St. Joe shakes up board amid shareholder pressure

AP News
Posted: Feb 28, 2011 5:15 PM
St. Joe shakes up board amid shareholder pressure

Fairholme Capital Management founder Bruce Berkowitz's bid to replace the board of directors of Florida landowner St. Joe Co. ended Monday with the ouster of the company's CEO and three other directors.

The Fairholme Fund _ a mutual fund and St. Joe's largest shareholder _ also got to name four new board members, including Berkowitz, and agreed not to pursue any more changes to the board.

The remarkable turn of events comes as St. Joe, based in Jacksonville, Fla., weighs its strategic options, including a possible sale, after suffering massive losses during the real estate downturn.

St. Joe President and CEO Britt Greene, who has been with the company for 13 years, resigned his seat on the board Monday. He will step down as president and CEO later this week, the company said.

Also due to resign this week are directors Michael Ainslie, John Lord and Walter Revell.

In addition to Berkowitz, Fairholme named three other new directors: Fairholme Capital Management President Charles Fernandez, former Florida Gov. Charlie Crist and Carnival Corp. Chief Operating Officer Howard Frank.

Surviving the board shakeup were Hugh Durden, Thomas Fanning and Delores Kesler.

Less than two weeks ago, Berkowitz released a letter to St. Joe shareholders where he argued the entire board needed to be replaced in order to turn the company around.

The fund manager even reserved a website _ _ for the campaign.

"We've lost enough. Let's take back Joe," Berkowitz wrote in the Feb. 16 letter.

But the effort stopped short of a complete ouster of the St. Joe board.

The company said it had reached an "understanding" with Fairholme on certain corporate governance matters, and Fairholme agreed it will not press for further changes on the board.

Only two weeks ago, Berkowitz and Fernandez stepped down from the board after being elected to it in December. They cited disagreements with the nominating and governance process as they resigned, according to an SEC filing.

Two days later, St. Joe said it opposed Fairholme's efforts to replace the entire board, and called for Fairholme to make a buyout offer to shareholders if it wanted to take control of the company. The company also invited the mutual fund to submit any alternative business plan for consideration. It also adopted a poison pill to thwart any unwanted efforts to take control of the company.

Durden has served as chairman of the board since August 2008 and is a former executive of Wachovia Corp. Fanning is the top executive at Southern Co. Kesler has served as chairman of ATS Services Inc., a human resources company, and chairman and CEO of investment company Adium LLC since 1997.

Fairholme is not the only investor to be critical of St. Joe.

Hedge fund manager David Einhorn announced last year that he was shorting the company _ essentially betting that the company would not be able to right itself _ and criticized St. Joe's efforts to bring Southwest Airlines to a nearby airport by promising to cover the airline against any losses for a specified period.

The developer's stock has tumbled in the last year as it navigates out of the real estate slump and deals with land polluted by the Gulf of Mexico oil spill last summer. The company has sued Halliburton Co. and others involved in the spill over the decline in the value of 577,000 acres in Northwest Florida and in its development.

St. Joe shares added 12 cents to $26.90 in aftermarket trading after falling 89 cents, or 3.2 percent, to $26.78 during the regular session.