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 $662 million in assets and $426 million in shareholder equity. Central Square Management LLC and River Road Asset Management LLC collectively own more than 14% of PICO. Other activists at http://ReformPICONow.com/ have taken to the Internet to advance the shareholder cause.
The bloggers announced that much-maligned PICO CEO John “The Juicer” Hart has been fired without cause. And they are only partially pleased. “Juicer was terminated without cause and will receive a $10 million termination payment plus about another $1 million in other sundry payments.
This is the second-worst result possible for PICO shareowners.
First, the Board took the easy way out. When RPN broke the PICOGate scandal, the Board had more than enough justification to retain outside forensic experts to investigate Juicer. An independent investigation would likely have turned up evidence of malfeasance and Juicer could have been fired for cause. This would have saved PICO shareowners $11 million.
Ray ‘Look the other way’ Marino, Hapless Howie Brownstein and certain other Directors were not willing to fight for $11 million in shareholder money. Instead, they took the easy way out.
Mr. Marino announced the closure of the Synthonics investigation. We feel the PICO Board conducted a hapless and superficial inquiry into PICOGate that was never destined to reveal the truth. We place the blame squarely on Mr. Brownstein as Audit Committee Chair, for what we characterize as a dereliction of duty.”
PICO announced that CFO Max Webb would assume the CEO role and be made a Director. The bloggers are not pleased by this either. “Max Webb has been with PICO for almost 2 decades. He has been an active participant in all the recent corruption and incompetence. PICO lost $86 million, or almost $4 per share, in the Northstar Hallock capital allocation disaster. Mr. Webb was CFO. UCP produced artificially inflated results pre-IPO, which duped buyers into paying $15 per share. Both UCP’s results and its share price have collapsed. Mr. Webb was CFO. The UCP Board removed the Officer Stock Ownership Guidelines from the proxy statement without informing shareowners. Mr. Webb was a UCP Director.
The bloggers have a theory as to why the PICO Board fired Mr. Hart without cause. “Simple — its not their money. Eric Speron owns a lot of shares and was even brave enough to get some for his spouse. But the other independent Directors own negligible amounts of shares. Using SEC information, we calculate Mr. Marino’s net worth at about $10 million. Since becoming Chairman, he has purchased 5,000 PICO shares for an out-of-pocket investment of $50,900. In other words, Mr. Marino has perhaps 0.5% of his net worth invested in PICO.”
The bloggers are entertained that Mr. Hart refuses to give up his Board seat. “Juicer should get an award for least-dignified human being in San Diego history. He drives PICO stock into the ground, destroying value for owners. He dishonestly manipulates a corrupt Board to procure a larcenous employment agreement. He gets fired for corruption, incompetence and intransigence. And yet he refuses to go. He refuses to accept that he has lost. The most hilarious aspect of his infantile tantrum is that he is not even a paid Director. He is humiliating himself for our entertainment for free.”
Mr. Webb’s compensation is still unknown. “Friend to PICO owners, Daniel Silvers, is Chair of the Comp Committee. We hope Mr. Silvers takes into account the enormous value destruction that has occurred under the financial stewardship of Mr. Webb.
In seven months, Mr. Marino and his Board have sold one small asset, spent $11 million to messily remove a corrupt and incompetent CEO, promoted the CFO, and returned zero capital to shareholders.
We are not impressed.”