Amid a battle with the board of directors, loanDepot‘s founder Anthony Hsieh is stepping down as executive chairman. However, he will remain chairman for the company’s board, the company announced on Wednesday.
The announcement came the day after Hsieh said he had decided to use his majority voting power to unilaterally nominate Williston Financial Group executive Steve Ozonian to the board of directors.
Hsieh is stepping down due to a mutual agreement unanimously approved by the board, according to the company’s statement.
“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 board’s nominating and corporate governance committee, said in a statement. “We question why he (Hsieh) would pursue a disruptive proxy contest to install his nominee when Mr. Ozonian has already been, and continues to be, under evaluation.”
According to the statement, the committee has interviewed Ozonian as part of its ongoing process for evaluating potential nominees for election.
Before the completion, Hsieh unilaterally nominated and said he will vote all of his shares in favor of Ozonian. In a letter to stockholders, Hsieh said he ought to engage with the board due to the need for refreshment over the past few months, “but there has been no appetite for meaningful discussions.”
Hsieh can execute the power of nominating a candidate because he owns 40% of the economic interest and 57% of the combined voting power of the lender, according to Securities and Exchange Commission (SEC) filings.
The decision on the new board composition will be made at loanDepot’s 2023 annual stockholders’ meeting.
Two of the board’s eight members will have terms expiring by then: Andrew Dodson, managing partner at Parthenon Capital, and Pamela Hughes Patenaude, a housing policy expert who once served as a deputy secretary of HUD.
Hsieh has previously committed to vote for a representative of Parthenon – a major investor in loanDepot – as a company director, per a stockholders agreement. Patenaude is expected to be replaced.
The dispute at the California-based nonbank lender comes as loanDepot is shrinking due to market conditions.
According to Inside Mortgage Finance, loanDepot originated just $6.37 billion in mortgages in the fourth quarter. The company reported $12.4 billion in mortgages volume in the previous quarter. Meanwhile, loanDepot’s workforce has nearly halved from 11,300 at year-end 2021 to approximately 6,100 at the end of September 2022.
Despite the company’s struggles, HousingWire reported in October that loanDepot’s board opted to give its executives generous raises.