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Stockholder Urges WITHHOLD VOTE on Douglas Elliman’s CEO Howard Lorber

Wednesday, 31 July 2024 09:00 AM

NEW YORK, NY / ACCESSWIRE / July 31, 2024 / Mr. Bradley Tirpak announced he has issued the following letter to the Stockholders of Douglas Elliman, Inc. ("DOUG" or "Company").

In his letter, he urges his fellow stockholders to WITHOLD VOTES ON PART- TIME CEO HOWARD LORBER at the upcoming Annual Meeting of Stockholders to be held August 21, 2024.

The full text of the letter is below:

Dear Fellow Stockholders,

I am writing to you to urge you to vote "WITHOLD" on the company's part-time CEO Howard Lorber at the upcoming Douglas Elliman Inc. ("DOUG" or "Company") Annual Meeting of Stockholders to be held August 21, 2024.

Stockholders are urged to vote "AGAINST" Proposal 3, the advisory vote ("SAY-ON-PAY") on executive compensation, and to vote "FOR" Proposal 4, the proposal to elect directors annually.

Given the fact that Company's share price has declined approximately 80% since the spin off from Vector Group Ltd. ("VGR" or "Vector" ), Institutional Shareholder Services ("ISS") and Glass Lewis will be asked to rigorously scrutinize the compensation policies at the Company.

In the recent proxy statement filed on July 11, 2024 with the Securities and Exchange Commission, stockholders learned that the compensation committee of the board of directors significantly lowered the metrics used to measure the success of the Company when awarding executive bonuses.

A WITHOLD VOTE on Mr. Lorber and a VOTE AGAINST PROPOSAL 3 will make sure that the board of directors understands that the compensation policies of the Company are flawed and the Company requires truly independent oversight that aligns management compensation with stockholder returns.

Between fiscal years 2022 and 2023, the compensation committee lowered the Threshold, Target and Maximum Adjusted EBITDA performance goals from a positive $72 million, $80 million, and $95 million to a Threshold of rewarding management for posting a loss of $20 million, a Target of merely breaking even at $0, and a Maximum bonus for reporting a paltry $10mm in Adjusted EBITDA.

When Mr. Lorber agreed to his part-time job just over two years ago, the board believed $72mm in EBITDA was a worthy "Threshold." Today, the board has lowered that "Threshold" by an astonishing $92 million and happily accepts continuing losses as the "Threshold" of success.

Under the 2022 bonus structure, management would have widely failed the Adjusted EBITDA Threshold, fallen short of the Gross Transaction Value Target, and whiffed the Dividend Threshold. As a painful reminder, the Company cancelled its dividend in early 2023.

From the proxy, it is unclear how the board evaluated the Diversity, Equity and Inclusion portion of Mr. Lorber's bonus where he received the Maximum permissible award, but given recent headlines in the Wall Street Journal surrounding problematic brokers accused of sexual assault, stockholders deserve to know how the assault and harassment claims were handled by management.

It is even less clear on what management has done to further address the important issue of climate change. Over the past year, it is clear management has yet to complete a measurement of the Company's emissions, which began in 2022.

Here are some obvious suggestions to the board:

The board should hold the CEO to the 2022 EBITDA and Transaction Value thresholds, and claw back his 2023 bonus.

Mr. Lorber also serves as part-time CEO at the cigarette maker Vector. Given the disastrous stock performance, recent dilution, and failure to maintain profitability, it is clear the Douglas Elliman needs a focused, full-time CEO. Mr. Lorber's contract ends on December 29, 2024. The board should open a search for a new CEO immediately.

Losses are not acceptable to stockholders. The newly reconstituted compensation committee should retain a new compensation consultant immediately.

The Company is paying $4.2 million a year for certain services to Vector. These services should be brought in house. It is time for a complete separation from Vector.

The board should eliminate the private jet arrangement with Vector.

The board should open an independent investigation into recent sexual assault allegations made in the Wall Street Journal and investigate if management participated in a cover-up or has been rewarding certain brokers in a self-serving manner.

The board should institute a whistle blowing hotline to allow employees to report sexual harassment, fraud, and other illegal behaviors.

Normally, poor compensation practices would simply warrant a vote against the compensation committee or compensation committee chairman, but the staggered board prevents this solution. This is why stockholders are urged to vote "FOR" Proposal 4, the proposal to elect directors annually.

The board has paid Mr Lorber over $45 million over the past three years, and stockholders have suffered under his leadership. It is time to send a message to the board that stockholders demand compensation policies aligned with profitability and better corporate governance.

Given the abysmal stockholder returns and the massive dilution recently inflicted on stockholders, stockholders are urged to WITHOLD VOTES FOR HOWARD LORBER in the upcoming election.

Douglas Elliman is a valuable franchise and a storied real estate brand. Under new leadership, with appropriate cost controls, less dilution, improved capital allocation, and a management team accountable to and aligned with stockholders, it is certain the Douglas Elliman can recover and thrive.

Sincerely,

Bradley Tirpak

About ATI:

Bradley Tirpak is the managing director of ATI and is an investor based in New York and Aspen. ATI invests in public companies with the aim of improving corporate governance and shareholder returns.

Contact Information

Bradley Tirpak
Managing Member, ATI
[email protected]
(212) 533-6940

SOURCE: ATI

Topic:
Company Update
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