St. Joe Co.'s newly formed board of directors has elected Fairholme Capital Management founder Bruce Berkowitz as chairman and appointed ex-chairman Hugh Durden to fill in temporarily as CEO.
The move, announced in a regulatory filing on Friday, caps a week of sweeping changes in the Jacksonville, Fla., real estate developer's leadership, prompted by a months-long battle with the company's largest shareholder, The Fairholme Fund. The changes come as St. Joe weighs its strategic options, including a possible sale, after suffering massive losses during the real estate downturn.
On Monday, ex-CEO Britt Greene and three other St. Joe directors were ousted and replaced by Berkowitz, Fairholme Capital Management President Charles Fernandez, former Florida Gov. Charlie Crist and Carnival Corp. Chief Operating Officer Howard Frank.
On Friday, the new board also elected Fernandez as vice chairman. The board said it has begun to search for a new CEO and expects Durden to serve as acting chief for no more than 60 days, or less, if a new CEO is appointed more quickly.
In a letter addressed to St. Joe employees Friday, Berkowitz called the company a "national treasure," and said he and Fernandez bring to St. Joe's Fairholme's shareholders, clients and potential partners for "win-win" solutions to the company's problems.
But he warned that the company is in difficult shape.
"St. Joe is losing money, selling valuable assets to cover losses and is under attack," he wrote. "We cannot continue on this course for long or there will be no Joe. Starting today, we will not continue down this road."
St. Joe's stock has taken a beating in the last year. The developer suffered a double-whammy from the real estate slump and the Gulf of Mexico oil spill last summer, which polluted coastal lands it owned along Florida's panhandle. The company has sued Halliburton Co. and others involved in the spill over the decline in the value of 577,000 acres in Northwest Florida and in its development.
Those problems took a back seat in recent weeks as Berkowitz stepped up his campaign to reshape the company's management.
Two weeks ago, Berkowitz released a letter to St. Joe shareholders in which he argued that the entire board needed to be replaced in order to turn the company around. He cited issues with board compensation and corporate governance.
Greene, who had been with the company for 13 years, resigned his seat on the board Monday and agreed to step down as CEO. Three other directors — Michael Ainslie, John Lord and Walter Revell — also agreed to step down.
But Berkowitz's effort stopped short of a complete ouster of the St. Joe board. The company said it had reached an "understanding" with Fairholme on certain corporate governance matters, and Fairholme agreed it will not press for further changes on the board.
Berkowitz and Fernandez were elected to St. Joe's board in December. The two left the board in early February and shortly after the company announced plans to explore financial and strategic alternatives.
On Tuesday, St. Joe reported it lost $2.7 million, or 3 cents per share, in the fourth quarter ended Dec. 31, compared with a loss of $58.7 million, or 64 cents per share, in the year-ago period. Revenue was flat at $37.1 million. The results trumped Wall Street's expectations.
St. Joe shares slipped 14 cents to $27.28 in aftermarket trading on Friday. The stock had closed the regular session up 76 cents, or 2.9 percent, at $27.42.
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