St. Joe Opposes Board Replacement

MIAMI (AP) - St. Joe Co. said Wednesday it opposes its largest shareholder's efforts to replace the real estate developer's entire board.

The Florida company in a statement called for Fairholme Fund to make a buyout offer to shareholders if it wants to take control of the company. St. Joe also invited the mutual fund to submit any alternative business plan for consideration.

Fairholme said earlier Wednesday that it hired executive search firm Spencer Stuart to oversee a process allowing shareholders to suggest director candidates. The move came within hours of St. Joe's enacting a "poison pill."

Fairholme President Bruce Berkowitz and executive Charles Fernandez resigned from St. Joe's board on Monday, but in a letter filed with the Securities and Exchange Commission on Wednesday, Berkowitz said he and Fernandez have submitted their names for board consideration and agreed to serve without pay.

Fairholme also suggests former Florida Gov. Charlie Crist and Carnival Corp. COO Howard Frank as potential board members.

Berkowitz said Fairholme anticipates the remaining spots on a seven or nine-member board would be filled with people suggested by other shareholders and Spencer Stuart.

Berkowitz and Fernandez were elected to St. Joe's board in December, but resigned Monday over disagreements with the nominating and governance process, according to an SEC filing.

Fairholme is not the only investor to be critical of St. Joe. Hedge fund manager David Einhorn announced last year that he was shorting the company, criticizing St. Joe's efforts to bring Southwest Airlines to a nearby airport by promising to cover the airline against any losses for a specified period.

Einhorn was the same investor whose dire forecast for Lehman Brothers preceded its downfall.

Late Tuesday, St. Joe adopted a shareholder rights plan, or "poison pill," which is typically used to prevent hostile takeovers.

St. Joe, based in Jacksonville, Fla., is currently weighing its strategic options, including a possible sale, after it suffered massive losses during the real estate downturn. The company has hired Morgan Stanley & Co. to help it with the exploration process.

The developer's stock has tumbled in the last year as it navigates out of the real estate slump and deals with land polluted by the Gulf of Mexico oil spill last summer. The company has sued Halliburton Co. and others involved in the spill over the decline in the value of 577,000 acres in Northwest Florida and in its development