** See Bottom for update
Talk about drama.….
Bruce R. Berkowitz and Charles M. Fernandez, Managing Member and President, respectively, of Fairholme, have withdrawn their names from consideration to serve on the Issuer’s slate of directors for the Issuer’s upcoming Annual General Meeting and have resigned from the Issuer’s board of directors (the “Board”), effective as of February 14, 2011.
On February 14, 2011, Mr. Berkowitz and Mr. Fernandez sent the following email to the Board:
Directors of St. Joe:
The two of us have discussed the situation at St. Joe and its nominating and governance process. We will not stand for re-election except as part of a Board where a majority of the directors are committed to shareholder value, pay for performance, and effective corporate governance.
After working with the current Board over these past weeks, we have concluded that the current Board is not in a position to propose such a slate of directors.
Accordingly, we withdraw our names from consideration by the Nominating and Governance Committee for election at the Annual General Meeting, and we resign from the Board of St. Joe effective immediately.
Bruce & Charlie
Why? Ity would seem going through the “process” was going to prove extremely frustrating for Berkowitz. But, he still owns 30% of the shares. He can’t just dump them. What to do? Well, if you want to be able to force change, how could you do it?
Buy the rest of the company or a >51% stake in it. He has the cash sitting in Fairholme to do it (at this point it would amount to slightly more that couch cushion money). By NOT being on the board, he does have his fiduciary duties lessened and simplified. He can begin buying more shares of JOE without the restrictions and prior notification requirements he would have if he were sitting on the Board. Rather than work with them, he can acquire enough to effectively “throw the bums out”.
It would be a far quicker and seemingly less frustrating path to take. This isn’t over..not by a long shot.
Watch for a “special shareholder” meeting to be called in which he proposes his own slate of directors. From the most recent 8K: Emphasis mine.
. This section replaces Article II, Section 2 of the Former Bylaws and provides procedures for requesting a record date for shareholders who seek to call a special meeting and includes advance notice provisions with respect to business proposed to be conducted at a special meeting. This section does not change the ability of certain persons to call special meetings of the shareholders from time to time, including the Chairman of the Board, the Board, or shareholders holding not less than 30% of the voting power of the Company’s issued and outstanding shares. This section mandates that any shareholder who seeks to call a special meeting is first required to request that the Board fix a record date for the purpose of determining the shareholders entitled to demand that the Company call a special meeting. Under this section, a shareholder requesting a special meeting must set forth his, her or its request in writing. This requesting shareholder’s written request must include disclosures similar to those required under the advance notice provisions for annual meetings, including material information about the security ownership, economic, voting and other interests of the shareholder seeking to call a special meeting. In addition, a shareholder’s request must include, among other requirements, a brief description of the business to be brought before the meeting, the reasons for conducting such business at the meeting and a detailed description of all agreements, arrangements and understanding between the requesting shareholder or shareholders and any other person or entity in connection with the proposal of such business. If directors are proposed to be elected at the special meeting, nominee information for each person expected to be nominated by the requesting shareholder is also required to be included in the written request. Within 20 days after receipt of a request in proper form to fix a record date, the Board may fix the record date and if the Board fails to fix a record date the record date is the 20 th day after the Company receives the request. After the record date is set, a special meeting may be called at the request of shareholders holding not less than 30% of the voting power of the outstanding shares of the Company’s issued and outstanding stock. To be timely, this shareholder request must be received by the Company no later than the 60 th day after the record date. To be in proper form, the shareholder request must set forth (i) the business proposed to be conducted at the special meeting or the proposed election of directors at the special meeting, (ii) the text of the proposal or business and (iii) with respect to any shareholder submitting a demand for a special meeting by way of a solicitation statement filed on Schedule 14A, the more detailed economic, voting and other information required of a shareholder requesting the Board to fix a record date. Under this section, the Company is not required to call a special meeting if the items of business proposed to be considered at the special meeting are substantially similar to an item of business already presented in the past year to the shareholders. This section further requires that a shareholder’s proposal be updated and supplemented, if necessary, so as to be accurate as of the record date and as of the date that is ten business days prior to the meeting date or any adjournment thereof.
UPDATE 2:
Janus Capital has increased it’s ownership stake in JOE from 9.3 to 13.2% as of Monday