loanDepot founder and chairman Anthony Hsieh has decided to use his majority voting power to unilaterally nominate Steven Ozonian for election to the board of directors, exposing a dispute with other board members, the company disclosed in a regulatory filing on Tuesday.
The decision on the new board member will be made in the company’s 2023 annual stockholders’ meeting, during which Hsieh intends to vote all of his shares in favor of Ozonian.
Hsieh stepped back from loanDepot’s CEO position in April and was replaced by industry veteran Frank Martell. But the company founder maintained the chairmanship and retained over 40% of the economic interest and 57% of the combined voting power of the nonbank lender, according to Securities and Exchange Commission (SEC) filings.
In a letter to stockholders, Hsieh said that unilaterally nominating Ozonian was not a decision he came to “lightly.” Still, he firmly believes it is important to seek out fresh perspectives amid the recent rise in mortgage rates.
Like its peers, loanDepot is struggling amid a contracting mortgage market. The California-based lender reported a $137.5 million loss in the third quarter of 2022, when origination volumes declined to $12.4 billion. Per Inside Mortgage Finance data, conditions have since worsened – the lender originated just $6.37 billion in mortgages in the fourth quarter, though .
loanDepot’s headcount has nearly halved from 11,300 at year-end 2021 to approximately 6,100 at the end of September 2022.
According to Hsieh, he’s not affiliated with Ozonian, which qualifies the candidate as an independent director. Covington & Burling LLP is serving as the legal advisor in the decision.
Hsieh said he ought to engage with the board to consider Ozonian’s nomination due to 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,” Hsieh wrote in the letter. “The Board’s recent decision to create a committee that excludes me and my director designee — in order to contest Mr. Ozonian’s nomination — only accentuates this concern, as does its decision that I should no longer serve as Executive Chairman.”
loanDepot’s board of directors has eight seats, including Hsieh and Martell. Two members have terms expiring at the annual meeting, Andrew Dodson, managing partner at Parthenon Capital, and Pamela Hughes Patenaude, a real estate, housing policy, and disaster recovery expert who once served as a deputy secretary of HUD.
Hsieh expects to replace one of them – Patenaude is the most likely – with Ozonian. Per a stockholders agreement, Hsieh has previously committed to vote for a representative of Parthenon, a major investor, as a company director.
Since 2017, Ozonian has been the CEO of the title underwriter and real estate tech services provide, Williston Financial Group. He has also been a member of the board of directors of LendingTree since 2011.
In October, HousingWire reported that despite mounting financial losses, layoffs, a growing chorus of complaints from workers and even the removal of a 401K match to workers’ retirement plans, loanDepot’s board opted to give its executives generous raises.