NowVertical Now Has A Shareholder Problem With Calls For Board Overhaul
NowVertical Group (TSXV: NOW) is grappling with shareholder dissatisfaction as Daren Trousdell, the founder and largest shareholder, demands transparency in the wake of the annual meeting on October 13, 2023.
Trousdell, holding around 30% of the company’s voting shares through KOAT Holdings LLC, is urging NowVertical to promptly release the voting results for the Board of Directors’ election at the said annual meeting. A significant portion of shareholders voted against the re-election of directors Andre Garber, Elaine Kunda, Scott Nirenberski, and Darrell MacMullin.
The voting percentages reveal a notable lack of support for these directors, raising concerns about the current board’s efficacy: Andre Garber, 36.884%; Elaine Kunda, 36.991%; Scott Nirenberski, 38.034%; and Darrell MacMullin, 13.107%
Trousdell, compelled to support the incumbent board due to contractual obligations, asserts that if he had been free to vote his conscience, he would not have supported these directors’ re-election.
“The only explanation for the Company’s failure to release the results of the Board election, is that the incumbent directors are attempting to hide from the Company’s owners the resounding repudiation of their abandonment of the Company’s growth strategy, track record of value destruction, and abysmal management of the Company’s balance sheet,” read in Trousdell’s press release.
Furthermore, Trousdell criticizes the appointments of David Charron and Chris Ford, asserting they lacked stakeholder consultation. He advocates for Board overhaul, emphasizing the need for directors committed to shareholder value and sustainable growth.
Since Trousdell’s departure in May 2023, NowVertical has experienced a decline in shareholder value, compounded by the departure of the CFO, the resignation of the former CEO, and the departure of the company’s former auditor, BDO Canada LLP. Trousdell attributes this downturn to the board’s shift from a growth strategy to short-term cost-cutting.
In response, NowVertical clarified that Trousdell’s resignation was accompanied by the signing of a separation agreement, outlining certain commitments until December 31, 2024. These commitments included refraining from attempts to influence the company’s management, board, or policies, avoiding discussions with fellow shareholders, and pledging to vote in favor of resolutions recommended by the company’s leadership.
“Unfortunately, Mr. Trousdell has taken the position that he is not bound by his commitments,” the company said.
The company states it is pursuing legal action to enforce this agreement and warns shareholders against engaging with Trousdell on these matters.
In contrast, NowVertical asserts proactive measures taken over the last six months, including a significant reduction in burn rate, orientation towards growth opportunities, and elevating unit leaders to spearhead the next phase of organic and inorganic growth.
NowVertical Group last traded at $0.40 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or 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.
