After AB Value’s Years of Advocating for
Such a Decision, which the Board Ignored, the Recent Announcement
is Only in Response to Shareholder Pressure
The Board’s Refusal to Seek Shareholder
Approval for the Poison Pill Redemption Proposal Suggests that the
Board Cannot be Trusted
No Assurances Preventing the Board from
Reinstating a Poison Pill Without Shareholder Approval
Unlike the Board, the Concerned Shareholders
of Rocky Mountain Included Shareholder Proposal to Redeem the
Poison Pill
Follow the Endorsement of Both ISS and Glass
Lewis by Voting on the BLUE
Card
VOTE ON THE BLUE PROXY CARD for the Concerned Shareholders of
Rocky Mountain’s Four Highly-Qualified Candidates
AB Value Management LLC (collectively with its affiliates, “AB
Value”), and the other participants in this solicitation
(collectively with AB Value, the “Concerned Shareholders of Rocky
Mountain”) representing approximately 14.70% of the outstanding
shares of Rocky Mountain Chocolate Factory, Inc. (the “Company”),
today commented on the Company’s desperate last-minute rescindment
of its poison pill (which originated in the 1990s),1 merely four
days before the Company’s 2021 Annual Meeting of Shareholders (the
“2021 Annual Meeting”) scheduled for October 6, 2021.
“Although we welcome the termination of such a
shareholder-unfriendly device, this decision by the Company’s Board
of Directors (the “Board”) deserves no applause. AB Value has been
urging the Board to redeem the pill since its first proxy contest
against the Company nearly 2.5 years ago. Only after unrelenting
pressure from us and the proxy advisory firms, the Board rescinded
the poison pill,” commented Andrew T. Berger, Managing Member of AB
Value.
The Concerned Shareholders of Rocky Mountain note that until
now, the Board had consistently decided to keep this poison pill on
its books every day for the past 22+ years. With the contested
election at the 2021 Annual Meeting looming, the Concerned
Shareholders of Rocky Mountain do not believe the Board’s sudden,
convenient change of heart to be an authentic demonstration of
proper corporate governance. This timing suggests that certain
incumbent Board members have shown once and for all that their
priority is self-preservation over, and at the expense of,
maximizing shareholder value.
The Concerned Shareholders of Rocky Mountain also noticed that
the Company’s furtive Saturday night announcement noticeably lacked
any commitment from the Board preventing it from unilaterally
adopting another unjustifiable long-term pill following the 2021
Annual Meeting. To avoid such a disingenuous maneuver, the
Concerned Shareholders of Rocky Mountain intend to bring their
proposal to request that the Board redeem any poison pill
previously issued and not adopt or extend any poison pill, unless
submitted to a shareholder vote within 12 months of such adoption
(such proposal, the “Poison Pill Redemption Proposal”) at the 2021
Annual Meeting. No such policy has been adopted by the Company.
Prior to rescinding the poison pill Saturday evening, the Board had
refused to even acknowledge the Concerned Shareholders of Rocky
Mountain’s Poison Pill Redemption Proposal in the Company’s proxy
statement. To date, the Board has not taken a position on the
Poison Pill Redemption Proposal, yet has refused to allow
shareholders to vote on the proposal using the Company’s proxy
card.
Notably, while the Company claims it terminated the poison pill
based on feedback from shareholders and Institutional Shareholder
Services, Inc. (“ISS”), the Company’s decision to merely terminate
the existing poison pill and, in the words of ISS, “completely
ignore [the Concerned Shareholders of Rocky Mountain’s] submission
of a non-binding proposal to vote on the redemption of the
Company’s poison pill” falls short of ISS’s recommendation that
“shareholders should have the right to vote on the implementation
of all new poison pills, as well as any material changes to
existing pills.” ISS further stated that “shareholders should be
troubled that the Board has chosen to keep silent regarding a
fundamental and contentious issue of corporate governance and can
legitimately question the Board’s interest in receiving public
feedback from shareholders,” and recommended that shareholders
vote “FOR” the Poison Pill Redemption Proposal. 2
Rescinding the poison pill at the eleventh hour is only the
latest in a string of election ploys to give a false impression
that the Board cares about corporate governance, and another reason
why the Concerned Shareholders of Rocky Mountain believe the Board
must be reconstituted to ensure genuine best-in-class governance
practices. The Board has repeatedly made wrong decisions, reversing
course often but only after prompting from the Concerned
Shareholders of Rocky Mountain.3 The Concerned Shareholders of
Rocky Mountain believe that shareholders should not expect
different results from the incumbent Board that has made the same
mistakes time and time again.
To restore trust in the Board, it is vitally important that
shareholders vote “FOR” the Concerned Shareholders of Rocky
Mountain’s four highly qualified, independent nominees—Andrew T.
Berger, Mark Riegel, Sandra Elizabeth Taylor and Rhonda J.
Parish—and “FOR” the Poison Pill Redemption Proposal on the
BLUE proxy card and discard any white proxy card received
from the Company.
Important Additional Information
AB Value Partners, LP and AB Value Management LLC, Andrew T.
Berger, Bradley Radoff, Rhonda J. Parish, Mark Riegel, and Sandra
Elizabeth Taylor (collectively, the “Participants”) have filed a
definitive proxy statement and an accompanying BLUE proxy
card with the SEC to solicit proxies from shareholders of the
Company for use at the 2021 Annual Meeting. THE PARTICIPANTS
STRONGLY ADVISE ALL SHAREHOLDERS OF THE COMPANY TO READ THE PROXY
STATEMENT AND OTHER PROXY MATERIALS BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. Such proxy materials are available at no charge on the
SEC’s website at http://www.sec.gov. In addition, the Participants
in this proxy solicitation will provide copies of the proxy
statement without charge, upon request. Requests for copies should
be directed to the Participants’ proxy solicitor.
Certain Information Regarding the Participants
The Participants in the proxy solicitation are: AB Value
Partners, LP, AB Value Management LLC, Andrew T. Berger, Bradley
Radoff, Rhonda J. Parish, Mark Riegel, and Sandra Elizabeth Taylor.
As of the date hereof AB Value Partners, LP directly owns 224,855
shares of common stock, $0.001 par value per share of the Company
(“Common Stock”). As of the date hereof, AB Value Management LLC
beneficially owns 460,189 shares of Common Stock. As of the date
hereof, Mr. Radoff directly owns 440,021 shares of Common Stock. As
of the date hereof, none of Mr. Berger, Ms. Parish, Mr. Riegel, or
Ms. Taylor directly own any shares of Common Stock.
_______________________
1 The Company originally adopted a
ten-year poison pill on May 18, 1999,
which was later extended for another
decade until May 19, 2019. In connection with the
reorganization of the Company in 2015, the Company adopted a
replacement pill on March 1, 2015 (prior to the expiration of the
original pill).
2 ISS Report, dated September 30,
2021.
3 Other examples as previously described
by the Concerned Shareholders of Rocky Mountain include, but are
not limited to: Urging the Board to undergo a refreshment process,
advocating for the separation of the Chairman and CEO roles,
calling for Scott Capdevielle’s resignation, and questioning
Franklin Crail’s place on Compensation Committee as a
non-independent director.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211004005519/en/
John Glenn Grau InvestorCom LLC (203) 295-7841
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