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After being ousted from his role as the company’s executive chairman, loanDepot founder Anthony Hsieh has appealed to shareholders to appoint real estate veteran Steve Ozonian to the floundering mortgage lender’s board of directors.
Hsieh, who handed off his responsibilities as loanDepot CEO last year to CoreLogic veteran Frank Martell, remains loanDepot’s largest shareholder and will continue to serve as the non-executive chair of the company’s board. An executive chairman is typically a company employee who takes an active role in running the company, while a non-executive chair’s main duty is to oversee the board of directors.
In nominating Ozonian as an independent director Tuesday and pledging to vote his shares in favor of him, Hsieh made public differences that have apparently been simmering for months before erupting into a full-blown proxy fight.
Hsieh, who said he controls a 57 percent majority of the company’s combined voting power, issued a press release Tuesday stating that he had “engaged with the board over the last few months in an effort to persuade members of the urgent need for board refreshment to address the challenges the company faces in this economic environment.”
Because the board has not been receptive to these efforts, Hsieh said he “has exercised his right as a stockholder to unilaterally nominate Mr. Ozonian” to the company’s board.
LoanDepot board responds
LoanDepot responded Wednesday by announcing that Hsieh had “stepped down” as the company’s executive chairman as part of a “mutual agreement unanimously approved” loanDepot’s board. The company said it continues to evaluate Hsieh’s request to seat Ozonian on the board.
“It is surprising and disappointing that Mr. Hsieh would attempt to circumvent the company’s process for assessing potential director nominees,” board member Dawn Lepore said in a statement on behalf of the board. “We question why he would pursue a disruptive proxy contest to install his nominee when Mr. Ozonian has already been, and continues to be, under evaluation.”
While loanDepot characterized the board’s decision to remove Hsieh as executive chairman as a “mutual agreement” by unanimous vote, Hsieh made it clear in his letter to shareholders that he was forced out.
“I have sought to engage with the board to consider Mr. Ozonian and the need for refreshment over the past few months but there has been no appetite for meaningful discussions,” Hsieh wrote in his letter. “Instead, I have only seen signals that leave me very concerned that the scourge of board entrenchment is taking hold. The board’s recent decision to create a committee that excludes me and my director designee — in order to contest Mr. Ozonian’s nomination — only accentuates this concern, as does its decision that I should no longer serve as executive chairman.”
In a second press release published Wednesday afternoon, Hsieh said he was terminated as executive chairman in a 5-2 vote at a special board meeting held Feb. 6 — before he formally nominated Ozonian to the board. Hsieh disputed other claims made by loanDepot’s board, saying he has been given no indication that Ozonian is being seriously considered as a board candidate.
Stage set for vote on Ozonian vs. Patenaude
In his letter to shareholders, Hsieh said it was his preference that Ozonian take the place of an unnamed director who is not up for reelection this year. But Hsieh said he expects the board will instead nominate two incumbent directors whose terms expire at this year’s annual meeting — Andrew Dodson and Pamela Hughes Patenaude — for re-election.
Dodson represents loanDepot shareholder Parthenon Capital LLC on the board, and Hsieh said he’s already committed through a stockholder’s agreement to keeping Dodson on the board. That means Hsieh’s nomination of Ozonian looks likely to result in a challenge to Patenaude’s reelection — a challenge Hsieh said was not his original intent.
“My decision to nominate Mr. Ozonian is not intended to target Ms. Patenaude personally, nor is it a negative reflection on the current management team and the wonderful people of loanDepot,” Hsieh explained to shareholders. “It is simply a reflection of the urgency I believe is necessary to address the company’s challenges by appointing a director with significant and relevant operating experience.”
Like many lenders, loanDepot saw business tank when mortgage rates shot up last year. On the company’s November earnings call, executives said they were making progress getting the company back in the black after shedding 5,200 workers through layoffs and attrition and instituting other cost-cutting measures that were aimed at trimming $400 million in annual expenses by the end of the year.
“As the largest single stockholder of the company, I have an obligation to act,” Hsieh wrote of his nomination of Ozonian. “Holding over a 40 percent economic interest, I have a clear incentive to see the company succeed and am aligned with stockholders in pursuing the objective of creating long-term value. I believe my fellow stockholders will see Mr. Ozonian’s experience with consumer fintech and real estate leadership as crucial to navigating the challenges the current market presents loanDepot.”
Ozonian, 67, has served as CEO of the Williston Financial Group since 2017, after being named president and chief operating officer in 2015 and serving on the company’s board of directors since 2011.
Ozonian currently serves on the board of directors of loan marketplace LendingTree Inc., real estate data services provider Attom Data and real estate software services provider Inside Real Estate. His past experience includes stints as CEO of RealEstate.com, Realtor.com operator Move, Help-U-Sell Real Estate, and Prudential Real Estate and Relocation Services.
“I have come to know Mr. Ozonian professionally over the years and have great respect for his accomplishments in – and deep knowledge of – the real estate and consumer fintech industries,” Hsieh said of his nomination. “We are not affiliated in any way, and he qualifies as an independent director under all applicable standards. There are no agreements between us as to how he would address any issue that would come before the board. My objective in nominating him is for the company to have the benefit of his remarkable experience to help position the Company to succeed in its current operating environment.”
Patenaude, a real estate and housing policy expert with four decades of experience, was named to loanDepot’s board in 2021. A principal at Granite Housing Strategies, a consulting firm, Patenaude served as deputy secretary of Housing and Urban Development during the Trump administration before resigning in 2019 — reportedly over differences in the provision of hurricane relief funds to Puerto Rico.
On Feb. 2, loanDepot announced that Patenaude had been appointed as chair of the Home Builders Institute’s board of trustees. LoanDepot has a number of joint ventures with homebuilders. In December, Patenaude rejoined the board of directors of the National Housing Conference, a nonprofit advocacy group for affordable housing backed primarily by lenders and real estate industry groups.
Before stepping down as CEO last year, Hsieh bolstered his holdings in loanDepot, spending $16.2 million to acquire 3.15 million shares of loanDepot Class A common stock at an average price of $5.13 a share. According to a Feb. 7 regulatory filing, Hsieh owns 151.9 million shares in loanDepot.
Shares in loanDepot were trading for around $2.40 Wednesday afternoon, nearly double the 52-week low of $1.25 registered on Oct. 10, but down nearly 50 percent from a high of $4.71 over the same period.
Editor’s note: This story has been updated to correct that a vote to remove Anthony Hsieh as loanDepot’s chairman allegedly took place before Hsieh nominated Steve Ozonian to serve on the company’s board, and to include Hsieh’s comments disputing that he was removed by mutual agreement in a unanimous vote.
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