Florida's Who's Who vs. THE SHARKS

Florida's Who's Who vs. THE SHARKS

TAKEOVER BATTLE by Jean Gruss | Editor/Lee-Collier

Carl Icahn, one of America's most relentless shareholder activists, celebrated his 71st birthday Feb. 16. The party: He launched another proxy battle, this time for control of Bonita Springs-based WCI Communities Inc.

Icahn in recent months has acquired nearly 15% of the homebuilder's shares. He wants to replace the entire board of WCI with his own slate of directors, including himself and Hugh Culverhouse Jr., owner of Sarasota-based Palmer Ranch and son of the late Tampa Bay Buccaneers' owner, who, in his day, waged his own share of takeover battles.

Icahn wants to replace a WCI board that reads like a who's who of Florida business, including Charles Cobb Jr. of Miami, former chairman and CEO of Arvida Corp. and Disney Development Co., Stewart Turley, former chairman and CEO of Clearwater-based Eckerd Corp., and F. Philip Handy, a Winter Park investment banker who served as Gov. Jeb Bush's chairman of the Florida Board of Education.

Icahn is not acting alone. In other deals, Icahn has worked in concert with hedge-fund tycoon Steve Cohen and SAC Capital Advisors to push for change. Cohen recently increased his stake in WCI to 7.8% of the shares outstanding. That will allow Icahn to work around WCI's recently adopted poison-pill provision that dilutes the shares of any investor who acquires more than 15% of the company's shares.

Other large shareholders include value-oriented money management firm Hotchkis & Wiley, which built a 16.1% stake in WCI in the months before the board adopted the poison-pill provision. Meanwhile, money management company Neuberger Berman and its managing director Marvin Schwartz have acquired a 12% combined stake in WCI. None of the investors, current and proposed directors or company officials would comment.

In a prepared statement, WCI Chairman Don Ackerman called Icahn's plan "highly disruptive and not in the best interest of all our shareholders." WCI recently hired Goldman Sachs to evaluate the possible sale of the company.

Ackerman says Icahn rejected an offer for a seat on the board. "Mr. Icahn has repeatedly asked us to give him preferential treatment and provide him with advantages not offered to other shareholders," Ackerman said in his statement. The statement didn't say what advantages Icahn requested.

WCI is widely considered Southwest Florida's bellwether homebuilding company and its performance has mirrored the dramatic downturn in new-home construction. WCI executives say they expect the company to lose money in the fourth quarter because of impairments and write-offs of land options totaling as much as $120 million. Investors will learn the details when WCI releases the results of the fourth quarter Feb. 27.

WCI's current board consists of directors hand-picked by Al Hoffman, the Florida developer and Republican fundraiser who built the company and retired as chairman and CEO in 2005. Hoffman is now U.S. ambassador to Portugal and no longer holds a significant stake in WCI.

Many on the current board have ties to the Republican Party and former Gov. Bush. They have served in various volunteer and professional capacities at the federal and state level (see profiles on this page). In addition to Handy as education board chairman, Kathleen Shanahan was Gov. Bush's chief of staff.

Ackerman has announced plans to step down as chairman of WCI at the company's annual meeting May 17, with the expectation that Cobb, who recently was named vice chairman, is the likely successor - if Icahn's bid fails.

Cobb, now CEO and senior managing director of Cobb Partners, a Miami-based investment firm, was appointed to WCI's board in 2005. Having led the Arvida Corp. to becoming Florida's foremost residential real estate developer in the 1980s, he has been in this position before. When corporate raider Saul Steinberg tried to greenmail the Walt Disney Co. in 1984, Disney's directors tried repelling Steinberg by purchasing Arvida for about $340 million.

As a result of the buyout, Cobb became a Disney director, and Disney later paid a premium to Steinberg to end his takeover attempt. (Cobb is a shareholder and former director of The Observer Group Inc., owner of the Gulf Coast Business Review.)

Handy, meanwhile, is no stranger to real estate, either. In the late 1980s, Handy served as a director of a company controlled by Chicago real estate kingpin Sam Zell, controlling shareholder of Equity Office, one of the largest commercial property owners and managers in the nation. In the late 1990s, Handy was managing director of Equity Group Corporate Investments, another Zell company.

Icahn apparently is not impressed with the real estate credentials of WCI's board.

His proposed slate of directors consists largely of hedge fund and investment managers. Only Culverhouse Jr. appears to have extensive experience with residential development.

A former U.S. attorney in Miami, Culverhouse served on the audit committee of the board of Del Webb from 1991 to 1997, a developer of retirement communities. And for the past decade, he has controlled and developed Palmer Ranch, the 10,000-acre property his father acquired more than two decades ago.

Culverhouse declined to comment on Icahn's proxy battle. But his involvement with Icahn stems from his connections as an active investor in New York hedge funds and a member of the Greenwich Roundtable, a Connecticut-based group of leading money managers. Culverhouse said he has known Icahn for about 20 years, having met him while representing such clients as the Ohio financier Carl Lindner.

Besides Culverhouse, Icahn's other board picks include 31-year-old David Schechter, an Icahn executive; Jonathan Macey, a Yale Law School professor who specializes in corporate law; Howard Lorber, president and CEO of cigarette maker Vector Group in Miami; and Michael Ashner, chairman and CEO of Winthrop Realty Trust, a publicly traded real estate investment trust in Boston.

WCI COMMUNITIES Proxy battle looms

Whose slate of directors would you vote for to lead WCI Communities? Shareholders will get to choose at the Bonita Springs-based homebuilder's annual meeting on May 17 between the current directors or those Carl Icahn has picked to lead the company.

Don Ackerman, 72

Chairman of the Board

Ackerman has served on WCI's board since July 24, 1995 and has announced that he will not stand for reelection as chairman even as he plans to remain on the board. Prior to that, he was chairman and executive vice president of WCI Communities L.P., which was acquired by developer Al Hoffman's Florida Design Communities in June 1999. Ackerman had been a board member of Florida Design since 1985. From 1967 until 1991, he was a partner at J.H. Whitney, a venture capital firm in New Canaan, Conn. He is also the chief executive officer of Chandelle Ventures, a private investment company in Bonita Springs.

Charles Cobb Jr., 70

Vice Chairman

A WCI director since 2005, Cobb had been expected to become chairman at the upcoming annual meeting. Cobb is chief executive officer and senior managing director of Cobb Partners, a Coral Gables-based investment firm with interests in real estate, international finance, resorts and tourism-related businesses. Cobb has served as chairman and CEO of Arvida Corp. and Disney Development Co. and was a director on the executive committee of the board of Walt Disney Co. Cobb served as U.S. ambassador to Iceland during the administration of George H.W. Bush and as the undersecretary and assistant secretary at the U.S. Department of Commerce during the Reagan administration. He is a member and past chairman of the board of trustees of the University of Miami and a former member of the Florida Governor's Commission on Education.

Hilliard Eure III, 70

Eure was the managing partner of the Tampa Bay practice of accounting firm KPMG from 1977 until June 1993. He serves on the board of Clearwater-based boat retailer MarineMax and was chairman of the board of WEDU, a public broadcasting station in Tampa, from 1991 through 2001. Eure has been a WCI director since 2003.

Philip Handy, 62

Handy is the chief executive officer of Strategic Industries, a Winter Park-based diversified service and manufacturing company. A WCI director since 1999, Handy also serves on the boards of Anixter International and Rewards Network. Until recently, he also served as the chairman of the Florida Board of Education.

Lawrence Landry, 62

Landry is the former chief financial and investment officer for the John D. and Catherine T. MacArthur Foundation, which was a major shareholder in WCI before Al Hoffman acquired the company. Landry has been a director at WCI since 1999 and from January 1996 until March 1999 he served as a director on Hoffman's Florida Design Communities. Landry is the chief executive officer of Westport Advisors Ltd., which is the general partner of Westport Senior Living Investment Fund L.P. He is also the CEO of Double L Investments, a private investment firm.

James McDonald, 66

McDonald is the chief executive officer of Scientific Atlanta, a technology company that Cisco Systems acquired in February 2006. He has been a WCI director since 2004. Prior to his 13-year tenure at Scientific Atlanta, McDonald was a general partner with J.H. Whitney, where he was responsible for venture capital in high-tech companies. From 1984 to 1989, he was president of Gould Inc. and from 1989 to 1991 he was president and CEO of Prime Computer. Prior to that, he spent 21 years with IBM. When he left IBM in 1984, he was general manager of its manufacturing systems products business.

Thomas McWilliams, 63

McWilliams is a managing director of Citigroup Venture Capital Ltd. He has been a WCI director since 2004 and also serves on the boards of Merchants Metals Corp., Strategic Industries LLC, Arizant Inc., IWCO Direct and Remy International.

Kathleen Shanahan, 46

Shanahan is the chief executive officer of WRS Infrastructure and Environment, a Tampa-based environmental-services company. A WCI director since 2004, Shanahan is the former chief of staff for Florida Gov. Jeb Bush. In addition, she has served in various capacities in the administrations of George H.W. Bush and Ronald Reagan and has served as chief of staff for Vice President Dick Cheney. Shanahan serves on the boards of the Lincoln Center Institute, the National Parks Foundation, Florida's Hurricane Relief Foundation. She is also a pro bono advisor to the Florida Coalition for Domestic Violence and Florida Governor's Mansion Foundation.

Jerry Starkey, 46

Starkey is the president and chief executive officer of WCI. A protege of Hoffman, Starkey joined Florida Design Communities in 1988. He has been a WCI director since 2001.

Stewart Turley, 71

Turley is the former chairman and chief executive officer of Eckerd Corp. in Clearwater, serving that company for 22 years before retiring in 1997. Turley has been a WCI director since 1999.

ICAHN'S PROPOSED BOARD

Carl Icahn, 71

Icahn, through his investment companies CCI Onshore Corp. and CCI Offshore Corp., is well-known for acquiring substantial stakes in companies he deems to be undervalued and forcing change. Most recently, Icahn battled the board of Time Warner to break up the company and has recently acquired stakes in Motorola and Lear Corp. Icahn is the chairman of pharmaceutical company ImClone Systems. He also is a chairman of three other companies: XO Holdings, American Railcar Industries and American Property Investors Inc.

Hugh Culverhouse Jr., 57

Culverhouse, a former trial attorney for the Securities and Exchange Commission, has owned Palmer Ranch Holdings Ltd. since 2001. Palmer Ranch is a master-planned community in Sarasota. Since 1989, he has owned Culverhouse Limited Partnership, an entity that invests in real estate and securities. Culverhouse has served on the board of Del Webb, a publicly held developer of retirement communities.

Howard Lorber, 58

Lorber is the president and chief executive officer of Vector Group Ltd., a cigarette manufacturer and real estate company based in Miami in which Icahn indirectly holds a minority interest. Lorber also is the executive chairman of Nathan's Famous, a chain of fast-food restaurants, and chairman of Ladenburg Thalmann Financial Services. From 1975 through 2004, he was chairman of Hallman & Lorber Associates, a consulting and actuarial firm for qualified-pension and profit-sharing plans.

Michael Ashner, 54

Ashner is the chairman and chief executive officer of Winthrop Realty Trust, a Boston-based publicly traded real estate investment trust (REIT). Since 1997, Ashner has served as executive chairman of Lexington Realty Trust, a $5.5 billion REIT based in New York City. He is also the managing director of AP-USX LLC, an entity that owns a 2.4-million-square-foot office tower. Since 1981, Ashner has been chairman of Exeter Capital Corp., a firm that organizes and administers real estate limited partnerships. He also has served as a director of Icahn-controlled GB Holdings.

Peter Clapman, 69

Clapman is the retired senior vice president and chief counsel for pension-fund giant TIAA-CREF. He is now chairman and trustee of AARP Mutual Funds and chief executive officer of governance for Owners USA Inc., which provides corporate governance consulting services. Clapman is a board member of the National Association of Corporate Directors and is a faculty member for its Corporate Directors Institute programs. In addition, he is a member of the NASDAQ Listing Council and on the corporate advisory boards of the University of Delaware Business School and the Yale School of Management.

Jonathan Macey, 51

Macey is a professor of corporate law at Yale University and is a member of the legal advisory committee to the board of the New York Stock Exchange. Macey is also a member of Yale's advisory committee on investor responsibility, which develops recommendations concerning the voting of Yale's stock at annual corporate meetings.

Auguste Rimpel Jr., 67

Rimpel is a retired partner of Price-waterhouseCoopers since 2000 after serving the company for 17 years. Prior to that, he was a partner with consulting firm Booz Allen & Hamilton. Rimpel has served on boards of companies controlled by Icahn, including GB Holdings, which indirectly owned The Sands Hotel and Casino in Atlantic City.

Jerome Becker, 71

Becker is special disciplinary referee for the New York state courts. He also has been a mediator for the Supreme Court of the State of New York for the last three years. He was appointed as a special master for the New York Supreme Court in January. From 1995 until 2006, Becker served as chairman of the New York State Housing Finance Agency, the New York State Affordable Housing Agency, the New York State Municipal Bond Bank Agency and vice chairman of the New York Mortgage Agency. Until 2006, he served as a director of the New York State Housing Trust Fund Corp. and the Homeless Housing Assistance Corp. Prior to his public service, Becker practiced law and specialized in real estate.

Sumner Baye, 74

Baye is president and partner of International Hotel Network, a hospitality consulting firm based in New York City. Baye has worked in the hospitality industry for 35 years, including as a vice president in the sales, marketing and conference division of Sheraton Hotels and vice president of travel and related services at American Express.

David Schechter, 31

Schechter serves as director and senior investment analyst for Icahn Management LP, the entity through which Icahn manages private investment funds for others. Prior to joining Icahn in January 2004, Schechter was vice president of global special situations at Citigroup. Schechter serves on the board of WestPoint International, an Icahn-affiliated manufacturer of home-fashion products.