Strathmore Capital Calls on Tejon Ranch to Significantly Reduce G&A and Prioritize Free Cash Flow

Rhea-AI Summary

Strathmore Capital, a long-term shareholder of Tejon Ranch (NYSE:TRC), has issued a letter to TRC's Board of Directors calling for significant corporate restructuring and cost reductions. The letter commends CEO Matthew Walker's appointment of an interim CFO but urges more substantial changes to improve shareholder value.

Strathmore highlights concerns about excessive G&A expenses, including the employment of five Vice Presidents of Real Estate, with one EVP receiving nearly $1 million in average annual compensation. The investor also criticizes the $1 million annual consulting contract with the former CEO and the oversized 10-member board structure.

The letter emphasizes that TRC's recurring income primarily comes from passive investments and joint ventures, suggesting the current corporate structure is unnecessarily complex and costly.

Positive

• Initial steps toward fiscal responsibility with interim CFO appointment
• Company has valuable recurring income streams from passive investments and joint ventures
• CEO showing willingness to engage with shareholders

Negative

• Excessive G&A expenses with five Vice Presidents of Real Estate
• Unnecessary $1 million annual consulting contract with former CEO
• Oversized 10-member board structure increasing costs
• Failed returns from capital expenditures on master-planned communities
• 40+ years of shareholder-unfriendly cost structure

WELLINGTON, Fla., July 24, 2025 /PRNewswire/ -- Strathmore Capital, Inc. ("Strathmore" or "we"), a long-term shareholder of Tejon Ranch Co. (NYSE:TRC) ("Tejon"), today issued the following letter urging Tejon's Board of Directors to Enable CEO Matthew Walker to Significantly Reduce G&A and Prioritize Free Cash Flow Production.

Dear Tejon Ranch Board of Directors,

Strathmore Capital, a long-term TRC shareholder, commends CEO Matthew Walker's recent decision to appoint an existing employee as interim CFO, a prudent step toward reducing executive overhead at Tejon. This action signals an initial step to fiscal responsibility, which we applaud. However, we believe additional substantial reductions are needed to unlock the full potential of the Company's recurring income streams and deliver meaningful free cash flow to shareholders. Historically, we believe these streams have been eroded by excessive and unnecessary general and administrative (G&A) expenses and capital expenditures on master-planned communities that have, in our view, failed to deliver any returns to shareholders.

Our analysis indicates that the majority of Tejon's recurring income is derived from passive investments (royalties, land leases, etc.) and joint venture partnerships. Yet, according to LinkedIn profiles, the Company currently employs five Vice Presidents of Real Estate, including an Executive Vice President who over the last three years has received a total annual average compensation of nearly $1 million. Given the passive nature of these investments, we question the necessity of maintaining more than one Vice President of Real Estate. Additionally, to our knowledge, the Company employs multiple employees in communications and public affairs, when in our view, a single officer would suffice.

To achieve a true focus on free cash flow, we urge the Board to empower Mr. Walker to implement wholesale changes in order to significantly reduce corporate waste. This includes reconsidering the composition of the Board itself, which, at ten members, is disproportionately large for a company of this size. Reducing the Board's size would yield additional immediate cost savings. Furthermore, we find the consulting contract awarded to the former CEO, valued at approximately $1 million annually, to be an unnecessary expense that is indicative of the widespread corporate waste at the Company.

We acknowledge Mr. Walker's efforts to engage with shareholders, which is a positive step toward rebuilding trust. It is our hope that Mr. Walker can be the right leader to finally deliver the value that shareholders have been waiting decades for. However, in order for this investor mandate to be achieved, we believe Mr. Walker needs to be enabled by the Board to make significant cost reductions that are necessary. Lastly, it is our view that wholesale changes cannot be made while the former CEO remains on the Board.

For over four decades, Tejon Ranch has operated with a cost structure that has not prioritized shareholder value, largely due to insufficient investor oversight and accountability. That era must end.

Sincerely,
Justin Lebo, Strathmore Capital, Inc.

Contact: 
Justin Lebo
732-207-8278

View original content:https://www.prnewswire.com/news-releases/strathmore-capital-calls-on-tejon-ranch-to-significantly-reduce-ga-and-prioritize-free-cash-flow-302512825.html

SOURCE Strathmore Capital, Inc.

FAQ

What changes is Strathmore Capital demanding from Tejon Ranch (TRC)?

Strathmore is demanding significant G&A cost reductions, including downsizing the number of Vice Presidents, reducing board size, and eliminating the former CEO's $1 million consulting contract.

How many Vice Presidents of Real Estate does Tejon Ranch currently employ?

Tejon Ranch currently employs five Vice Presidents of Real Estate, including an Executive VP earning nearly $1 million in average annual compensation.

What are the main sources of Tejon Ranch's recurring income?

Tejon Ranch's recurring income primarily comes from passive investments such as royalties, land leases, and joint venture partnerships.

How large is Tejon Ranch's current Board of Directors?

Tejon Ranch currently has a 10-member Board of Directors, which Strathmore considers disproportionately large for a company of its size.

What initial positive step has TRC's CEO Matthew Walker taken?

CEO Matthew Walker has taken a positive step by appointing an existing employee as interim CFO, which helps reduce executive overhead.