Bloggers Vote “Against” Director Howard Brownstein

 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.

River Road, owner of 8.2% of PICO shares, in a 13D filing with the Securities and Exchange Commission, stated that it will vote its stake “Against” Director Kenneth Slepicka’s reelection at the Annual Meeting, to take place on July 11.

The bloggers begin by explaining that River Road’s 13D served to legitimize the PICOGate information. “ISS and Glass Lewis have strict policies about what information can be used in formulating a recommendation. The more formal the information, the more weight it carries. When a mongrel blog publishes a bastard conspiracy theory on failure to disclose a conflict of interest, the proxy firms treat it as suspicious. When “best in show” River Road files a 13D, the information becomes as legitimate as if sprung from the collective loins of William and Kate.”

The bloggers note that since PICO has not defended Mr. Slepicka against PICOGate, nor offered any explanation, PICO appears willing to let Slepicka be thrown off the Board unceremoniously. The bloggers expect both ISS and Glass Lewis to recommend “Against” Slepicka, and that will seal his fate.

RPN Votes “Against” Brownstein

The bloggers have voted “Against” the election of Howard Brownstein and suggest all shareholders do the same. The bloggers are dissatisfied with Mr. Brownstein’s handling of PICOGate. “Mr. Brownstein is the Audit Committee Chair, and management of PICOGate rests on his shoulders. By all accounts, and we mean ALL, Mr. Brownstein has been derelict in his response to PICOGate.” The bloggers claim there is a coverup at PICO and note that Mr. Brownstein was appointed by “corrupt and incompetent Directors. Mr. Brownstein has not communicated with PICO shareholders — the owners of the company — regarding PICOGate. Since we have heard nothing regarding a 6-year failure to disclose a conflict of interest, we assume the worst and claim a cronyistic coverup.”

The bloggers testily continue, “It has been 13 days since RPN broke PICOGate. Mr. Brownstein has not issued a press release. Mr. Brownstein has not communicated with shareholders. We sent Mr. Brownstein an email a week ago and he has not answered — a professional discourtesy which has been duly noted. As a result of this silence, we assume a PICOGate coverup. We are the owners of the company and we are in the dark.

RPN has been flooded with emails regarding Mr. Brownstein’s inappropriate handling of PICOGate. Let us put it in language that a Harvard attorney can understand: Most PICO shareholders, if questioned in a legal forum, would testify that Mr. Brownstein has breached his fiduciary duty to PICO shareholders.”

In typically irreverent fashion, the bloggers ask, “We have two questions for you, Howie:

a) Why must shareholders coerce you to seek the truth regarding PICOGate?

b) As Audit Chair, shouldn’t you be aggressively seeking truth on behalf of the corporation you steward and the shareholders you represent?”

Fair questions, indeed. But the bloggers answer their own questions: “Mr. Brownstein is simply not up to the task of Audit Chair of PICO. Or put another way, he is in over his head.

Whenever there is a controversial situation with multiple constituencies, uncertainty and large amounts of money, there are three rules: communication, communication, communication.

This is basic. And when we say basic, we mean kindergarten, everyone-knows-that basic. That Mr. Brownstein has ignored such a simple and obvious aspect of management is unfortunate and telling. We see a wannabe public-company director who lacks the character for this job.”