Print

Email story

Comment

Email editor

Walter Industries says it will trim its board

The decision will leave the largest new stakeholder unrepresented.

By SCOTT BARANCIK
Published March 23, 2005

When Walter Industries' top shareholder jettisoned its last 10-million shares of company stock in October, a new crop of investors snapped them up.

One newbie, Appaloosa Management LP, almost instantly went from having no position in the Tampa home-building and coal-mining company to being its largest stakeholder, at 15.4 percent.

But Walter's board of directors isn't giving Appaloosa or any other Johnny-come-lately a seat at the table just yet.

On Tuesday, Walter disclosed that two of its nine directors, Perry Golkin and Simon Brown, will not seek re-election at the company's April 28 shareholders meeting. Their departure was long expected: Both are representatives of Kohlberg Kravis & Roberts Co., the New York investment bank that acquired Walter in 1988, took it public in 1995 and remained its largest shareholder until selling out in October.

With no investment left to protect, Golkin's and Brown's exit was essentially preordained.

But rather than fill their seats with representatives acceptable to Appaloosa and other newcomers, Walter's board decided Monday to slim down to seven seats, at least for now.

"The board is conducting a process to identify director candidates and, if appropriate and when qualified candidates are found, the board will exercise its powers ... to increase the number of directors," the company said in a filing Tuesday with securities regulators.

Walter executives did not return phone calls and an e-mail seeking comment. Neither did six of the company's top seven shareholders, whose combined stake in the company totaled 43.5 percent as of Dec. 31. The seventh, Elm Ridge Capital Management, declined to comment.

Barbara Allen, an analyst at Avondale Partners and one who monitors Walter's stock, said it's possible Walter's board is buying time until a successor to retiring chairman and CEO Don DeFosset is found. It would be natural for a new CEO or chairman to have a say in the board's composition.

By the same token, she said, a top shareholder like Appaloosa might feel it deserves to have a voice in the selection of Walter's new leadership. That would suggest getting a board seat sooner rather than later.

"If you own 15 percent of a company," Allen added, "your opinion needs to be considered."

Scott Barancik can be reached at barancik@sptimes.com or 727 893-8751.

[Last modified March 23, 2005, 00:55:18]