Strathmore Capital Calls on Tejon Ranch to Significantly Reduce G&A and Prioritize Free Cash Flow
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.
Strathmore Capital, azionista di lungo termine di Tejon Ranch (NYSE:TRC), ha inviato una lettera al Consiglio di Amministrazione di TRC chiedendo una significativa ristrutturazione aziendale e riduzioni dei costi. La lettera apprezza la nomina di Matthew Walker come CEO e la sua scelta di un CFO ad interim, ma sollecita cambiamenti più sostanziali per aumentare il valore per gli azionisti.
Strathmore evidenzia preoccupazioni riguardo alle spese generali e amministrative eccessive, inclusa l'assunzione di cinque Vice Presidenti del settore immobiliare, con un EVP che riceve quasi 1 milione di dollari di compenso medio annuo. L'investitore critica inoltre il contratto di consulenza annuale da 1 milione di dollari con l'ex CEO e la struttura eccessivamente grande del consiglio di amministrazione, composto da 10 membri.
La lettera sottolinea che il reddito ricorrente di TRC deriva principalmente da investimenti passivi e joint venture, suggerendo che l'attuale struttura aziendale è inutilmente complessa e costosa.
Strathmore Capital, accionista a largo plazo de Tejon Ranch (NYSE:TRC), ha enviado una carta al Consejo de Administración de TRC solicitando una reestructuración corporativa significativa y reducción de costos. La carta elogia el nombramiento del CEO Matthew Walker como CFO interino, pero insta a realizar cambios más profundos para mejorar el valor para los accionistas.
Strathmore destaca preocupaciones sobre los gastos generales y administrativos excesivos, incluyendo la contratación de cinco vicepresidentes de bienes raíces, con un EVP que recibe casi 1 millón de dólares en compensación anual promedio. El inversor también critica el contrato de consultoría anual de 1 millón de dólares con el ex CEO y la estructura sobredimensionada de la junta directiva de 10 miembros.
La carta enfatiza que los ingresos recurrentes de TRC provienen principalmente de inversiones pasivas y empresas conjuntas, sugiriendo que la estructura corporativa actual es innecesariamente compleja y costosa.
Strathmore Capital는 Tejon Ranch (NYSE:TRC)의 장기 주주로서 TRC 이사회에 중대한 기업 구조조정과 비용 절감을 요구하는 서한을 발송했습니다. 이 서한은 CEO 매튜 워커의 임시 CFO 임명을 칭찬하면서도 주주 가치를 높이기 위한 보다 실질적인 변화를 촉구합니다.
Strathmore는 과도한 일반관리비(G&A) 지출에 대한 우려를 제기하며, 부동산 부문 부사장 5명을 고용하고 그 중 한 명 EVP가 연평균 거의 100만 달러의 보수를 받고 있다고 지적합니다. 투자자는 또한 전 CEO와의 연간 100만 달러 컨설팅 계약과 10명으로 구성된 과대 규모의 이사회 구조를 비판합니다.
서한은 TRC의 반복 수입이 주로 수동적 투자 및 합작 투자에서 발생한다며 현재의 기업 구조가 불필요하게 복잡하고 비용이 많이 든다고 강조합니다.
Strathmore Capital, actionnaire de longue date de Tejon Ranch (NYSE:TRC), a adressé une lettre au conseil d'administration de TRC appelant à une restructuration d'entreprise significative et à des réductions de coûts. La lettre félicite la nomination de Matthew Walker en tant que CEO par intérim, mais exhorte à des changements plus profonds pour améliorer la valeur pour les actionnaires.
Strathmore souligne des préoccupations concernant les dépenses administratives et générales excessives, y compris l'emploi de cinq vice-présidents de l'immobilier, avec un EVP percevant près de 1 million de dollars de rémunération annuelle moyenne. L'investisseur critique également le contrat de conseil annuel d'un million de dollars avec l'ancien CEO ainsi que la structure surdimensionnée du conseil d'administration composé de 10 membres.
La lettre met en avant que les revenus récurrents de TRC proviennent principalement d'investissements passifs et de coentreprises, suggérant que la structure actuelle de l'entreprise est inutilement complexe et coûteuse.
Strathmore Capital, ein langfristiger Aktionär von Tejon Ranch (NYSE:TRC), hat einen Brief an den Vorstand von TRC gesendet, in dem eine umfassende Unternehmensrestrukturierung und Kostensenkungen gefordert werden. Der Brief lobt die Ernennung von CEO Matthew Walker zum interimistischen CFO, drängt jedoch auf tiefgreifendere Veränderungen zur Steigerung des Aktionärswerts.
Strathmore hebt Bedenken bezüglich übermäßiger Verwaltungs- und Allgemeinkosten (G&A) hervor, darunter die Beschäftigung von fünf Vizepräsidenten für Immobilien, von denen ein EVP fast 1 Million US-Dollar durchschnittliche Jahresvergütung erhält. Der Investor kritisiert zudem den jährlichen Beratungskontrakt über 1 Million US-Dollar mit dem ehemaligen CEO sowie die überdimensionale 10-köpfige Vorstandstruktur.
Der Brief betont, dass TRCs wiederkehrende Einnahmen hauptsächlich aus passiven Investitionen und Joint Ventures stammen, und legt nahe, dass die derzeitige Unternehmensstruktur unnötig komplex und kostenintensiv ist.
- 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
- 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
Insights
Shareholder Strathmore pushes for massive cost cuts at Tejon Ranch to improve free cash flow amid claims of corporate waste.
This letter from Strathmore Capital represents a significant activist investor challenge to Tejon Ranch's management and board. The shareholder is explicitly targeting what it perceives as bloated corporate overhead and excessive G&A expenses that are eroding the company's recurring income streams.
The activist has identified several specific areas for cost reduction, including:
- The current executive structure with five Vice Presidents of Real Estate, including one EVP reportedly earning nearly
$1 million annually - Multiple communications and public affairs staff deemed unnecessary
- A ten-member board considered disproportionately large for Tejon's size
- A
$1 million annual consulting contract with the former CEO
What's particularly notable is Strathmore's claim that Tejon's recurring income primarily comes from passive investments (royalties and land leases) and JV partnerships, suggesting the company is overstaffed for its operational needs. The letter indicates some initial positive moves by new CEO Matthew Walker, specifically appointing an existing employee as interim CFO rather than hiring externally.
This activist campaign highlights a classic corporate governance tension between management's desire for resources and shareholders' focus on capital efficiency. Strathmore is essentially arguing that Tejon has been operating with minimal shareholder accountability for decades, resulting in a corporate structure that prioritizes jobs over investor returns. The request for the former CEO to leave the board further suggests concerns about entrenched interests blocking necessary changes.
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
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
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)?
How many Vice Presidents of Real Estate does Tejon Ranch currently employ?
What are the main sources of Tejon Ranch's recurring income?
How large is Tejon Ranch's current Board of Directors?
What initial positive step has TRC's CEO Matthew Walker taken?
