Hyatt Hotels Corporation, controlled by the Pritzker family, has hit the headlines again for its corporate governance practices after it was revealed that Penny Pritzker was no longer considered an independent director of the group.
A report in the Wall Street Journal revealed the move and it comes after the Chicago-based hotel group has come under pressure to tighten its corporate governance.
Pritzker, one of America's wealthiest and most powerful businesswomen, appears to have given up the directorship in response to concerns over her role as chairman or president with various family businesses that did about $3 million a year in transactions with Hyatt, according to the WSJ report.
Pritzker is also first cousin of Hyatt's executive chairman, Thomas Pritzker, which some saw as a further conflict of interest.
The Pritzker family's control of the hotel chain was criticized when the company launched an initial public offering last November. A report by the real estate research and consultancy group Green Street Advisors said: "Simply put, Hyatt's corporate governance is the worst in our entire coverage universe.
"The existing owners are sending a strong signal to outside public shareholders that the Pritzker family will firmly control Hyatt, even if the family's economic ownership interest falls below 50%."
Under the terms of the IPO, Hyatt set up two classes of shares that gave the Pritzker family more voting power than other shareholders.
The family own 80.7% of the company's Class B common stock, representing 62.4% of shares outstanding and 78.4% of total voting power. Each Class B share is entitled to 10 votes compared with one vote per Class A share, according to company filings, cited in a Bloomberg report last year.
Pritzker might have stepped down as an independent board member, but concerns still remain over other independent members.
Richard Friedman, a partner and managing director at Goldman Sachs, is an independent director on Hyatt, despite the hotel group paying Goldman $3.5 million for investment banking and advisory services, according to the report in the WSJ, which cited Hyatt's proxy statement.
The Pritzker family are possibly the wealthiest family dynasty in the US, with as many as 10 members classified as billionaires – more any other family in America – according to Forbes' annual list of the wealthiest people in the world.
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