Exposes the Half-Truths Contained in the
Company’s Proxy Materials Ensuring Shareholders Have the Right
Information to Inform Their Voting Decisions
Encourages Shareholders to Learn the Facts,
Ignore the Fictions, and Vote the BLUE Card to Elect the Concerned
Shareholders of Rocky Mountain’s Director Candidates
AB Value Management LLC, collectively with its affiliates (“AB
Value”), and the other participants in this solicitation
(collectively, the “Concerned Shareholders of Rocky Mountain”)
representing approximately 14.63% of the outstanding shares of
Rocky Mountain Chocolate Factory, Inc. (NASDAQ: RMCF) (the
“Company”), today filed their definitive proxy statement with the
U.S. Securities and Exchange Commission (the “SEC”) to solicit
proxies for the election of their five, highly-qualified,
independent director candidates—Andrew T. Berger, Mary Kennedy
Thompson, Mark Riegel, Sandra Elizabeth Taylor and Rhonda J.
Parish—at the Company’s 2021 Annual Meeting of Shareholders (the
“2021 Annual Meeting”).
“We put forward director nominations because while we believe
that the Company has tremendous potential, it has been beset by
haphazard, reactive leadership and governance. This reactivity has
only been magnified in the recent months leading up to the 2021
Annual Meeting,” commented Andrew Berger, Managing Member of AB
Value.
The Concerned Shareholders of Rocky Mountain believe the
Company’s proxy materials continue a pattern of false and
misleading statements about the Company’s actions and engagement
with the Concerned Shareholders of Rocky Mountain. Summarized below
are a few of the most egregious fictions contained in the Company’s
filings and how those misrepresentations can be combatted with
facts that show the Company is manipulating the truth for its
benefit:
COMPANY FICTION #1: The
Company’s Board of Directors (the “Board”) has been successfully
implementing an ongoing refreshment program over the last several
years.
FACT:
The Board has taken defensive and reactionary measures after our
public involvement. The first time the Company publicly mentioned
“Board refreshment” was on July 22, 2021, that is, less than a
month after AB Value submitted its nomination notice. The Company
also fails to mention that the Board turnover was not driven by
some long-term, deliberate plan by the Company, but by continuing
shareholder agitation:
- Tariq Farid—joined the Board in January 2020 as part of a
strategic alliance with Edible Arrangements, LLC;
- Andrew Berger and Mary Kennedy Thompson—nominated to the Board
by the Company pursuant to a settlement agreement in December 2019;
and
- Jeffrey R. Geygan—appointed in August 2021 to the Board as a
means of settling a proxy fight headed by affiliates of Mr.
Geygan.
COMPANY FICTION #2: The
Board has engaged in substantial, good-faith dialogue with AB
Value.
FACT:
AB Value and the Company had a nearly fully negotiated settlement
agreement with a one-year standstill provision that had been agreed
to in principle by the Company’s general counsel, who communicated
that the agreement was also approved of by the CEO, only to be
deemed unacceptable by a contingency of the Board and abandoned by
the Company. The Company’s next “engagement” with AB Value
regarding potential settlement, more than six weeks later, included
a four-year standstill provision that would entrench incumbent
directors for multiple years and the Board’s refusal to change its
composition as part of any settlement with AB Value (despite its
willingness to do so when settling with Global Value Investment
Corp. (“Global Value”), which had recently pursued a tender offer
for shares of the Company). By refusing to put Mr. Berger on its
slate, the Company is attempting to remove the director who
championed the very governance enhancements the Company
subsequently implemented (and glamourized in a PR campaign).
COMPANY FICTION #3: The
Company is committed to best-in-class governance.
FACT:
The Board makes the daily decision to retain a decade-long poison
pill, adopted without shareholder approval, set to expire in March
2025. Despite the Concerned Shareholders of Rocky Mountain’s
qualifying and timely notice of its non-binding proposal to redeem
the pill, the Board, led by Rahul Mewawalla, did not even have the
courage to include our proposal on its proxy card for shareholders
to consider at the 2021 Annual Meeting.
COMPANY FICTION #4: The
Company’s nominees, six of whom are independent, constitute the
right Board with the right depth and breadth of qualifications to
drive the Company’s growth strategy.
FACT:
Excluding the Board, none of Mr. Mewawalla, Gabriel Arreaga or
Brett Seabert has ever sat on a public board. Mr. Mewawalla also
lacks C-level experience with a public company and food and
beverage experience. Similarly, neither Mr. Seabert nor Mr. Geygan
had any experience in the confectionary industry prior to joining
the Board.
The facts also support questioning both
Messrs. Seabert and Geygan’s ability to exercise independent
judgment. Mr. Geygan and Global Value recently attempted a tender
offer for a control-like stake in the Company, threatened to
replace a near-majority of the Board, and has made multiple
indications of their desire to take control of the Company.1 Mr.
Seabert, on the other hand, shares a close, intimate connection
with the Company’s CEO—Mr. Seabert may have found a Best Man in Mr.
Merryman, but that doesn’t make Mr. Seabert the best man for the
Board.2
COMPANY FICTION #5: The
Special Committee’s purpose is to oversee the process of
identifying new qualified, independent directors.
FACT:
The Company’s own counsel confirmed that the Special Committee was
formed in response to, and to address the proxy contest at the 2021
Annual Meeting. If the Company disputes this, we believe the Board
resolutions drafted to create the Special Committee eliminate any
doubt as to the committee’s true purpose and scope.
COMPANY FICTION #6: AB
Value’s nominees (except Ms. Thompson) do not have the requisite
experience, skillsets or expertise to drive the Company’s
strategy.
FACT:
As the Company’s largest shareholder group, the Concerned
Shareholders of Rocky Mountain are aligned in acting in the best
interest of all shareholders. The majority of our candidates have
served at public companies and bring a wide array of experience:
corporate social responsibility, restaurant and confection industry
expertise, sophisticated financial analysis and judgment, and
successful track records that the Board desperately needs to
enhance value for shareholders. Indeed, the Company has
conveniently changed its opinion of Mr. Berger since it published
both its 2020 and 2019 proxy statements, in which it told
shareholders that “[the Company] believe[s] that Mr. Berger’s
investment management experience, specifically experience within
the food and franchising industry, qualify him to serve as a
director of the Company.”
It is clear to the Concerned Shareholders of Rocky Mountain that
its campaign has inspired reactionary, though haphazard, changes at
the Company, but there is more work to be done. If elected, our
candidates will bring increased shareholder insight into the
boardroom, shareholder insight that is not tainted by a
historically demonstrated desire to seek personal rewards at the
expense of all other shareholders. The nominees of the Concerned
Shareholders of Rocky Mountain pledge to ensure increased
accountability and decisions that are made with shareholders’ best
interests in mind. The Concerned Shareholders of Rocky Mountain
encourage shareholders to arm themselves with all the facts and
take the Company’s fictions for what they are—attempts to save the
seats of certain incumbent directors. We are confident that
shareholders armed with the facts will vote the BLUE card for new, honest leadership at the
Company.
1 Such indications include two attempts implied from oral
conversations between GVIC and Company representatives
approximately five and ten years ago (both of which were recently
confirmed by Mr. Geygan to AB Value) and a written offer made on
June 8, 2021, as disclosed in the Company’s definitive proxy
statement filed with the SEC on September 9, 2021.
2 Mr. Merryman served as Mr. Seabert’s Best Man at his wedding.
The wedding announcement from the Reno Gazette-Journal may be found
here:
https://www.newspapers.com/clip/52304131/reno-gazette-journal/
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210913005561/en/
John Glenn Grau InvestorCom LLC (203) 295-7841
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