As originally appeared in Troubled Company Reporter, by Geoffrey J. Bailey
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. Central Square Management LLC and River Road Asset Management LLC collectively own more than 14% of PICO and have agitated for governance and financial changes. Sean Leder owns 1% of PICO shares and seeks shareholder authorization to call a Special Meeting to remove and replace five directors. Other activists at http://ReformPICONow.com/ have taken to the Internet to advance the shareholder cause.
PICO announced that Chairwoman of the Board, Kristina Leslie, and fellow Director Robert Deuster, have resigned. They will be replaced by Howard Brownstein and Ray Marino.
“Howard and Ray are outstanding additions to the PICO Board and we are confident that the extensive experience each of them brings to the PICO Board will benefit PICO and our shareholders as we continue to move forward with our previously announced new business plan that contemplates, as assets are monetized, we would return capital back to shareholders through stock repurchases or through other means such as special dividends,” said John Hart, PICO’s Chief Executive Officer.
Mr. Brownstein has extensive experience in finance, restructurings and turnarounds, strategic planning, valuing and selling businesses and corporate governance, as well as public company board experience. Mr. Brownstein is a nationally-known turnaround and crisis management professional and currently serves as the President of The Brownstein Corporation, which provides turnaround management and advisory services to companies and their stakeholders, as well as investment banking services, fiduciary services, and litigation consulting, investigations and valuation services.
Mr. Marino has extensive experience in real estate, investment management, executive-level management, risk oversight, strategic planning, financial reporting and corporate governance, as well as public company board experience. For more than a decade, Mr. Marino served as the President and Chief Operating Officer and a member of the board of directors of Mission West Properties, Inc., a publicly traded real estate investment trust involved in the development, investment and management of a portfolio that exceeded 9 million square feet.
Activist bloggers at www.ReformPICONow.com are overjoyed at Mrs. Leslie’s departure, whom they label “The 401(K) Destroyer,” but are not as sanguine as Mr. Hart about the newest appointments. Calling the action “too little, too late,” the bloggers note that the PICO Board has dragged its feet for almost a year now, since River Road filed its first 13-D. The bloggers claim that, since the existing Board has proven itself incapable and inattentive to shareholder interests, nominees need to come from shareholders, not the incumbent directors. The appointment of two new directors hardly improves the situation at a company with as many problems as PICO.
The new directors only represent two voices on a Board of 7, not enough to effect real change. Last, Leder has a clear path to an almost-complete overhaul of the Board via a Special Shareholder meeting, an outcome which the bloggers state would be more favorable to shareholders.
The activist bloggers suggest that Mr. Leder substitute Directors
Eric Speron and Michael Machado for the now-departed Leslie and
Deuster, thereby leaving the newest directors, Brownstein and Marino, not subject to election at the Special Meeting.