loanDepot Inc. late Tuesday announced a settlement in its proxy fight with Chairman Anthony Hsieh, agreeing to end the fight while also expanding the board of directors by immediately adding Hsieh’s nominee.
In a news release issued Tuesday and a Form 8K filed with the U.S. Securities and Exchange Commission on Wednesday, loanDepot states it has entered into a settlement and cooperation agreement with Hsieh, who in addition to being the company’s founder and chairman of the board is also its largest shareholder, holding approximately 57% of the combined voting power of loanDepot shares.
He was ousted as the company’s executive chairman in February after sending a letter to stockholders announcing his nomination of Williston Financial Group (WFG) CEO Steve Ozonian to the loanDepot board. In the letter, he told stockholders he intended to vote all of his shares in favor of adding Ozonian to the board during the company’s 2023 annual meeting.
The board objected to the nomination, in part because it currently consists of eight directors, only two of whom have terms that expire at the company’s annual meeting this year — Andrew Dodson of Parthenon Capital LLC, and Pamela Hughes Patenaude, principal of Granite Housing Strategies LLC.
Hsieh had previously committed to voting to elect the Parthenon Capital representative, and at the time said he would honor that commitment by voting to re-elect Dodson, but said he would vote for Ozonian over Patenaude.
'Temporarily' Expanding The Board
Under the agreement announced Tuesday, the company will temporarily expand the board from eight to nine directors and said Ozonian would join the board immediately.
“If Ozonian is unable or unwilling to serve as a director at any time prior to the 2024 annual meeting of stockholders, the board will promptly reduce its size from nine to eight,” the agreement states.
It also states that Ozonian, Dodson, and Patenaude will all be nominated for election to three-year terms as Class II directors at the 2023 annual meeting. The company has not yet announced a date for that meeting.
loanDepot said it plans to file a proxy statement with the SEC in connection with the solicitation of proxies for its 2023 annual stockholder meeting.
The agreement further states that, for its 2024 annual meeting, loanDepot will “nominate only Hsieh and Brian Golson (or another designee of Parthenon) for reelection as a Class III director and the board will be reduced from nine to eight directors, subject to the terms of the cooperation agreement.”
The agreement requires Hsieh to “vote all shares for which he has voting power” to support the board's director nominations at both the 2023 and 2024 annual meetings, and to “not make any director nominations in either year.”
The agreement also states that the size of the board “will return to eight directors effective as of the 2024 annual meeting, subject to the terms of the cooperation agreement.” Under those terms, loanDepot and Hsieh could mutually agree in writing to keep the board at nine directors beyond the 2024 annual meeting.
The agreement does not explain how the board would return to eight members in 2024. According to the spokesperson for Hsieh, however, current director John Dorman, who has been a board member since since 2015, will not stand for reelection in 2024.
In addition, loanDepot agreed to pay Hsieh $857,000 “and certain other amounts conditioned upon Hsieh providing the company a general release of claims.” A spokesperson for Hsieh said the payment is for "amounts owed under [Hsieh's] employment agreement as a result of his separation as executive chairman."
loanDepot officials did not immediately respond to a request for comment.
'Mutually Beneficial Resolution'
In the news release about the agreement, Dawn Lepore, chairwoman of the board's Nominating and Corporate Governance Committee, said the board is pleased to settle the dispute.
"We believe that reaching this agreement with Anthony is clearly in the best interests of loanDepot and all of its shareholders," Lepore said. "With this mutually beneficial resolution, we avoid the distraction of a contested election and management, under Frank Martell's leadership as CEO, can focus fully on the continued execution of our Vision 2025 plan to position LDI for long-term value creation. We look forward to the perspectives Steve will bring to the board and the continued contributions of Pam and Andrew."
Hsieh also expressed satisfaction with the agreement. "The Board and I have been discussing bringing in Steve Ozonian as a new director for the past several months, and I am pleased we have reached this point,” he said. “The addition of Steve to the board will bring a new and valuable perspective that will help loanDepot navigate the extraordinary challenges facing the mortgage industry.”
He added that loanDepot “is an incredible company with a track record of driving innovation and providing exceptional customer experiences. I am excited about LDI's future as we continue to work to delight our customers and increase long-term shareholder value under the direction of LDI's management team."
Ozonian has served as WFG’s CEO since 2017, and has served on its board of directors since 2011. He has also served on the board of LendingTree Inc. since 2011, and currently is lead independent director, chairman of the Audit Committee, and chairman of the Compensation Committee of LendingTree.
He has also served as CEO of LendingTree's proprietary full-service real estate brokerage business, known as RealEstate.com.
Ozonian also serves as chairman of Global Mobility Solutions, a global provider of human resources and real estate services.
He has held other high-level positions in the homeownership industry, including chairman and CEO of Prudential's real estate and related businesses; CEO of Realtor.com; and as national homeownership executive for Bank of America.
Ozonian is also a member of the board of ATTOM Data, a real estate data services company, and a member of the board of Inside Real Estate, a real estate software services company.
Dodson is a managing partner at Parthenon Capital and has been with that organization since 2005. He has also served as a director of loanDepot.com, LLC, since December 2009.
Patenaude, a member of loanDepot's board since 2021, is principal of Granite Housing Strategies, advising clients engaged in real estate development, affordable housing, and disaster recovery management. She also previously served as deputy secretary of the U.S. Department of Housing and Urban Development (HUD).
