It appears to be the end of an era. Medmen Enterprises (CSE: MMEN) this morning announced that co-founder and current Chief Executive Officer Adam Bierman has elected to resign from his role as CEO of the firm. The announcement has been viewed as positive news for shareholders whom have long called for a management shake up at the firm following the numerous scandals associated with the firm.
Bierman’s resignation will be effective as of February 1, 2020, with current Chief Operating Officer Ryan Lissack stepping into the role of interim CEO. Bierman will continue to serve on the company’s board, and will be up for re-election at this upcoming shareholders meeting. Medmen intends to subsequently begin a search for Bierman’s permanent replacement on the firms leadership team.
As part of his resignation, Bierman has agreed to return his controversial Class A super voting shares to the treasury of the company, thus relinquishing his significant control position of the firm. Co-founder Andrew Modlin will also be returning his Class A shares to the firms treasury, which will occur once the previously announced proxy expires in December 2020.
The result will be that Medmen Enterprises will be moving to a single class of shares by the end of the year, thus making the firms share structure much more favourable to the common investor.
Upon the return of his Class A shares, Bierman is expected to hold 1,893,047 subordinate voting shares of the firm, along with 3,956,324 redeemable units. Modlin will hold a total of 2,091,065 subordinate voting shares and 3,956,324 redeemable units. Both men also currently hold 9,661,939 long term incentive plan units, which collectively brings their ownership in Medmen to 4.8% and 4.9% respectively on a partially diluted basis when Class A shares are no longer included.
As a result of the resignation and the surrender of Class A shares by Bierman, and the surrender by Modlin, the Board of Directors is to form a special committee to determine if they should receive additional compensation for their efforts in 2019 following a third party evaluation of the super voting shares. Any amount determined to be payable will be paid in the form of a 50/50 split of subordinate voting shares and restricted stock units.
Any restricted stock units issued will have a ten year term and only be convertible if the company’s share price exceeds US$2.05 for a period of 25 consecutive days. Finally, Bierman will also see his current long term incentive plan units continue to vest on the previously announced schedule.
While the move by Bierman to resign may come as a surprise to some, many investors are likely unaware that his contract was to expire on May 18, 2020. The original employment contract entered into by Bierman and Medmen back in 2018 had a four year term for the co-founder of the company, however, an amended and restated contract entered into last May revised that time period to May of this year. The result is that Bierman’s resignation has simply been advanced by a few short months.
Co-founder Andrew Modlin’s employment with Medmen is likely to soon follow a similar path as well, given that his amended and restated employment contract with Medmen is stated to also expire on May 18, 2020. Whether or not that contract gets renewed is anyone’s guess at this point in time.
Medmen Enterprises last traded at $0.54 on the CSE.
Information for this briefing was found via Sedar and MedMen Enterprises. The author has no affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
