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In a letter to his fellow investors published on Wednesday, a Douglas Elliman shareholder fixed his gaze on chairman Howard Lorber, amid increased scrutiny on the firm following a bad financial stretch and mounting sexual assault allegations against a pair of former luxury brokers.
Investor Bradley Tirpak, in his letter, urged shareholders to vote against a proposal regarding executive compensation at the company’s annual stockholder meeting, which is scheduled for Aug. 21. Tirpak also implored the board to start looking into new options for a full-time chief executive immediately, with Lorber’s contract slated to expire on Dec. 29.
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The letter arrives about one week before Elliman is scheduled to release its Q2 2024 earnings results.
Bradley Tirpak | LinkedIn
“Douglas Elliman’s Board of Directors and management team maintain an open dialogue with, and value constructive input from, our stockholders,” Elliman told Inman in a statement. “The Company continually evaluates options to enhance long-term value and is committed to acting in the best interests of all our stockholders, agents and clients. Douglas Elliman will carefully review Mr. Tirpak’s letter.”
Tirpak went on to criticize Lorber’s leadership amid the firm’s continued financial losses and scrutiny following numerous reports about Tal and Oren Alexander, two former prolific Douglas Elliman brokers, who have now been accused by dozens of women of sexual assault and rape.
Lorber was known to be close with the brokers during their time at the firm, and it was recently made public that top Douglas Elliman agent Jessica Cohen told The New York Times she had confided in Lorber in 2012 after an incident in 2010 in which she believed she may have been drugged by Tal and Oren. Douglas Elliman maintains that no formal HR complaint was filed while the brothers were at the firm, and sent the following statement to Inman when the report was published:
“As to Oren and Tal Alexander, the Company never received any complaints of sexual assault or harassment, nor was management aware of any such claims.
“Over at least a decade ago, a broker told [Mr. Lorber] about having blacked out at a social event,” the statement continued. “She said that she did not know what, if anything, happened, she did not specify who may have been involved, and she insisted on absolute confidentiality. Douglas Elliman respected her wishes, and she has been a valued colleague at the company since then.”
Tirpak’s letter also expressed dismay at the board’s apparent complacency with ongoing losses under Lorber’s leadership.
“When Mr. Lorber agreed to his part-time job [as CEO] just over two years ago, the board believed $72mm in EBITDA was a worthy ‘Threshold,'” Tirpak wrote in his letter to investors. “Today, the board has lowered that ‘Threshold’ by an astonishing $92 million and happily accepts continuing losses at the ‘Threshold’ of success.”
Tirpak went on to spell out that, under the company’s 2022 bonus structure, management “failed” its Adjusted EBITDA threshold and fell short of its gross transaction value target and dividend threshold.
The shareholder urged his fellow investors to vote for a proposal to elect directors every year with the goal of aligning compensation with stockholder returns, pointing to a proxy statement Elliman filed in June that downgraded the standard used by the board to designate executive bonuses.
“From the proxy, it is unclear how the board evaluated the Diversity, Equity and Inclusion portion of Mr. Lorber’s bonus where he received the Maximum permissible award, but given recent headlines in The Wall Street Journal surrounding problematic brokers accused of sexual assault, stockholders deserve to know how the assault and harassment claims were handled by management,” the letter continues.
A statement sent to Inman from Elliman on Thursday once again addressed the allegations against Tal and Oren Alexander.
“Douglas Elliman notes that the former brokers accused of sexual assault left the Company more than two years ago, and there were no complaints against them when they were at the Company nor was there any concealment or preferential treatment with respect to those brokers.”
Elliman spun off from parent company Vector Group in 2021. At that time, “the goal was to make $100 million,” Tirpak told The Real Deal. “Now the goal is to break even.”
“The board rewards [Lorber] for losing money,” Tirpak added. “Your boss fires you if you lose money, that’s what happens in the real world.”
Tirpak additionally urged the board to claw back Lorber’s 2023 bonus and hire a new compensation consultant, since losses are “not acceptable” to the firm’s shareholders.
Regarding Elliman’s continued ties to Vector, Tirpak said the company should make a “complete separation” by ending its private jet arrangement with Vector and bringing certain services it currently pays Vector upwards of $4 million per year for in-house.
Tirpak said the board should also open its own independent investigation into the allegations made against the Alexander brothers and determine whether or not Elliman management “participated in a cover-up or has been rewarding certain brokers in a self-serving manner.” He also urged the board to create a whistle blowing hotline so that employees can easily report sexual harassment or other illegal actions.
At the beginning of July, Douglas Elliman announced that credit-focused alternative asset management firm Kennedy Lewis had closed a $50 million growth investment into the firm, to strengthen Elliman’s balance sheet and bolster the company’s growth. With the investment, Kennedy Lewis co-founder and co-managing partner David Chene joined Douglas Elliman’s board.
At that time, Elliman also release preliminary second quarter 2024 financial results, which projected a roughly $3.15 billion to $4.15 billion increase in unaudited gross transaction value from the second quarter of 2023. The firm anticipated cash and cash equivalents to hit about $92 million during the second quarter of 2024, up from $91.5 million as of March 31, 2024.
Update: This story was updated on Aug. 2, 2024 to include previously published statements from Douglas Elliman in response to Jessica Cohen’s claim that she informed Howard Lorber about her suspicions that Tal and Oren Alexander may have drugged her in 2010.
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