Conseco Inc. shareholders have expressed their dissatisfaction with the company’s recent performance by electing a dissident shareholder to the board of directors.
Keith Long, a vocal critic of the company’s board, won a majority of votes cast, according to preliminary results announced this morning at Conseco’s annual meeting in Carmel. Exact vote totals were not immediately available.
Long, a graduate of Indiana University, is president of Florida-based Otter Creek Management, which controls 1.4 million Conseco shares, less than 1 percent of the total.
“This was their way to send a message,” Conseco Chairman Glenn Hilliard said of shareholders in an interview after the vote. “The shareholders are – as we are personally in management – disappointed in how the stock has performed.”
Conseco shares have lost 70 percent of their value in the last year. Investment losses and accounting charges put Conseco perilously close to violating its bank loans earlier this year – forcing the company to renegotiate and pay higher interest rates for more breathing room on the terms of the loans.
Long, 61, was not immediately available for comment. After the vote, he headed into meetings with Conseco’s eight other directors.
It was the second time Long had tried to land a seat on the board. In comments leading up to the meeting, Long criticized Conseco’s board for failing to react quickly enough to problems in the company’s long-term-care insurance policies and in its investments.
“You can’t judge people on a short-term basis, but this has been going on for six years,” Long said on May 4. “Rightly or wrongly, somebody has to bear responsibility.”
Hilliard said it’s too early to say what role Long will have on the board or whether the board will adopt any changes he suggests.
Hilliard said Long will go through a board-orientation process. Board member Michael Tokarz will prepare a report for the board’s June meeting on how to fit Long into Conseco’s board committee structure.
“We’ll certainly work to make him an effective member of the board,” Hilliard said.
Long replaces Philip Roberts, a former investment officer at New York-based Mellon Financial Corp. Roberts had chaired the board’s investment committee and sat on its audit committee.
After Hilliard announced Long’s victory during the meeting, he thanked Roberts for his nearly six years of service to Conseco. The roomful of Conseco employees and investors – including Long – gave Roberts a standing ovation.
Conseco CEO Jim Prieur also thanked Roberts in his comments at the meeting. Asked afterwards if Long’s election to the board will lead to changes in how Conseco operates, Prieur said, “I don’t think so. He’ll just be one of the nine members of the board.”