Are St. Joe’s woes of its own making?

January 18, 2007

images7.jpegBack in August, Florida real estate operator and developer St. Joe Company (JOE) announced in this 8-K that it was launching a "reorganization of its operational structure designed to refocus the Company on long-term growth opportunities while capturing operating efficiencies."  What that translated to, apparently, was a net reduction of about 11% of its work force and a $3.8 million charge to earnings.  It seemed that JOE had already missed a few opportunities for "operating efficiencies" when it filed this amended employment agreement just two weeks prior to announcing the layoffs.  In the amended agreement, the Company agreed to pay for executives’ annual physicals and up to $10,000 per year for financial planning expenses.

Once again, St. Joe seems to have come down with efficiency amnesia.  In an 8-K filed on Tuesday, JOE claimed that it had "realized that there were additional opportunities for increasing operating efficiencies", including a 5% additional workforce reduction on top of the layoffs announced back in August.  Yet JOE wasn’t too concerned with operating efficiencies last week, when it promised retiring CFO Michael Regan a "stay" bonus of $800,000 — just for sticking with the company for three additional months after his planned retirement date. 

It doesn’t take a high-priced consultant to figure out where a few of St. Joe’s inefficiencies might be.

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