NEW YORK CITY—Corvex Management LP, which partnered with fellow shareholder Related Fund Management to wage an ultimately successful, year-long campaign to oust the board of CommonWealth REIT, has now set its sights on American Realty Capital Properties. Corvex disclosed a 7.7% stake in the net lease REIT this past December, making it the company's second largest shareholder, and now is pushing for more shareholder representation on its board, as well as the removal of the entire current board.

“As you are most certainly aware, ARCP's shareholders have suffered through the destruction of billions of dollars in shareholder value resulting from grossly conflicted self-dealing, an alleged accounting fraud and general mismanagement,” according to the Corvex letter over the signature of managing partner Keith Meister. The company's stock is down a reported 25% since the disclosure of accounting irregularities this past October. More recently, all of the company's senior executives, including executive chairman Nicholas Schorsch and CEO David S. Kay, have stepped down.

In view of ARCP's recent history, Meister wrote, “it is absolutely crucial that what happens next for the company is unassailable. New leadership must be of the highest caliber and integrity. Moreover, management and board members must be chosen in a manner that has the utmost credibility to ensure that they are fully aligned with the interest of all shareholders. And, lastly, corporate governance needs to be 'best in class'—with a clean slate from which to start, there is simply no excuse for it to be anything less. To truly move forward, ARCP cannot make any compromises on these fronts.”

Meister's letter spells out a series of “bedrock principles” to which he believes a new chairman and CEO should adhere. Among them are severing “any remaining ties with past affiliated entities and leadership'” commitment to “a board of truly independent directors, including elimination of the current board members from all positions with the company;” corporate governance “consistent with ISS and Glass Lewis standards, including a firm commitment to no related party transactions not approved by a vote of disinterested shareholders;” and the cessation of windfall payments to current board members.

ARCP says its board welcomes shareholder input “and has had numerous conversations and meetings with Corvex Management since December.  The board appropriately is focused on the completion and release of the company's restated financial statements and the third quarter 2014 quarterly report, the recruitment of a new CEO and non-executive board chair.  We will turn to the composition of the board once this very important work is completed.”