Incumbent nominees Rochelle Dobbs and George McDowell must be held accountable for RESI’s governance failures and history of underperformance
RESI shareholders should be concerned by the Board’s recent actions which risk disenfranchising shareholders and limiting meaningful shareholder participationAltisource intends to WITHHOLD votes for directors Rochelle Dobbs and George McDowell and to vote AGAINST the advisory proposal to approve the compensation for RESI’s named executive officers at the June 22, 2020 Annual Meeting of ShareholdersLUXEMBOURG, June 08, 2020 (GLOBE NEWSWIRE) — Altisource Portfolio Solutions S.A. (“Altisource”) (NASDAQ: ASPS), a leading provider and marketplace for the real estate and mortgage industries and a significant shareholder of Front Yard Residential Corporation (the “Company” or “RESI”) (NYSE: RESI), today issued the following open letter to RESI shareholders criticizing the Company’s decision to schedule a fast-tracked annual meeting of shareholders and announcing its intention to vote “Withhold” against directors Rochelle R. Dobbs and George W. McDowell (both of whom we believe are conflicted) and to vote “Against” the advisory proposal to approve the compensation of RESI’s named executive officers at the Company’s upcoming annual meeting scheduled to be held on June 22, 2020. The full text of the letter follows:June 8, 2020Dear Fellow RESI Shareholders:Altisource is a long-term holder of more than 5% of RESI’s outstanding shares and has been supportive of management since Altisource established and separated via spinoff RESI in 2012. Our support included acquiring a position in RESI to assist in its defense against a dissident proxy contest in early 2016. As a shareholder, Altisource continued to provide strong support to RESI for several years, including most recently when we agreed to lock up our shares and commit to vote in favor of the now terminated merger with Amherst Residential, LLC (“Amherst”).Like other shareholders who voted in favor of the merger at the special meeting of shareholders on April 27, 2020, we were shocked to learn of the Board of Directors’ unexpected and still unexplained decision to voluntarily terminate the merger on May 4, 2020. Together with all RESI shareholders, we suffered substantial destruction of shareholder value due to the Board’s actions.We think it is important to share with our fellow shareholders the rationale for Altisource’s decision to vote WITHHOLD on Rochelle R. Dobbs and George W. McDowell, two of the directors standing for election at the upcoming 2020 annual meeting of shareholders, and to vote AGAINST the advisory proposal to approve the compensation for RESI’s named executive officers.We believe that these incumbent nominees should be held accountable for:RESI’s voluntary termination of the merger with Amherst without explanationRESI’s efforts to fast track the 2020 annual meeting, an apparent attempt to stifle shareholder opposition and frustrate meaningful shareholder participationRESI’s history of underperformance and failure to successfully implement its strategy to improve its financial performanceRESI’s payment of cash and equity based compensation to executive management when its external manager is already responsible for the compensation of RESI’s executive management and RESI’s costs are already bloated and out of line with its scale of operationsRESI’s fast-tracked 2020 Annual Meeting frustrates meaningful shareholder participation and seeks to entrench the incumbent BoardWe believe RESI fast tracked its 2020 annual meeting for the simple reason that the Board cares more about entrenching the incumbent directors than sound corporate governance and meaningful shareholder participation.On April 27th, at the recommendation of the RESI Board, shareholders overwhelmingly approved the Amherst merger. A mere one week later, on May 4th, without any prior indication of trouble, RESI voluntarily terminated the merger, destroying significant shareholder value in the process. Incredibly, rather than addressing directly with shareholders its rationale for voluntarily terminating the merger, RESI began a race to schedule the annual shareholder meeting by June 22nd. What was the reason for the Board’s misguided focus on scheduling the annual meeting, rather than taking the effort to explain to shareholders the reasons for the massive loss of value they had just experienced? The answer is simple – a meeting held on June 23rd or later would require the Company to entertain shareholder proposals and nominees for the Board. By scheduling the meeting for June 22nd, the Board members could protect their positions and insulate themselves from shareholders.We believe RESI undertook its plan to fast track the meeting and frustrate shareholder participation by initiating an important step, a legally required brokers’ search of shareholders who beneficially own shares in street name through their brokers, on May 6th. This action is required to be taken 20 business days prior to the meeting date. We believe RESI violated SEC requirements by, as we understand, undertaking this action 19 business days prior to the June 22nd meeting date. The purpose of the 20-business day requirement is to ensure that all shareholders are identified and given a chance to participate in the meeting. RESI’s breach of this legal obligation is not a mere technical failure. Given the seriously compressed timelines of the RESI meeting, RESI’s action could very well disenfranchise RESI shareholders. The Board, under the leadership of Chair Rochelle R. Dobbs, apparently concluded that protecting its position was more important than identifying shareholders.By racing to schedule the annual meeting for June 22nd, a mere 19 days following the June 3rd record date, RESI’s Board also blatantly disregarded the New York Stock Exchange’s recommendation that there be at least a minimum of 30 days between the record and meeting dates to give ample time for the solicitation of proxies. Leaving aside potential delays due to COVID-19 disruptions, as a practical matter, the Company at best will have 14 days prior the meeting date to commence and complete the mailing of proxy materials to street name holders.We believe that the fervor of RESI’s Board to hold the meeting by June 22nd was so great that it apparently drove the Company to file a defective definitive proxy statement on May 28th – prior to the June 3rd record date – that we believe is devoid of such basic information as the number of outstanding shares entitled to vote at the meeting. The priorities evidenced by this action of the RESI Board, under the leadership of Ms. Dobbs, are apparent and those priorities do not include shareholder participation and good corporate governance.RESI’s fast tracked timeline clearly shows shareholder disenfranchisementThe diagram below demonstrates the disenfranchising impact of RESI’s irregular and truncated timeline.A Media Snippet accompanying this announcement is available by clicking on the image or link below:
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