St. Joe's largest shareholder may have failed in his first attempt to change the company's direction, but Fairholme Capital's Bruce Berkowitz is not done yet.
"We are looking at all options and issues," Berkowitz told CNBC. Those options could include launching a proxy fight for the Florida-based real estate company.
A source close to Berkowitz told CNBC Fairholme could file a proposal nominating a new slate of directors to replace all of the current board members in the coming days.
Berkowitz and Charles Fernandez, president of Fairholme Capital, both resigned from St. Joe's board Monday. In a letter to the board they wrote, "We will not stand for re-election except as part of a Board where a majority of the directors are committed to shareholder value, pay for performance and effective corporate governance."
In a statement, St. Joe said, "Fairholme's statement and actions surrounding the resignation of its representatives from the Board of the St. Joe Company, after served for only six weeks and while St. Joe Governance and Nominating Committee was reviewing their proposed nominees, are not in the best interest of all St. Joe shareholders."
Last week, Berkowitz and Fernandez proposed restructuring the company's board, hiring a financial advisor to explore strategic alternatives for northwest Florida's largest landowner, and a business plan they said would cut expenses and bring St. Joe to breakeven within six months.
They won a partial victory last week when St. Joe announced it had hired Morgan Stanley to help it explore strategic alternatives. Still, Berkowitz said his and Fernandez's disagreements with the rest of the board about pay for performance, and ineffective governance at the company made it impossible for them to continue as directors.
"It was two against everyone else," Berkowitz said.
Fairholme Capital, a mutual fund with $20 billion under management, owns close to 30 percent of St. Joe's stock . Berkowitz and Fernandez were both appointed to the board on January 1, 2011.
Berkowitz said he had not spoken to any of the company's other large shareholders, which include Blackrock and T. Rowe Price , to gauge their interest in his plan.
St. Joe , whose holdings include timberland, commercial real estate and 31,000 residential units, lost money in 2008, 2009 and the first three quarters of 2010.