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 http://ReformPICONow.com/ have taken to the Internet to advance the shareholder cause.
On May 17, PICO filed its 2016 Proxy Statement. The Annual Meeting will take place on July 11 in La Jolla, California. At the 2016 Annual Meeting, Carlos Campbell will resign as Director and Chair of the Compensation Committee. The Board of Directors will be declassified, going forward. Existing Directors will serve out their terms, with 2016 elected Directors serving until 2019. PICO proposes to reincorporate from California to Delaware, in order to protect roughly $2 per share in Deferred Tax Assets. Shareholders will vote on an advisory “Say on Pay” proposal.
Not surprisingly, the activist bloggers have a few things to say. Regarding the resignation of Mr. Campbell, in a section entitled “RPN: America’s Worst Comp Chair — Carlos Campbell,” the bloggers write, “This is great news for PICO shareholders. In all our years in business, we have never encountered a worse Comp Committee Chair than Mr. Campbell. He betrayed PICO shareholders at every turn for many years. His final act of corruption and enmity to PICO shareholders, the criminal Hart Compensation Scheme, will cause considerable economic suffering. Mr. Campbell was a true enemy of PICO shareholders.”
In relation to the deferred tax assets, the bloggers say, “Unfortunately, those DTAs arise from Mr. Hart’s hapless capital allocation, which produced suffering for PICO shareholders. In a bid to protect the booby prize for being the biggest capital allocation loser, Mr. Hart seeks to reincorporate PICO in Delaware; the DTAs are the only asset on his balance sheet that has not been written down (although they are covered by a valuation allowance — which is the temporary equivalent of a writedown).
Recall also that the DTAs will be applied to asset sales to make Mr. Hart’s bonus bigger. With The Juicer, self-interest is always front and center.”
With disgust, the bloggers conclude their post with an expression of extreme dissatisfaction: “PICO shares continue to scrape along the bottom. In a testament to Mr.Hart’s failure as a CEO, when measured by any and all relevant metrics, it was almost exactly 6 months ago that he announced the ‘Revision to Business Plan.’ Therein, Mr. Hart promised to monetize assets, buyback shares, improve corporate governance and create value for shareholders. None of this has been accomplished, save the Board has been turned over due to shareholder efforts.
It is appropriate that Mr. Campbell depart with PICO shares near their all-time low. Superstars go out on top, the corrupt and incompetent go out losers.
When Mr. Hart announced his disguised managerial neutering, PICO stock traded around $11 per share. It is now sub-$9. Measures need to be taken in order to control this executive tapeworm.”