As a result of a proxy battle with his own board of directors, Anthony Hsieh stepped down as executive chairman of loanDepot by mutual consent, the company announced.
Hsieh, who was replaced by former CoreLogic executive Frank Martell as president and CEO in April 2022 and moved up to his now-former post at that time, will no longer have a day-to-day role at the company. He remains as loanDepot's board chairman.
On Tuesday afternoon, just after the stock market closed, Hsieh released a letter he sent to loanDepot's board declaring as the company's majority shareholder, at the next annual meeting he was nominating — and given his 57% voting power, installing — Steven Ozonian, the CEO of title insurance underwriter Williston Financial Group, to replace former Department of Housing and Urban Development deputy secretary Pamela Patenaude.
Investors reacted negatively to the news, with its stock down approximately 4.8% as of 2 p.m. eastern time, to $2.49 per share from its Tuesday close of $2.61. That is well off of the initial public offering price of $14 per share in February 2021.
This unilateral action came about because the loanDepot board was not receptive to his efforts to change its composition, Hsieh said.
"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," Hsieh said in his press release. "The recent rise in rates and challenging macroeconomic environment make Mr. Ozonian's potential appointment all the more urgent."
Only two board positions are up for election at the next meeting. Hsieh's letter to the board stated that his original proposal was to name Ozonian to replace a member who would end their term early. But none agreed.
As for the two available positions, one belongs to Patenaude and the other to Andrew Dodson, the representative of Parthenon Capital, which has been an investor in loanDepot since 2009. Shareholder agreements require Hsieh to support Dodson's re-election. That left Patenaude's seat as the only one available, even though Hsieh claimed he wasn't targeting her personally.
A statement from the company declared Hsieh was jumping the gun in this matter. The board's nominating and corporate governance committee has interviewed Ozonian as part of its ongoing process for evaluating potential nominees but prior to the completion of the process, Hsieh made his intentions known.
"It is surprising and disappointing that Mr. Hsieh would attempt to circumvent the company's process for assessing potential director nominees," Dawn Lepore, chair of the nominating and governance committee said in the loanDepot press release. "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."
The board's statement then listed Patenaude's resume, including her recent appointment as chair of the Home Builders Institute board of trustees. She took her position at loanDepot in July 2021.
LoanDepot declined to make any further comment regarding the situation.
Ozonian is currently on LendingTree's board and is the former CEO of its real estate brokerage business. Among his other past positions were being the national homeownership executive of Bank of America and CEO of Realtor.com.
This is just the latest turmoil at the company, which included a loss of $137.5 million in the third quarter.
In July it announced plans to fire an additional 2,000 employees by the end of 2022, for 4,800 job reductions for the full year. But after its second quarter results announcement that included the decision to exit wholesale lending, loanDepot executives admitted the cuts were likely to go deeper.
On the legal front, Hsieh was personally named in a lawsuit filed by former chief operating officer Tamara "Tammy" Richards that alleged she was wrongfully terminated over her refusal to participate in a scheme to reduce underwriting standards as the company looked to build volume prior to its initial public offering. Richards also claimed loanDepot and Hsieh operated a frat house environment.
The company is also the target of a shareholder lawsuit regarding claims it made about its business during the IPO process.
And a Black couple from Maryland, Nathan Connolly and Shani Mott sued loanDepot and an appraiser over allegations of racial discrimination when they sought a refinance.
LoanDepot is also a plaintiff against CrossCountry Mortgage over allegations of loan officer poaching.
