Investor Group Owning Over 40% of Leaf Group Warns Board Not to Ignore Clearly Expressed Will of Majority of Shareholders as ...
July 29 2020 - 08:23AM
Business Wire
Investors owning over 40% of the issued and outstanding shares
of Leaf Group Ltd. ("Leaf Group" or the "Company") (NYSE: LEAF) –
including Osmium Partners LLC, PEAK6 Investments LLC, Boyle Capital
Opportunity Fund, LP, Oak Management Corp., Generation Capital
Partners II LP, Generation Partners II LLC, Spectrum Equity
Investors V, L.P. and Spectrum V Investment Managers’ Fund, L.P.
(together, the "Investor Group") – today issued the following
statement:
“We anticipate that the Leaf Group Board of Directors (the
“Board”) will likely be meeting today in advance of releasing Q2
earnings results tomorrow. The agenda for this meeting must include
a frank and objective discussion of Sean Moriarty’s dismal
performance during his tenure, now approaching six years as CEO. If
the Board does not conclude at this meeting that Mr. Moriarty
should be replaced, shareholders will know that the incumbent
directors place their own interests and relationship with Mr.
Moriarty ahead of the expressed wishes of shareholders.
To be clear, any half measures – such as appointing new board
members or launching a process to do so – will not satisfy us. We
strongly caution the Board against installing new directors without
significant input from major shareholders. With holders of a
majority of the stock publicly advocating for significant change,
the Board has absolutely no mandate to self-refresh.
Further, any Board ‘refreshment’ rubber stamped by a third-party
recruiting firm would have no more inherent credibility than the
Company’s sham strategic review process. At this point, the only
third parties the Board should be paying attention to are the
Company’s shareholders.
In that vein, we are dismayed that we have heard only once in
the past three weeks from the so-called Independent Committee of
Directors (the “Committee”), consisting of Beverly Carmichael and
Deborah Benton, that was supposedly assembled to engage with us. In
that one conversation, we were highly disappointed to learn that
Mr. Moriarty had the Board’s 'full support' despite the calls for
his removal (at that time) from 40% of the Company’s shareholders.
In the days since that one conversation with the Committee, several
additional shareholders have come forward – today, we know of
nearly 60% of the Company’s shareholders that have expressed their
view, publicly or privately to the company, that significant change
at the Company is necessary. If the Committee and the Board are
unwilling to demonstrate that their position has evolved in
response to this mounting opposition to the status quo, then they
cannot credibly claim that they are upholding their fiduciary
duties in good faith. The Board must decide at its next meeting
whether the directors stand with shareholders – and the facts – or
instead with Mr. Moriarty.
This is not a hard choice, but it does require leadership. We
urge the Board to do right by shareholders, including terminating
CEO Sean Moriarty and working towards a solution that includes new,
independent directors selected in conjunction with a majority of
shareholders and a fresh strategic review process.”
For more information, please visit www.LiberateLeaf.Group.
About Osmium Partners
We seek to generate strong, risk-adjusted returns by investing
in undervalued, small capitalization companies across equity
markets. Our Osmium 8 research process is based on eight simple
factors involving factors such as balance sheet strength, aligned
interests, attractive reinvestment opportunities, a low valuation,
and reasonable growth prospects. As engaged owners, we actively
discuss corporate strategy and capital structure with management
teams and boards of directors. We prefer to conduct these
discussions in private, but we will publicly debate important items
with all shareholders when appropriate.
About PEAK6
PEAK6 uses technology to find a better way of doing things. The
company's first tech-based solution was developed in 1997 to
optimize options trading and, over the past two decades, the same
formula has been used across a range of industries, asset classes
and business stages to consistently deliver superior results.
Today, PEAK6 seeks transformational opportunities to provide
capital and strategic support to entrepreneurs and forward-thinking
businesses, helping to unlock potential and activate what is into
what ought to be. PEAK6's core brands include: PEAK6 Capital
Management, Apex Clearing, National Flood Services and Evil
Geniuses. Learn more at www.PEAK6.com or follow us on LinkedIn.
About Boyle Capital Opportunity Fund
Boyle Capital Opportunity Fund, LP is a value-oriented
investment partnership. We manage a focused portfolio of deeply
undervalued securities and actively engage with the company's
management and board of directors to unlock shareholder value over
the long-term.
About Oak Investment Partners
Oak Investment Partners was founded in 1978. Since that time,
the firm has invested $9 billion in over 525 companies around the
world, earning the trust of entrepreneurs with a senior team that
delivers steady guidance, deep domain expertise and a consistent
investment philosophy. We are involved in the formation of
companies, fund spinouts of operating divisions and technology
assets, and provide growth equity to mid- and late-stage private
businesses and to public companies through PIPE investments. These
companies are concentrated in the five major sectors that fuel the
most disruptive growth in our world today: Information Technology,
FinTech, Internet and Consumer, Healthcare Services, and Clean
Energy.
About Generation Partners
Founded in 1995, Generation Partners provides equity capital to
growth companies through buyout and growth equity investments.
About Spectrum Equity
Spectrum Equity is a leading growth equity firm providing
capital and strategic support to innovative companies in the
information economy. For over 25 years, the firm has partnered with
proven entrepreneurs and management teams to build long-term value
in market-leading internet, software and information services
companies. Representative investments include Ancestry, Bats Global
Markets, Definitive Healthcare, GoodRx, Grubhub, Lynda.com, Origami
Risk, SurveyMonkey and Verafin. For more information, including a
complete list of portfolio investments, visit
www.spectrumequity.com.
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Sloane & Company Dan Zacchei / Joe Germani
dzacchei@sloanepr.com / jgermani@sloanepr.com
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