AB Value-Radoff Group Files Definitive Proxy and Issues Letter to Stockholders of Rocky Mountain Chocolate Factory
2022年7月14日 - 8:00PM
ビジネスワイヤ(英語)
Believes the Board Has Allowed Chair Jeffrey
R. Geygan to Assume Effective Control of the Company, Resulting in
Dysfunctional Governance and Continued Underperformance
Contends the Board Needs Additional Industry
Expertise and Diverse, Independent Perspectives to Effectively
Oversee the Recently Appointed Management Team
Urges Fellow Stockholders to Vote on
BLUE Proxy Card to Elect Mary Bradley
and Correne Loeffler to the Company’s Board at the 2022 Annual
Meeting – Only Stockholders’ Latest-Dated Vote Counts
AB Value Management LLC and Bradley L. Radoff (together with
their affiliates, the “AB Value-Radoff Group” or “we”), who own
approximately 17.6% of the outstanding shares of Rocky Mountain
Chocolate Factory, Inc. (NASDAQ: RMCF) (“Rocky Mountain” or the
“Company”), today announced that they have filed a definitive proxy
statement with the U.S. Securities and Exchange Commission and
mailed the proxy statement and a BLUE proxy card to Rocky Mountain stockholders
in connection with the Company’s 2022 Annual Meeting of
Stockholders (the "Annual Meeting") scheduled for August 18. The AB
Value-Radoff Group has nominated two highly qualified and
independent candidates – Mary Bradley and Correne Loeffler – for
election to the Board of Directors (the “Board”) at the Annual
Meeting. Ms. Bradley and Ms. Loeffler collectively possess
considerable experience in franchising, chocolate retail
operations, finance and other areas of relevance to Rocky Mountain.
In addition, the AB Value-Radoff Group issued the following
letter:
Fellow Stockholder,
The AB Value-Radoff Group holds approximately 17.6% of Rocky
Mountain, signaling our strong alignment with you and all of the
Company’s stakeholders. We firmly believe Rocky Mountain can
fulfill its potential as a beloved brand and create significant
stockholder value over the long-term if it has the benefit of a
diverse, experienced and high-integrity Board. That is why we have
spent more than a year engaging in good faith with the Company’s
current leadership and pursuing further director refreshment.
Unfortunately, Rocky Mountain has been unwilling to collaborate
with us on a viable Board refresh that can address our concerns and
advance all stakeholders’ interests. This intransigence is
particularly disturbing when one considers that the Company’s total
shareholder returns are negative over practically every relevant time
horizon. In light of these facts, we feel compelled to proceed with
a campaign to replace two incumbent directors – including Chair
Jeffrey R. Geygan – with two highly qualified and independent
female directors. Our candidates – Mary Bradley and Correne
Loeffler – possess fresh perspectives and valuable experience in
the areas of franchise and retail operations, public company
leadership and finance.
We urge all of the Company’s stockholders to vote on the
BLUE proxy card to elect our
slate and ignite a turnaround following years of dismal performance
and subpar governance. If you have already voted Rocky Mountain’s
white proxy card or had your vote taken over the telephone by the
Company’s proxy solicitor, you have every right to change your vote
by voting a later-dated BLUE
proxy card. Only your latest-dated vote counts.
Additional Boardroom Change is Needed at the
2022 Annual Meeting Following Continued Underperformance and
Governance Lapses
Last year, we ran a campaign – which earned the support of
leading independent proxy advisory firms Institutional Shareholder
Services Inc. and Glass Lewis & Co., LLC – to address what we
felt was an underperforming management team overseeing an
ineffective strategy. Our 2021 campaign also exposed the Board’s
lack of qualifications, material mismanagement of the Company and
its long-standing disregard for sound corporate governance and
public company norms. Our efforts ultimately resulted in two new
directors being elected to the Board by stockholders.
While the Geygan-dominated Board would like stockholders to
believe that it has completely reformed Rocky Mountain over the
past year, we believe that significant performance and governance
issues persist today:
- Rocky Mountain’s corporate governance has been shambolic
despite recent changes to the composition of the Board. We
contend any Board refreshment has occurred primarily due to
pressure from stockholders like us who have tired of the status quo
of persistent value destruction, subpar investor disclosure,
numerous interlocks among directors and executives and a lack of
independence in the boardroom.
- We believe the Company is now effectively controlled by Mr.
Geygan, who made multiple indications of interest to take control
of the Company last year, and Chief Executive Officer Robert
Sarlls, who was initially nominated by Mr. Geygan’s investment firm
as a director candidate last year. We question how the Company’s
“thorough,” nine-month-long search process for a new Chief
Executive Officer ended with Rocky Mountain hiring an apparent
friend of Mr. Geygan?1 This level of interconnectivity suggests Mr.
Geygan is disregarding the tenets of sound governance and running
the Company like his own private business.
- We are concerned by the recent departures of highly qualified
female directors during Mr. Geygan’s tenure that have resulted in
one woman remaining on the Company’s six-member slate. Upon the
resignation of then-Chair Elisabeth Charles, why did the
Geygan-dominated Board decide to reduce the number of directors
instead of replacing her with another independent, highly qualified
woman? This bears an unfortunate resemblance to the events that
occurred last year following the resignation of former director
Mary Thompson. These actions force us to conclude that Mr. Geygan
does not value diversity and independent perspectives in the
boardroom.
- Rocky Mountain has repeatedly skirted governance best
practices while failing to act in the best interest of all
stockholders. Notably, the Board advanced the date of this
year’s Annual Meeting by more than 30 days from the anniversary of
the 2021 Annual Meeting in what we believe was an apparent attempt
to avoid the SEC’s impending universal proxy rules. The Board then
rejected our good faith request for the adoption of a universal
proxy card, which would have allowed stockholders to pick their
preferred candidates from both the Company’s slate and our slate on
one card at the 2022 Annual Meeting.
- The Board has continued to oversee lackluster results.
Given the muted sales growth reported in the Company’s recent
earnings, in addition to ongoing legal issues with Edible
Arrangements, LLC and Immaculate Confection, Ltd., we believe the
Board has made little headway in realizing the full potential of
the Rocky Mountain brand during Mr. Geygan’s tenure. We contend
that our slate will bring the talent and sense of urgency needed to
turn around Rocky Mountain for the benefit of all
stakeholders.
- Rocky Mountain still maintains a Board that, in our view,
lacks the integrity, independence and industry expertise needed to
properly oversee its newly appointed Chief Executive Officer.
- We do not believe Mr. Geygan is fit to be Chair of the Company
in light of his attempts to acquire a control-like stake in Rocky
Mountain, lack of prior confectionary industry experience and track
record of value destruction at previous companies, including ALCO
Stores, Inc. – where an affiliate of his also nominated Mr. Sarlls
for election to the board in 2014. After we expressed concerns
regarding Mr. Geygan’s role as interim Chair in late 2021, he was
swiftly replaced by Ms. Charles only to later be reappointed by the
Board as Chair when Ms. Charles determined to depart the Company.
It is unclear what drove the Board’s and Nominating and Governance
Committee’s apparent change of heart.
- We do not believe Brett Seabert is qualified to continue
serving as a director of the Company given his lack of prior public
board experience and relevant industry expertise and low level of
ownership despite serving as a director for five years.
Furthermore, his close personal relationship with then-Chief
Executive Officer and current Chief Financial Officer Bryan
Merryman – a fact that was undisclosed to stockholders for too long
– leads us to question his objectivity.
In light of the Board’s continued failure to advocate for
stockholders’ best interests, we believe it is once again critical
for stockholders to send the message that the status quo is
unacceptable and elect directors with the independent perspectives
and relevant expertise needed to fix Rocky Mountain once and for
all.
We Have Nominated the Right Change Agents to
Repair Rocky Mountain
We have nominated two independent, female director candidates
who possess highly relevant skillsets with fresh perspectives and
valuable franchise and retail operations, public company leadership
and corporate finance experience:
Mary Bradley is a high-integrity leader in the food retail
space with extensive experience in the areas of franchising and
chocolate retail operations. If elected to the Board, Ms. Bradley
would bring a sorely needed independent perspective and a vision
for enhancing the Company’s operations.
- Currently serves as Senior Vice President, Corporate Clubs at
Planet Fitness, Inc. (NYSE: PLNT), a fitness center operator and
franchisor.
- Former Head of Café & Retail for North America, at Godiva
Chocolatier, Inc., an international chocolate retailer.
- Former Vice President of Operations at HoneyGrow, LLC, a
private restaurant operator.
- Previously held various management and operations roles at
Peet’s Coffee, a coffee roaster and retailer and subsidiary of JDE
Peet’s N.V. and at Starbucks Corporation (NASDAQ: SBUX), a coffee
roaster, marketer and retailer.
Correne Loeffler is a public company financial expert with
highly relevant expertise in real estate, capital markets and
corporate consulting. If elected to the Board, Ms. Loeffler would
bring valuable experience in the areas of finance and capital
allocation.
- Currently serves as the interim Chief Financial Officer of Key
Energy Services, Inc., a Houston-based oilfield services
company.
- Former Chief Financial Officer of The Howard Hughes Corporation
(NYSE: HHC), a real estate development company and management
company.
- Previously served as the Chief Financial Officer at Whiting
Petroleum Corporation (NYSE: WLL), an independent energy
exploration and production company, and as Vice President, Finance
and Treasurer and Interim Chief Financial Officer at Callon
Petroleum Company (NYSE: CPE), an independent oil and natural gas
company.
- Former Executive Director in the Corporate Client Banking –
Energy Group at JP Morgan Securities, LLC, the investment banking
arm of JPMorgan Chase & Co. (NYSE: JPM).
- Former Consultant for Accenture plc (NYSE: ACN), an
Ireland-based multinational professional services company that
specializes in information technology and consulting services.
The Board’s Unwillingness to Compromise
Validates Our Case for Change
The Company has failed to engage in a substantive, good faith
dialogue with us despite repeated attempts. Since he was named
Chief Executive Officer in May, Mr. Sarlls has repeatedly delayed,
rebuffed and ignored us, further heightening our concerns that Mr.
Geygan retains outsized influence over the Company’s leadership. In
our decades of investing experience, we cannot recall a Chief
Executive Officer who flat-out refuses to have a telephonic
conversation with its largest stockholders.
It is now clear to us that the current Board has not been
focused on fulfilling its fiduciary responsibilities to
stockholders and is unwilling to take the steps necessary to
safeguard the future of Rocky Mountain. Last year, the Company
reached an agreement that provided Mr. Geygan – then an 8.1%
stockholder – with a Board seat and a standstill agreement that
lasted less than a year. Today, the Board has rebuffed our attempts
to settle for just one Board seat and a one-year standstill
agreement despite the fact that our ownership position is more than
double the amount of Mr. Geygan's. We believe it is a flashing red
light for stockholders that the Board would reject legitimate
settlement offers from its largest investor, choosing instead to
drag all stakeholders into yet another distracting and expensive
contest in the face of persistent financial underperformance and
governance missteps.
We believe more fresh oversight from retail and financial
experts is urgently needed in Rocky Mountain’s boardroom to help
the Company achieve its full potential. Although we are
disappointed by our recent engagement with Rocky Mountain, we will
continue to attempt to work constructively with the Board in the
best interest of all stockholders. Should we continue to be shut
out, however, we are committed to running an election contest and
providing stockholders the opportunity to strengthen Rocky
Mountain’s Board with two highly qualified directors at this year’s
Annual Meeting.
VOTE THE BLUE
PROXY CARD TODAY!
Sincerely,
Andrew T. Berger Bradley L. Radoff
***
1 Company press release dated May 6, 2022:
https://www.accesswire.com/700363/Rocky-Mountain-Chocolate-Factory-Names-Seasoned-Executive-and-Food-Industry-Innovator-Rob-Sarlls-as-Chief-Executive-Officer.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220714005318/en/
Longacre Square Partners Greg Marose / Bela Kirpalani,
646-386-0091 gmarose@longacresquare.com /
bkirpalani@longacresquare.com
Saratoga Proxy Consulting John Ferguson / Joe Mills,
212-257-1311 info@saratogaproxy.com
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