Bloggers Vote “Against” Director Kenneth Slepicka

As originally appeared in The Troubled Company Reporter.

PICO Holdings, Inc. (Nasdaq:PICO), based in La Jolla, Calif., is a diversified holding company reporting recurring losses since 2008. PICO owns 57% of UCP, Inc. (NYSE:UCP), 100% of Vidler Water Company, Inc., a securities portfolio and various interests in small businesses. PICO has $664 million in assets and $434 million in shareholder equity. Central Square Management LLC and River Road Asset Management LLC collectively own more than 14% of PICO. Other activists at have taken to the Internet to advance the shareholder cause.

The activist bloggers vote “Against” Kenneth Slepicka in the PICO Electronic Proxy and encourage all PICO shareholders to do the same.

The bloggers note that the PICO Proxy offers shareholders have a golden opportunity to effectuate change. They provide a link to the pertinent paragraphs here:

These are the important points:

a) If a director receives more “Against” votes than “For” votes, the Corporate Governance and Nominating Committee (CGNC) will evaluate that director’s continued service on the Board;

b) The CGNC will make a recommendation to the entire Board (and the director in question will not participate); and

c) Within 90 days, the Board will ask the director for remediation or resignation.

The activist bloggers offer readers 10 reasons to vote “Against” Mr. Slepicka, calling him “The Slug.”

“10 Reasons To Toss The Slug

1) Mr. Slepicka Is Corrupt: See RPN June 7, 2016.

2) Mr. Slepicka Is Incompetent: During Mr. Slepicka’s 11-year tenure as a Director, PICO shareholders have lost over half a billion dollars in value.

3) Mr. Slepicka Is Conflicted: PICO owns securities in Mr. Slepicka’s firm. John “The Juicer” Hart personally owns securities in Mr. Slepicka’s firm. Mr. Slepicka knows, or should know about Mr. Hart’s equity interest. Mr. Hart’s equity interest has not been formally disclosed to PICO shareholders. Mr. Slepicka knew, or should have known, that too. Mr. Slepicka is a PICO Director. We see Mr. Slepicka plagued by conflicts possibly deeper than those that plague Mr. Hart. And Mr. Slepicka is a PICO Director. This makes Mr. Slepicka conflicted.

4) Mr. Slepicka Is A Deadbeat: Mr. Slepicka serves on no Committees. He has not served on a Committee since 2011. Yet last year, PICO shareholders paid this deadbeat $138,856. And for what? He did nothing that resulted in increased value for PICO shareholders.

5) Mr. Slepicka’s Firm Is A Deadbeat: PICO’s SEC filings do not mention any dividends paid by Synthonics on the Series D Preferred Securities to PICO.

Does Synthonics get to use PICO’s shareholder capital for free? Why has PICO held speculative biotech securities on its balance sheet for 6 years with no return?

Convertible preferred shares of a speculative, ne’er-do-well biotech should yield around 8%. PICO made the majority of its Synthonics investment in 2010. We calculate that Synthonics owes PICO shareholders at least $1 million ($2 million x .08% x 6 years). If Mr. Slepicka would like to remedy this cronyistic sham investment, Synthonics should redeem the Series D Synthonics Preferred for $3.2 million today ($1 million in dividends + $2.2 million par).

We bet the convertible feature of the Series D Synthonics Preferred is worthless. We bet if PICO shopped the Synthonics position to arm’s length, independent buyers, the bids would come back almost at $0. We bet the whole thing is an example of cronyism between The Juicer and The Slug. We bet the only reason the Synthonics position is still on the books is because The Juicer and The Slug can’t sell it and neither man is honest enough to write it down to $0.

6) Mr. Slepicka’s Director Credentials Are Worthless: According to PICO’s latest Proxy Statement:

‘Mr. Slepicka has also received a Master Director Certification from the National Association of Corporate Directors (NACD), is a member, and has earned certificates of director education in 2007, 2008, and 2009, as well as the status of Leadership Fellow from the NACD.’

Mr. Slepicka’s Director credentials have taken the same trajectory as the Venezuelan Bolivar: from full value to $0. We wonder if Mr. Slepicka also was honored by the NACD for competency in disclosure failure? Perhaps he leads a workshop on conflict of interest? Again, see PICOGate.

7) The Juicer And The Slug Already Bankrupted One Company: Back in 1995, when Mr. Hart ran PICO with Ronald Langley, PICO bought common stock in PC Quote, “A leading provider of ticker plant and smart order routing technologies and managed services to exchanges, financial institutions, hedge funds, and channel partners.”

Mr. Hart was made a Director of Hyperfeed Technologies in 1997, and Mr. Slepicka was made a Director in 1998. After refusing two acquisition offers, in November 2006, Hyperfeed Technologies filed for Chapter 7 bankruptcy — a liquidation. PICO shareholders lost over $10 million in the Hyperfeed bankruptcy.

8) Mr. Slepicka Is A De Minimis Shareowner: The 2016 Proxy Statement says that Mr. Slepicka owns a mere 12,543 PICO shares
– or barely 1,000 shares for every year he has served on the Board. Contrarily, Mr. Brownstein, who came to PICO less than 6 months ago, owns 14,968 shares. Mr. Slepicka is not invested in PICO’s future.

9) Three More Years Of This Clown? Although the PICO Board will be declassified as of July 11, 2016, the current Director elections are for 3-year terms. Do you want this corrupt and incompetent crony of Mr. Hart on the PICO Board until 2019? We don’t.

10) The Fantastic Four Need Freedom To Create Value: In the PICO Boardroom, Mr. Slepicka is the equivalent of an ill-fitting jockstrap. He occupies an important place, but he is an annoying hindrance to forward motion.

The Fantastic Four (Mr. Brownstein, Ray Marino, Andrew Cates and Daniel Silvers) are working to create value for PICO shareholders. Justin Akin and River Road are also doing their part. But these value creation agents will be stymied if Mr. Slepicka remains on the Board. If Mr. Slepicka is pushed out Manuela Herzer-style, the only corrupt and incompetent Directors remaining would be Messrs. Machado and Hart. When voting, the Fantastic Four would carry the day every time.

RPN has voted ‘Against’ Mr. Slepicka. We encourage all PICO shareholders to vote ‘Against’ Mr. Slepicka.”