traveling abroad as part of his Wal-Mart Stores job, the company said, he would have met the requirement.

Regarding Ernst & Young's non-audit work — which amounted to 56 percent of its total Ryman tab for 2012, a number ISS "could be perceived as impairing an auditor's independent judgment" — company officials say that 80 percent of the roughly $2 million they spent on tax services last year were one-time costs related to the conversion of what had been Gaylord Entertainment Co. into Ryman, which is structured as a real estate investment trust.

"Moreover, we believe that the selection of Ernst & Young to provide these REIT-related services, and the amount of fees paid to Ernst & Young to provide these services, was appropriate given Ernst & Young’s expertise and historical knowledge of the Company and its organizational structure, which proved critical in Ernst & Young’s rendering of these REIT-related services during 2012 and in our success in completing this REIT conversion," the company said in an addendum to its proxy statement.

ISS last year also called for investors to vote against the re-election of Gaylord and Roth (as well as David Johnson, a TRT Holdings designee who has since stepped down) because of poor meeting attendance. Gaylord and Roth both received about 74 percent of votes cast a year ago — Johnson got 66 percent — compared to more than 90 percent for all other nominees.