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One day after the company he founded reported a $610 million 2022 net loss, loanDepot founder Anthony Hsieh says he remains determined to install veteran real estate executive Steve Ozonian on the lender’s board of directors.
Hsieh, who handed off his responsibilities as loanDepot CEO last year to CoreLogic veteran Frank Martell, was ousted as loanDepot’s executive chair at a special Feb. 6 board meeting.
But Hsieh, who continues to serve on the loanDepot board as nonexecutive chairman, says he controls enough of loanDepot’s voting shares to overcome obstacles the company’s board has allegedly thrown up to keep Ozonian — the CEO of title insurer and settlement services provider Williston Financial Group — from being seated on the board.
“Yesterday’s earnings call was an important market update and reflects the extraordinary challenges facing all mortgage companies due to the unprecedented increase in interest rates,” Hsieh said in a statement Thursday. “LoanDepot cannot maintain the status quo if we are to succeed over the long term. The company’s board would benefit from a fresh perspective amidst these challenges to ensure we emerge stronger relative to our competition.”
Hsieh said he nominated Ozonian to serve on loanDepot’s board on Feb. 7 “precisely for this reason” and repeated a previous vow to “vote my approximately 57 percent of combined voting power in support of his nomination.”
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.
In its initial response to Hsieh’s proxy contest, loanDepot’s board on Feb. 8 said it was “surprising and disappointing” that the company’s founder was trying to seat Ozonian on the board “outside of the governance process overseen by the board’s nominating and corporate governance committee.”
But in a Feb. 7 letter to shareholders, Hsieh said that before formally nominating Ozonian he’d spent months trying to build support for seating Ozonian on the board.
“I had hoped that the board of directors as a whole would support Mr. Ozonian’s nomination and acknowledge what I view as an urgent need for board refreshment,” Hsieh wrote. “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. Instead, I have only seen signals that leave me very concerned that the scourge of board entrenchment is taking hold.”
On a call with investment analysts Wednesday, Martell said that despite mounting losses, loanDepot is executing a “Vision 2025” strategic plan approved by the board last summer as rising interest rates drastically curtailed the company’s refinancing business.
LoanDepot loan originations by purpose
Source: loanDepot regulatory filings
“We believe that a laser focus around putting first-time homebuyers into homes positions loanDepot to be a customer’s trusted resource when making key home ownership and other financial decisions,” Martell said.
In addition to boosting loanDepot’s purchase loan business and loan servicing portfolio, Vision 2025 called for the company to develop a digital home equity line of credit (HELOC) product, which it launched in November.
“With over $860 million in cash on hand, approximately $520 million in run rate cost reductions identified so far, and several new growth vectors in flight, we believe we are positioned to navigate through the current market downturn and emerge a stronger and more valuable company,” Martell assured investors.
Hsieh’s nomination of Ozonian sets the stage for incumbent director Pamela Hughes Patenaude to be removed from the board. Patenaude is one of two incumbent directors whose terms expire at this year’s annual meeting. Last year, loanDepot held its annual meeting on May 18, reelecting board members Martell, Dawn Lepore and John Lee. This year’s meeting is yet to be scheduled.
Hsieh says he’s already pledged to support the other incumbent — Andrew Dodson, who represents loanDepot shareholder Parthenon Capital LLC on the board — for re-election.
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 boards 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.
In his Feb. 7 letter to shareholders, Hsieh said he is “not affiliated in any way” with Ozonian, “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.
Timeline of events
- November 2022: Hsieh says he began privately lobbying loanDepot’s board members to build support for adding Ozonian to the company’s board.
- Feb. 2, 2023: LoanDepot announces that Patenaude, an independent director on the company’s board, had been appointed as chair of the Home Builders Institute’s board of trustees. Hsieh would later complain that loanDepot’s “unusual actions of promoting Ms. Patenaude’s biography and accomplishments” demonstrated that the company was not giving serious consideration to Ozonian as a candidate.
- Feb. 6, 2023: At a special meeting of loanDepot’s board of directors, Hsieh is removed as the company’s executive chair. Hsieh says the board also created a proxy committee that excluded him and his director designee in order to contest Ozonian’s nomination.
- Feb. 7, 2023: Hsieh formally nominates Ozonian for election to loanDepot’s board as an independent director, and issues a press release making some of his issues with the board public. The press release does not mention the vote to remove him as executive chair.
- Feb. 8, 2023: LoanDepot issues a press release stating that Hsieh had “stepped down as executive chairman, pursuant to a mutual agreement unanimously approved” by loanDepot’s board, “in light of Hsieh’s decision to run a proxy contest” against loanDepot. An executive chair is typically a company employee who takes an active role in running the company. Hsieh continues to serve as nonexecutive chair, a role in which the main duty is customarily to oversee the board of directors.
- Feb. 9, 2023: Hsieh issues a press release, “Anthony Hsieh Corrects the Record on loanDepot’s Inaccurate Claims,” disputing that the vote to remove him was unanimous. Hsieh said that after a 5-2 vote to remove him, he agreed that the company could describe the termination as “mutual in light of his desire not to serve in this role after the board’s vote.”
- March 8, 2023: LoanDepot reports a $610 million net loss for 2022, as fourth-quarter loan production fell 86 percent from a peak of $41.5 billion during the first three months of 2021 to $6.4 billion during the last three months of 2022.
- March 9, 2023: Hsieh reiterates his intention to place Ozonian on loanDepot’s board, saying, “I remain passionate about loanDepot’s ability to deliver the dream of homeownership, and believe that Steve’s experience and expertise will be important to loanDepot’s long-term success.”
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