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Jesse and Joel Stanley (the “concerned shareholders”), co-founders of Charlotte’s Web Holdings, Inc. (OTCQX:CWBHF) (TSX:CWEB), have submitted instructions to “WITHHOLD” votes for four of six of the company’s director nominees – namely, John Held, Jacques Tortoroli, Thomas Lardieri and Alicia Morga (the “subject directors”) – ahead of the annual general meeting of shareholders scheduled to be held on June 15, 2023. The concerned shareholders understand that certain supporting shareholders, including Major League Baseball (the “supporting shareholders”), have also submitted instructions to “WITHHOLD” votes for the subject directors ahead of the meeting.
The concerned shareholders and the supporting shareholders collectively represent 24.66% of the common shares of the company entitled to vote at the meeting. Given the voter turnout for the election of directors at last year’s annual general meeting of shareholders, changes to the company’s board of directors appear to be inevitable.
Voting Policy
Under the company’s majority voting policy, any director that is not elected by at least a majority of the votes cast with respect to his or her election must immediately tender his or her resignation to the chair of the board following the meeting. The board must determine whether or not to accept the resignation within 90 days following the meeting. The board must accept the resignation unless it determines that the applicable director should continue to serve on the board. The rules of the Toronto Stock Exchange require that a board will accept the resignation absent exceptional circumstances that warrant the director continuing to serve on the board. As a result, the concerned shareholders expect the board to accept any resignations it receives and to cause the company to call a special meeting of shareholders without delay to fill any vacancies on the board.
Proposed Nominees
In light of the above and in order to avoid additional costs of calling a special meeting of shareholders by the company, the concerned shareholders proposed to the company that the subject directors not stand for election, and the board waive the company’s advance notice requirements, which would allow the concerned shareholders to nominate Joel Stanley, Jesse Stanley, Lynn Kehler and Angela McElwee for election as directors of the company at the meeting. The concerned shareholders reached out to the board to discuss a smooth transition. Rather than engage with the company’s largest shareholders, the board has chosen to remain silent. This has forced the concerned shareholders to make their concerns public.
The concerned shareholders are disappointed in the board’s refusal to engage.
Joel Stanley, co-founder of the company, stated: “Without urgent action today, the future of Charlotte’s Web is at risk. We call on the Charlotte’s Web board and the four incumbent directors, who will fail to achieve majority support, to put shareholders first and to do the right thing by stepping down and avoid delaying change. Shareholders have seen the value of their investments collapse and the stock price is trading at an all-time low. The company is in need of a refreshed board and we have the right people to take on the huge challenges that lie ahead, in order to restore shareholder value.”
Photo: Benzinga edit with photos by jarmoluk and lindsayfox on Pixabay
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