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Bruce Berkowitz’s Fairholme Capital forces CEO and board reshuffle at St. Joe

|Includes:CCL, St Joe Co. (JOE)

The St. Joe Company (NYSE:JOE), a Florida-based real estate developer, announced Monday that CEO Britt Greene has resigned from his position on the Board of Directors effective immediately. He will step down from his positions as President and CEO of the company later this week. Three other members of the Board of Directors, Michael L. Ainslie, John S. Lord, and Walter L. Revell have also agreed to step down from their board positions later this week, citing they were “recognizing the desire of St. Joe shareholders for the company to pursue a different course.”

The move was pushed through by Bruce Berkowitz, founder and Chief Investment Officer of Fairholme Capital Management, LLC . Fairholme has owned a near 30% stake in St. Joe Company for a few years now. Mr. Berkowitz has always been famously bullish on St. Joe, even going so far as to challenge Greenlight Capital’s David Einhorn on his short position in St. Joe last year by buying more shares in the company. St. Joe rewarded Mr. Berkowitz for his support with seats on the Board of Directors for himself and partner and President of Fairholme Capital, Charlie Fernandez.

However, the plot turned sour when Mr. Berkowitz and Mr. Fernandez proposed a few candidates for the Board of Directors, and the Board declined to consider them. This led to Mr. Berkowitz and Mr. Fernandez’s resignations, but on February 15, 2011, the pair announced they intended to replace the Board of Directors. St. Joe immediately implemented their poison pill right and retained Morgan Stanley to “explore financial and strategic alternatives,” but it now seems now that Mr. Berkowitz and Mr. Fernandez have won.

St. Joe will add four new directors, including Bruce Berkowitz, Charlie Fernandez, and the previously proposed former Governor of Florida Charles J. Crist and Carnival Corporation & plc (NYSE:CCL) COO Howard S. Frank. Mr. Frank is also an independent director on the Board of Fairholme Funds, Inc. St. Joe is also expected to engage an executive search firm to identify potential candidates to replace now-defunct CEO Britt Greene and add one more member to the Board.

Chairman of the Board Hugh M. Durden said of the move: “St. Joe is committed to acting in the best interests of shareholders, and in light of the feedback the Board of Directors has received, we are taking steps to change the Company's governance and leadership. We look forward to working with the new members of the Board to build shareholder value and advance St. Joe's leadership position in the Northwest Florida real estate market.”

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: JOE, CCL