Investor Philip Falcone is stepping down as chairman and chief executive of publicly traded Harbinger Group Inc. to focus on his hedge fund firm.
Mr. Falcone will receive a one-time payment of $20.5 million, “$16.5 million in respect of Mr. Falcone's previously earned and awarded annual bonus for fiscal year 2014 and $3.3 million as a pro-rata bonus for fiscal year 2015,” Harbinger Group said Tuesday in a statement.
Joseph S. Steinberg, an independent member of the board and chairman of Leucadia National Corp., Harbinger Group's biggest shareholder, was named chairman, and the company is searching for a new CEO, according to the statement.
Mr. Falcone, 52, founder of hedge fund firm Harbinger Capital Partners, last year settled a probe by U.S. regulators by admitting that he improperly borrowed money from his fund to pay his personal taxes and gave preferential treatment to some of his investors. He was barred from the industry for at least five years but allowed to continue running Harbinger Group, which owns stakes in companies that range from life insurance to pet supplies.
As part of his settlement with regulators, Mr. Falcone had to liquidate his hedge funds under the supervision of an independent monitor. He and his firm had to pay an $18 million fine. Mr. Falcone said three years ago that he planned to move away from hedge fund investing, where clients can pull out their money at regular intervals, and instead use Harbinger Group to finance long-term investments.
Leucadia, which also owns investment bank Jefferies Group, in March more than doubled its stake in Harbinger Group stock, to about 20 percent, buying shares from Mr. Falcone's Harbinger Capital at $11 apiece. In 2013, Leucadia took a stake in Harbinger Group by paying $8.50 a share. Steinberg joined Harbinger Group's board as Leucadia boosted its stake. Andrew Whittaker, the vice chairman of Leucadia, also got a board seat as part of the deal.
Harbinger Group climbed 0.6% to $12.98 at 10:07 a.m. in New York. The company has advanced about 9.5% this year.