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Shamrock says its three nominees win seats on TXI's board
12:00 AM CDT on Friday, October 23, 2009
Three insurgent candidates won seats on Texas Industries Inc.'s board of directors, according to the California investment firm that nominated them, in what analysts described as a stinging rebuke to TXI's management.
According to preliminary calculations by Burbank, Calif.-based Shamrock Activist Value Fund LP, the three candidates were elected by a 4-1 ratio in a shareholder vote Thursday.
Shamrock, with more than 10 percent of TXI shares, is the Dallas-based cement company's third-largest shareholder.
"The shareholders haven't just spoken, they have shouted for change," said Vicki Bryan, an analyst at Gimme Credit LLC, a New York-based research firm. "This should be a very humbling experience for existing management."
TXI, which barred reporters from the shareholder meeting, declined to comment on the preliminary assessment released by Shamrock. Official voting results are expected next week, TXI said.
"We are eager to move forward with our strategies for TXI to achieve its greatest potential," Mel Brekhus, the company's CEO, said in a written statement released before the vote.
Stanley Gold, Shamrock's president and chief executive, described the vote as a reprimand of TXI chairman Robert Rogers, son of the late Dallas civic leader Ralph Rogers, who founded TXI in 1951.
"It is in my opinion a referendum on Mr. Rogers' leadership," Gold said.
TXI shares rose $1.12 to $41.39 in Thursday trading.
TXI is the No. 1 cement producer in Texas and one of the largest in California. It also provides sand, gravel and ready-mix concrete.
The U.S. recession and housing bust have slammed TXI. Its stock price fell from $90 in July 2007 to a bit more than $30 at the end of June, when Shamrock announced plans to propose three nominees to the company's board.
Shamrock, which oversees the fortune of Walt Disney Co. heir Roy Disney and manages money for pension funds, argues that TXI has performed worse than industry peers through bad times and good.
The investment firm also has called for a strategic review of TXI's assets and operations.
The three directors backed by Shamrock were Marjorie Bowen, a former executive at investment bank Houlihan Lokey; Gary Pechota, a former cement industry executive who heads a medical services billing company; and Dennis Johnson, a Shamrock portfolio manager.
Shamrock said TXI shareholders also approved three corporate governance resolutions it proposed, by 9-to-1.
"We believe that this resounding endorsement by our fellow shareholders provides a mandate to immediately seek to restore accountability and to change the status quo at Texas Industries," Johnson said.
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