Five Out of Nine Leaf Group Non-Executive
Directors Have Now Resigned In the Last Five Months, While
Remaining Directors Ignore Shareholders’ Publicly Expressed
Desires
Investor Group Believes These Departures
Reflect Rapidly Shrinking Support for CEO Sean Moriarty and His
Standalone Plan for Leaf Group
Investor Group Warns Remaining Board Members
Not to Attempt to Fill Board Vacancies Without Shareholder
Input
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 regarding the Company’s 8-K filing indicating that
Chairman James R. Quandt resigned from the Board of Directors (the
“Board”) on September 21:
“With Mr. Quandt’s resignation, five directors of Leaf’s nine
non-executive directors have resigned since April. It is hard to
believe that this tide of departures is due to anything other than
a desire not to be the last director left stranded on the Leaf
Group island with CEO Sean Moriarty. The four remaining directors
have stubbornly protected Mr. Moriarty despite his long track
record of destroying value (more than $1 billion at companies he
has led) and overwhelming dissatisfaction among shareholders. At
the current pace of defections, the circle surrounding Mr. Moriarty
may soon be a mere triangle.
The Board has lost its two financial experts as well as
representatives of two of the Company’s largest and longest-tenured
investors. Shareholders representing nearly 60% of the stock are on
record calling for change.
The four remaining directors, who continue to turn a deaf ear to
shareholders’ legitimate concerns, have no special insight or
monopoly on truth. Three of them, however, have long-standing
personal and professional ties to Mr. Moriarty. It is long overdue
for these directors to exercise objective, independent and informed
business judgment and constructively engage with shareholders
regarding the path forward, including the future composition of the
Board.
Any attempt by these four holdout directors to pack the Board
with hand-picked directors will be seen for the illegitimate act it
is. The Board must consult and receive the approval of shareholders
before appointing new directors – which is why we have provided
qualified director candidates to the Company. Leaf Group’s counsel,
Joe Johnson at Goodwin Procter, is also the lawyer to Virtusa
Corp., where the Board had the audacity to change governance
policies and fill a vacancy in the face of shareholder discontent
and nominations; we remind the remaining Leaf Group directors that
these actions at Virtusa were looked upon with distain by
Institutional Shareholder Services Inc. (as “defensive tactics”)
and Glass, Lewis & Co., LLC (as “gamesmanship of a company’s
corporate machinery and governance policies”) and led both
independent proxy advisors this week to recommend against the
incumbent Virtusa nominees. In any event, no responsible
professional would consider joining this Board without the support
of shareholders.
Yesterday, two of the remaining four directors accused our group
of attempting to “ruin” their reputation. If these directors are
concerned about their reputations, they should realize that they
have the ability to make the right decision and spare themselves
from the continued ire of shareholders.
The time for real change is now. We strongly urge the Board to
terminate Mr. Moriarty, immediately engage in constructive
discussions with shareholders and begin a genuine strategic
alternatives 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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version on businesswire.com: https://www.businesswire.com/news/home/20200925005292/en/
Sloane & Company Dan Zacchei / Joe Germani
dzacchei@sloanepr.com / jgermani@sloanepr.com
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