Irvine-based mortgage lender New Century Financial Corp. is expanding its board to make room for a dissident shareholder who threatened to run his own slate of candidates.
David Einhorn, president of New York-based hedge fund operator Greenlight Capital Inc., is set to become a director at month’s end, bringing the board to 11 members.
New Century also is allowing Greenlight an exception to increase its stake in the company from about 10% now to as much as 19.6%.
The company bars shareholders from owning more than 9.8% of its stock.
In exchange, Einhorn has agreed to drop a proxy battle against New Century.
In February, New Century rejected a bid by Einhorn for a board seat. At that time, the company said it was addressing his concerns that the subprime mortgage lender could be worth more on Wall Street.
Einhorn also takes issue with New Century’s conversion to a real estate investment trust in 2004. The conversion was OK’d by 90% of New Century’s shareholders.
“Our discussions with the company over the last few weeks have been very productive,” Einhorn said in a statement.
