Gyrodyne Reaches Governance Agreement with Star Equity Fund, Reduces Board Size

Gyrodyne, LLC has entered into a comprehensive agreement with Star Equity Fund that resolves previous governance disputes and establishes new parameters for board composition and compensation. The agreement represents a significant development in shareholder-company relations and corporate governance practices within the real estate investment sector.

Under the terms of the agreement, Star Equity Fund has withdrawn its slate of nominees for election at the 2025 annual shareholders meeting, while Gyrodyne will reduce its board size from five to four directors. This structural change comes with additional governance enhancements including a freeze on director compensation and a limitation on the aggregate fee paid to the Chairman to $65,000. Richard Smith will be the sole nominee standing for election at the upcoming shareholders meeting as part of this board restructuring.

The agreement includes customary standstill provisions that prevent Star Equity Fund from pursuing further activist campaigns against the company for a specified period. The full details of the agreement will be disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission, available through the SEC's EDGAR database at https://www.sec.gov/edgar/searchedgar/companysearch.

Gary Fitlin, Gyrodyne's President and Chief Executive Officer, emphasized the constructive nature of the engagement, stating that shareholder input has strengthened the company's efforts to complete property sales and deliver maximum value to shareholders. Jeff Eberwein, manager of Star Equity Fund, expressed satisfaction with the collaborative process that led to enhanced governance alignment with shareholder interests.

The governance changes occur alongside leadership transitions, as Paul Lamb concludes his 28-year tenure with the company. Nader Salour, Chairman of Gyrodyne's Nominating Committee, acknowledged Lamb's significant contributions, noting his instrumental role in guiding the company through challenging periods and transformation. Despite not standing for re-election, Lamb will remain involved as a significant shareholder and supporter of the company's long-term success.

This agreement demonstrates the evolving dynamics between companies and activist investors, particularly in the real estate sector where governance practices directly impact property valuation and strategic execution. The resolution avoids potential proxy contests that could have distracted management during critical property disposition processes. The governance enhancements align with broader industry trends toward board efficiency and compensation discipline, potentially setting precedents for similar mid-sized real estate companies facing shareholder activism.

The timing of this agreement is particularly significant as Gyrodyne pursues value-enhancing entitlements for its properties, including a 63-acre site on Long Island and a medical office park in Cortlandt Manor, New York. Improved governance and shareholder alignment could facilitate smoother execution of these strategic initiatives. Additional information about Gyrodyne's property portfolio and corporate developments can be found on the company's website at https://www.gyrodyne.com.

For investors and industry observers, this agreement represents a case study in constructive shareholder engagement resolving potential conflicts before they escalate to public disputes. The governance changes implemented through this agreement may influence how other real estate companies approach shareholder relations and board composition decisions in an increasingly activist investment environment.