Strathmore Capital Calls for Substantial G&A Reductions and Free Cash Flow Prioritization at Tejon Ranch Co.

Strathmore Capital urges Tejon Ranch to significantly reduce G&A expenses and prioritize free cash flow production. The company suggests reducing the board size, eliminating unnecessary consulting contracts, and reconsidering the composition of the board to achieve fiscal responsibility. Strathmore applauds CEO Matthew Walker's recent decision to appoint an interim CFO and believes further substantial reductions are needed to unlock the full potential of Tejon's recurring income streams.

Strathmore Capital, a long-term shareholder of Tejon Ranch (NYSE: TRC), has issued a letter to the company's Board of Directors calling for significant corporate restructuring and cost reductions. The letter commends CEO Matthew Walker's appointment of an interim CFO but urges more substantial changes to improve shareholder value [1].

Strathmore highlights concerns about excessive General and Administrative (G&A) expenses, including the employment of five Vice Presidents of Real Estate, with one Executive Vice President reportedly earning nearly $1 million in average annual compensation. The investor also criticizes the $1 million annual consulting contract with the former CEO and the oversized 10-member board structure [1].

The letter emphasizes that Tejon's recurring income primarily comes from passive investments and joint ventures, suggesting the current corporate structure is unnecessarily complex and costly. Strathmore pushes for massive cost cuts at Tejon Ranch to improve free cash flow amid claims of corporate waste [1].

Strathmore Capital believes that reducing the board size, eliminating unnecessary consulting contracts, and reconsidering the composition of the board will achieve fiscal responsibility. The company applauds CEO Matthew Walker's recent decision to appoint an interim CFO but believes further substantial reductions are needed to unlock the full potential of Tejon's recurring income streams [1].

This activist campaign highlights a classic corporate governance tension between management's desire for resources and shareholders' focus on capital efficiency. Strathmore is essentially arguing that Tejon has been operating with minimal shareholder accountability for decades, resulting in a corporate structure that prioritizes jobs over investor returns. The request for the former CEO to leave the board further suggests concerns about entrenched interests blocking necessary changes [1].

References:
[1] https://www.stocktitan.net/news/TRC/strathmore-capital-calls-on-tejon-ranch-to-significantly-reduce-g-a-o5thyje8bpq6.html