St. Joe Capitulates to Berkowitz; Board to be Overhauled

[Stocks-to-Watch]

The St. Joe Company (JOE) announced Monday that it would oust its CEO and add four new directors proposed by the company’s top shareholder, Bruce Berkowitz’s Fairholme Fund.

The Florida real estate firm’s shares have seesawed in the past five months as rival hedge fund barons, Berkowitz and Greenlight Capital’s David Einhorn, have placed opposite bets on the company. Berkowitz owns just under 30% of the company and has been agitating for changes. Einhorn has shorted St. Joe, and made a presentation last fall about why he thought the company was hugely overvalued. The SEC has launched an inquiry into St. Joe’s accounting practices.

Berkowitz has made it clear that he thought the board was holding the company back, and has vented his frustration in recent weeks. Earlier this month, he withdrew his name for consideration to join the board because he said it was not “committed to shareholder value, pay for performance and effective corporate governance.”

Today, however, Berkowitz was granted his wish to transform the board and presumably the company. The stock initially rose on the news, and then fell. It was down 1.7% in early afternoon trading.

CEO Britt Greene resigned from the company after 13 years at the helm, and four directors will step down later this week, “recognizing the desire of St. Joe shareholders for the Company to pursue a different course.”

“St. Joe is committed to acting in the best interests of shareholders, and in light of the feedback the Board of Directors has received, we are taking steps to change the Company’s governance and leadership,” the company said in a statement. “We look forward to working with the new members of the Board to build shareholder value and advance St. Joe’s leadership position in the Northwest Florida real estate market.”

In their place, the company says it will add four new directors: Berkowitz, former Florida Governor Charles J. Crist, Fairholme President Charles M. Fernandez, and Carnival Corporation COO Howard S. Frank. Berkowitz’s slate now controls a majority of the seven-person board, although St. Joe also plans to eventually add another independent director.



Original Article Source by Barrons.com