St. Joe CEO to Leave as Fairholme's Berkowitz Succeeds in Board Shake-Up
St. Joe Co. said Chief Executive Officer Britt Greene and three other board members will resign, marking a victory for Bruce Berkowitz’s Fairholme Capital Management LLC in a battle for control of the Florida landowner.
Greene resigned from the company’s board effective immediately and will step down as president and CEO this week, the company said today in a statement. He was named CEO in 2008. Michael L. Ainslie, John S. Lord and Walter L. Revell also will leave as directors.
Berkowitz, whose firm is the biggest shareholder of Watersound, Flordia-based St. Joe, will join the board, along with three other new members. He resigned earlier this month after disagreements over the company’s compensation and governance process, and began efforts to oust some of the directors.
St. Joe, with Berkowitz on the board, may consider a “more aggressive” investment plan outside of its concentration of northwest Florida properties, said James Wilson, a real estate analyst at JMP Securities LLC in San Francisco.
“How long before northwest Florida takes off and makes it feasible to really develop a lot, I don’t know, but it’s probably going to take a while,” Wilson said in a phone interview. “Florida is still well behind the rest of the country economically. Sitting and waiting for the Panhandle to start growing is obviously not a very proactive business model.”
Wilson has a “market perform” rating on the company.
The other new directors are Charles M. Fernandez, Fairholme’s president; former Florida Governor Charlie Crist; and Carnival Corp. Chief Operating Officer Howard Frank. Chairman Hugh Durden, Thomas Fanning and Delores Kesler will remain from the old board.
“St. Joe is committed to acting in the best interests of shareholders, and in light of the feedback the board of directors has received, we are taking steps to change the company’s governance and leadership,” Durden said in the statement.
Fairholme, based in Miami, has indicated it won’t seek further changes to the board, St. Joe said in its statement. Jed Repko, a spokesman for St. Joe, said company executives, including Greene, would have no comment beyond today’s statement. Tom Pinto, a spokesman for Berkowitz, also declined to comment.
The company, which has lost money for 10 consecutive quarters, said it will hire an executive search firm to find at least one additional independent director.
St. Joe shares fell 89 cents, or 3.2 percent, to $26.78 at 4:15 p.m. in New York Stock Exchange composite trading. The stock has gained 23 percent this year, after losing 24 percent in 2010.
Today’s announcement comes 12 days after St. Joe said it “adamantly” opposed Berkowitz’s attempt to take control of the company and that Fairholme’s proxy fight would be “costly and disruptive.” On Feb. 8, St. Joe said it hired Morgan Stanley to explore ways to boost shareholder value, including a merger or sale.
Hedge-fund manager David Einhorn has questioned St. Joe’s accounting practices. In October, Einhorn said the company failed to properly write down the value of its land after having sold its most valuable waterfront tracts. He said he was shorting the stock, anticipating that shares would fall.
The company last month said it faced an informal inquiry into its asset valuation practices by the U.S. Securities and Exchange Commission.
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