Founder Fights loanDepot Board Over Adding WFG CEO
Anthony Hsieh intends to use his voting power to add Steve Ozonian as a director over board's objections.
Anthony Hsieh is out as executive chairman of loanDepot Inc. following a proxy fight over his bid to add the CEO of Williston Financial Group (WFG) to his company’s board of directors.
Hsieh, who founded loanDepot in 2010 and is the company’s largest shareholder, sent a letter to stockholders Tuesday announcing his nomination of WFG CEO Steve Ozonian to the loanDepot board.
Hsieh holds approximately 57% of the combined voting power of loanDepot, and told stockholders he intends to vote all of his shares in favor of adding Ozonian to the board during the company’s 2023 annual meeting. A company spokesperson said a date and venue for the meeting have not yet been announced.
The board responded by announcing on Wednesday that Hsieh has stepped down as executive chairman under a mutual agreement unanimously approved by the board.
“The resignation was in light of Hsieh's decision to run a proxy contest against loanDepot through his nomination of a director candidate outside of the governance process overseen by the board's Nominating and Corporate Governance Committee.” the company said in an SEC filing and news release.
Hsieh will continue to serve as chairman of the company's board of directors, loanDepot said.
The decision comes 10 months after Hsieh was replaced as CEO by former CoreLogic CEO Frank Martell, who now serves as loanDepot president & CEO. Hsieh was named executive chairman at that time.
Letter To Shareholders
In his letter to shareholders, Hsieh said his nomination of Ozonian was “not a decision I came to lightly. The past year has been difficult. In the face of challenge, I firmly believe it is important to seek out fresh perspectives. As leaders of this company and stewards of stockholder capital, the board must always challenge itself to be a dynamic center of passionate, informed, and relevant perspectives to help guide the company to future success.”
Ozonian is president and CEO of Williston Financial Group, a national title underwriter and real estate technology services provider. He also previously served as lead director for LendingTree, as chief real estate officer for Carrington Capital Management, and as executive chairman of Global Mobility Solutions.
In his LinkedIn profile, Ozonian describes himself as “a vanguard of the real estate industry for 25 years,” and states that he has “commanded billions in revenue and tens of thousands of employees, restructured finances, and expanded coverage to achieve dominant market leadership.” He adds that he has been named a “Top Innovator” an influencer by The National Association of Realtors.
Hsieh cited Ozonian’s “experience and perspective” as assets, and that while he has “sought to engage with the board to consider Mr. Ozonian and the need for [board] refreshment over the past few months, but there has been no appetite for meaningful discussions.”
He also told shareholders that Ozonian’s knowledge, experience and accomplishments in real estate and consumer fintech would be assets. He added that “there are no agreements between us as to how he would address any issue.”
Hsieh did acknowledge that the board consists of eight directors, only two of whom have terms that expire at the company’s annual meeting. He said he previously committed to voting to elect the representative from Parthenon Capital LLC, and will honor that commitment by voting to re-elect Andrew Dodson of Parthenon to the board. That means, he explained, that he will vote for Ozonian over current board member Pamela Hughes Patenaude, who also is up for re-election.
“My decision to nominate Mr. Ozonian is not intended to target Ms. Patenaude personally, nor is it a reflection on the current management team and the wonderful people at loanDepot,” Hsieh states in his letter. “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.”
In its response, the board issued a statement saying that Hsieh submitted his nomination of Ozonian and, at Hsieh's request, the board’s Nominating and Corporate Governance Committee “has interviewed Ozonian as part of its ongoing process for evaluating potential nominees for election at the Company's 2023 annual meeting.”
The board added, however, that before it could complete its evaluation process, Hsieh informed it of his intent to use his voting power to replace Patenaude with Ozonian.
"It is surprising and disappointing that Mr. Hsieh would attempt to circumvent the company's process for assessing potential director nominees,” said Dawn Lepore, chairwoman of the board’s Nominating and Corporate Governance Committee, whom the company said was speaking 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. Our focus remains on following good corporate governance practices, fulfilling our fiduciary responsibilities, and driving the long-term value of loanDepot."
loanDepot said Patenaude, who has served as a director since 2021, is a nationally recognized real estate and housing policy expert with “a four-decade record of success as an executive in government, the nonprofit sector, and private industry.”
She is a principal at Granite Housing Strategies, and previously served as deputy secretary of the U.S. Department of Housing and Urban Development (HUD). Before that, she served as director of housing policy for the Bipartisan Policy Center.
The proxy fight comes as loanDepot continues to struggle financially. The company reported a net loss of $137.5 million, or 37 cents per diluted share, for the third quarter of last year. While the loss was reduced by 39% from the second quarter, it was achieved by “right-sizing” the company, which included cutting nearly 5,000 employees in 2022.