HomeFed’s Shareholders Go Out With a Harangue : Banking: Investors at annual meeting have seen shares become worthless. The insolvent thrift is due to be seized by the government.
HomeFed Corp. shareholders got what probably was their last crack at the failed savings and loan’s management Wednesday and they gave it to Chairman Kim Fletcher and Chief Executive Officer Tom Wageman with both barrels.
Venting frustration with the imminent seizure of the once mighty thrift and the virtual wiping out of their investments, two dozen of the 250 shareholders attending HomeFed’s annual stockholders meeting stood up to rail against the executives for bringing the 201-branch thrift to its current, moribund pass.
The comments came during a question and answers session following the executives’ formal presentation, during which the mostly elderly shareholders were told that their stock, worth as much as $47.50 per share less three years ago, is now worth next to nothing.
HomeFed shares were delisted by the New York Stock Exchange last month and will soon be delisted by the Pacific Stock Exchange.
At several points during the meeting, Fletcher apologized for the failure of HomeFed, which was founded by his father, Charles E. Fletcher, in 1932.
“I’m very sorry for what has happened. . . . This is certainly not the way we planned it,” he said.
Fletcher admitted to shareholders that HomeFed, once the fifth-largest S&L; in the nation, had made strategic mistakes, mainly by loaning money to out-of-state commercial developers in a misguided bid at diversification. At a news conference after the shareholders meeting, Fletcher said HomeFed’s demise was 95% due to actions taken by Congress and various presidents.
HomeFed lost $807.7 million in 1991, a loss that rendered it insolvent.
But Fletcher’s mea culpa and Wageman’s detailed explanation of his efforts to lead HomeFed out of the woods did little to mollify shareholders.
A frequent focus of shareholder criticism Wednesday was Wageman and his $1.2-million compensation package for six months of work last year. Wageman, who was hired in July after a stint at Sunbelt Savings in Dallas, was paid $859,000 in relocation benefits, money which he used to buy another house in Dallas.
Shareholder Nancy Warner said Fletcher and the HomeFed board were “stupid” for having hired Wageman. Investor Joe Steinberg agreed, saying the thrift holding company ought to cut costs from “the top down instead of the bottom up” by cutting salaries of Wageman and other top executives.
Jack Ebrol chastised the HomeFed board for agreeing to Wageman’s compensation, which he described as “abusive and poorly done.”
Fletcher defended the compensation paid to Wageman, saying it was reviewed by the Office of Thrift Supervision and that HomeFed’s deteriorating condition at the time of the hiring made it difficult to recruit top management.
Shareholder Robert Knerl of Glendale complained that the loan review initiated by Wageman after he took office last summer and which resulted in drastic write-downs of HomeFed’s assets was similar to “fixing a leak in the corner by tearing up the roof, the electrical system and the entire carpet. You’re tearing down everything.”
“I think you guys are running around in circles and you’re all crazy,” Knerl said to Fletcher and Wageman.
Asked after the meeting how he felt about investors’ emotions, Fletcher said: “I think it’s very understandable. I can empathize with it.” Fletcher said he has seen his $5-million investment in HomeFed shares wiped out.
On April 3, the Office of Thrift Supervision placed capital-deficient HomeFed in its Advanced Recovery Program. Under ARP, regulators effectively impose a death sentence on a thrift but do not seize it until it can arrange a government-assisted sale in advance.
However, Congress’ refusal earlier this month to appropriate funds for S&L; resolutions now means that the OTS could step in and seize HomeFed at any time. Wageman and Fletcher insisted Wednesday they have no idea when the inevitable seizure will take place
After the shareholders meeting, Wageman said he would be interested in being part of a bidding group to buy HomeFed but that he has held no discussions with outside investors. “I’d be delighted to have somebody call,” Wageman said. More than a dozen such groups have approached the OTS about making a possible bid for HomeFed.
