UCP Directors Cortney, Lori & Wade Nearly Noncompliant With Director Stock Ownership Guidelines

On April 7, 2016, UCP, a hombuilder subsidiary of PICO Holdings, released its 2015 Proxy Statement. Page 26 outlines 2015 UCP Director Compensation.

UCP Directors Refuse UCP Equity

This Section, states in part, “As noted below, each non-employee director may elect to receive Class A restricted stock or Class A restricted stock units in lieu of all or a portion of the cash compensation otherwise payable to the director in a given calendar year. No directors made this election in fiscal year 2015.”

The three independent UCP Directors are Michael C. Cortney, Peter H. Lori and Kathleen R. Wade.

The fact that none of the Independent Directors elected to receive equity in lieu of cash compensation in 2015, while UCP stock was trading at a considerable discount to book value, does not inspire investor confidence. Additionally, these Directors were apparently unwilling to align their own economic interests’ with those of UCP shareholders.

UCP Directors Nearly Out of Compliance With Director Stock Ownership Guidelines

The three independent UCP Directors, Messrs. Cortney and Lori and Mrs. Wade, are nearly out of compliance with the UCP Director Stock Ownership Guidelines.

The UCP Proxy Statement says in part, “Pursuant to our director stock ownership guidelines, each of our independent directors will be required to own shares of our Class A Common Stock (including vested and unvested Class A restricted stock and Class A restricted stock units) equal in value to three times the annual cash retainer payable to our non-employee directors by the director’s third anniversary of joining the Board.”

Messrs. Cortney and Lori have roughly 3 months to become compliant, while Mrs. Wade has roughly a year.

Michael C. Cortney: For 2015, Mr. Cortney was paid $85,000 for UCP director services. As a result, Mr. Cortney must own $255,000 worth of UCP shares by July 2016, his third anniversary as a UCP Director. At the current share price of $7.50, Mr. Cortney should own 34,000 UCP shares. He currently owns 8,240 shares, for a shortfall of roughly 25,760 UCP shares. Mr. Cortney better get to buying.

Peter H. Lori: For 2015, Mr. Lori was paid $85,000 for UCP director services. As a result, Mr. Lori must own $255,000 worth of UCP shares by July 2016, his third anniversary as a UCP Director. At the current share price of $7.50, Mr. Lori should own 34,000 UCP shares. He currently owns 5,237 UCP shares, for a shortfall of 28,763 UCP shares. Mr. Lori better get to buying.

Kathleen R. Wade: For 2015, Mrs. Wade was paid $70,000 for UCP director services. As a result, Mrs. Wade must own $210,000 worth of UCP shares by April 2017, her third anniversary as a UCP Director. At the current share price of $7.50, Mrs. Wade should own 28,000 UCP shares. She currently owns 3,987 UCP shares, for a shortfall of 24,013 UCP shares. Mrs. Wade better get to buying.

To the extent these Directors own Restricted Stock Units not listed in the proxy statement or in other SEC filings, the prospective share purchase requirements would be adjusted.

RPN Water & Wood 2 (03/31/16)= 9

RPN Water &Wood 2 YTD = + 8.7%

S&P 500 YTD = + 0.2%

4 responses to “UCP Directors Cortney, Lori & Wade Nearly Noncompliant With Director Stock Ownership Guidelines

  1. Great article. But I do not hear any game plan of solution! We know about the deals that have been put in places..WHAT TO WE DO ABOUT IT! When Leder pulled out,that was a blow,because ,now what is the alternative to replace Hart and his guys…WE NEED TO GET RID OF THEM!!! THERE HAS TO BE A WAY!

    • ReformPICONow

      Thanks for your comments.

      One way to encourage change at PICO would be for an investor to nominate an alternative director at the 2016 Annual Meeting. Recall that two of the Entrenched Directors will be up for reelection, Carlos Campbell and Kenneth Slepicka. One of those two will step down, as per the Central Square Settlement. But one will remain. If PICO shareholders could install a shareholder-friendly director, it would tip the scales on the PICO Board meaningfully.

      If you or someone you know has the wherewithal to make this happen, we point you to the PICO Bylaws. There are specific rules and procedures for nominating a director, and they must be followed exactly.

      We are encouraging all shareholders to attend the PICO Annual Meeting – whenever that may be. Investors should voice their opinions and let the Board know their displeasure.

      We are confident that PICO’s best days lie ahead.

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