Key Summary: On October 29, 2024, Global Value Investment Corp held a telephonic meeting with some directors of the company, requesting the resignation of certain directors and governance rights proportional to their stock ownership, with no agreement reached, potentially revising their plans for the 2025 annual meeting. GVIC had previously nominated five candidates for the board, proposing to repeal bylaw amendments made without shareholder approval since December 2019, while seeking to implement an operational plan to enhance the company’s retail franchise and governance. Meanwhile, AB Value Management, having significant stakes, engaged in a series of nominations and agreements with the company, focusing on improving corporate governance and expressing concerns about the board's effectiveness, ultimately leading to the election of some of their nominated directors and a subsequent settlement agreement to appoint a qualified female director.
Market Cap: $20 million | Rocky Mountain Chocolate Factory, Inc., together with its subsidiaries, operates as a confectionery franchisor, manufacturer, and retail operator.
On October 29, 2024, Global Value Investment Corp held a telephonic meeting with some directors of the company and sent a letter requesting the resignation of certain directors and governance rights proportional to their Common Stock ownership. No agreement has been reached, and they may revise their plans, including nominating directors for the company's 2025 annual meeting.
Past
Global Value Investment Corp
On June 24, 2021, Global Value Investment Corp (GVIC) (5.86%) nominated five candidates for election to the board. The Nomination Notice also includes a proposal concerning the repeal of any provision or amendment to the company's bylaws adopted by the board without stockholder approval after December 6, 2019. GVIC believes that the Common Stock is undervalued and that the election of the Nominees to the board will be enable the company to effect an operating plan developed by GVIC designed to:
expand the company's North American retail franchise and distribution footprint
enhance the company's franchisee support system
contemporize and simplify the company's franchise agreement
assess the company's corporate function and manufacturing operations
evaluate the company's wholly owned subsidiary, U-Swirl International, Inc., and develop a plan to rehabilitate or dispose of it
refocus the company's capital allocation strategy and align executive compensation with clear goals centered around returns on shareholder capital; and
improve the company's corporate governance practices
On August 12, 2021, the company announced that it had reached a cooperation agreement with Global Value Investment Corp (8.10%). Pursuant to the agreement, the board appointed Jeffrey R. Geygan, CEO and President of Global Value Investment Corp, to serve as a member of the board with a term expiring at the 2021 AGM.
AB Value-Radoff Group
On December 3, 2019, AB Value Management (7.68%) entered into a cooperation agreement with the company, and pursuant to it, the company agreed to nominate two candidates of AB Value Management for election to the board at the Annual Meeting.
On June 16, 2021, AB Value Management (7.52%) began discussions with the company regarding desired changes to its Board membership, structure, management, and strategy. Further it stated that if sufficient changes are not made, AB Value Management intends to nominate and seek to elect additional persons to the board at the 2021 AGM. AB Value Management believes that the shares are significantly undervalued and believes that the transformation of the board will be the initial step towards rectifying the company's operating margins and revenue growth. Representatives of AB Value Management appointed to the Board in December 2019 still serve on the board. Source
On June 28, 2021, AB Value Management (7.52%) delivered a letter to the company (i) nominating a slate of five (5) director candidates, including Mr. Berger, Ms. Thompson, Mr. Riegel, Ms. Taylor and Ms. Parish, for election to the board at the 2021 AGM and (ii) submitting a business proposal for consideration by stockholders at the 2021 AGM. Source
On July 21, 2021, the company announced corporate governance and leadership changes in response to discussions with it shareholders. The board committed to separate the roles of Chairperson of the Board and CEO. Additionally, in connection with the separation of the Chairperson and CEO roles, the board has begun the process to engage an executive search firm to assist in identifying a new CEO for the company. It is expected that Mr. Merryman will continue in an executive role with the company following the appointment of a new CEO.
On August 3, 2021, AB Value Management (7.51%) commented on a number of recent announcements by the company that, in AB Value's view, raise serious additional concerns about the Company's Board, poor governance and management, which continue to harm shareholders.
On August 15, 2021, AB Value, Bradley Radoff and the Nominees entered into a Joint Filing and Solicitation Agreement in which the filers agreed to solicit proxies or written consents for proposals submitted to stockholders for approval and the election of the Nominees at the 2021 AGM and AB Value agreed to bear all- preapproved expenses incurred by the parties in connection with the Joint Solicitation. Source
On September 20, 2021, AB Value, Bradley Radoff and the Nominees issued a presentation soliciting votes for the election of their slate of director nominees at the 2021 AGM.
On September 23, 2021, AB Value announced that AB Value has filed a lawsuit in the Court of Chancery of the State of Delaware against the company and certain members of its board seeking to rescind and declare invalid the board's resolutions shrinking the number of board seats up for election from seven to six right before the company's 2021 AGM.
On September 3, 2021, AB Value, Bradley Radoff and the Nominees filed proxy materials nominating seven candidates to the board at the upcoming annual meeting of shareholders.
On September 13, 2021, AB Value, Bradley Radoff and the Nominees filed proxy materials seeking support for their nominees.
On September 20, 2021, AB Value, Bradley Radoff and the Nominees issued a presentation soliciting votes for the election of their slate of director nominees at the 2021 AGM.
On September 22, 2021, AB Value Management announced that it has filed a lawsuit in the Court of Chancery against the company and certain members of its board seeking to rescind and declare invalid the board's resolutions shrinking the number of board seats up for election from seven to six right before the company's 2021 AGM.
On September 27, 2021, AB Value Management has acknowledged that ISS has recommended its clients vote on the BLUE proxy card to elect each of the Concerned Shareholders of Rocky Mountain's candidates—Andrew T. Berger, Mark Riegel, Sandra Elizabeth Taylor and Rhonda J. Parish—and for the group's proposal to redeem any poison pill previously issued and to abstain from adopting or extending future any poison pill absent shareholder approval within the previous 12 months (the "Poison Pill Redemption Proposal"). Glass Lewis also recommended that shareholders vote for Mr. Riegel and Ms. Taylor, and for the Poison Pill Redemption Proposal on the BLUE proxy card. Source
On October 4, 2021, AB Value Management commented on the company's desperate last-minute rescindment of its poison pill (which originated in the 1990s), merely four days before the company's 2021AGM 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. Source
At the AGM held on October 6, 2021, stockholders have voted to elect four directors nominated by the company: Brett Seabert, Jeffrey Geygan, Gabriel Arreaga, and Elisabeth Charles; and two directors nominated by AB Value Management LLC. Source
On May 12, 2022, AB Value Management (7.5%) delivered a letter to the company providing notice of nomination of Mr. Berger for election as director to be included in the proxy statement in connection with the company's 2022 annual meeting of stockholders Source
On May 27, 2022, AB Value Management and Bradley L. Radoff (together 17.4%) entered into a Joint Filing and Solicitation Agreement and nominate Andrew T. Berger, Mary Bradley, Richard Degnan, Correne S. Loeffler, Suchit Majmudar and Bradley L. Radoff for election to the board at the 2022 annual meeting of stockholders. Source
On July 1, 2022, AB Value Partners delivered a letter to the company withdrawing its nomination of Andrew T. Berger, Richard Degnan, Suchit Majmudar and Bradley L. Radoff for election to the board at the Annual Meeting. AB Value Partners and Mr. Radoff intend to file a definitive proxy statement with the SEC to solicit proxies to elect Mary Bradley and Correne Loeffler to the board at the Annual Meeting. Source
On July 19, 2022, AB Value Partners filed proxy materials seeking support for its nominees.
On July 20, 2022, AB Value Partners announced that it has modified its slate and is now seeking to elect just one highly qualified and independent candidate – Mary Bradley – to the Company's Board of Directors
On July 21, 2022, AB Value Partners filed proxy materials seeking support for its nominee.
On July 29, 2022, AB Value Management LLC and Bradley L. Radoff issued the following statement, " Earlier this week, our representative informed Rocky Mountain's legal counsel that we agree to all of the company's latest publicly disclosed settlement terms. The framework we have agreed to provides for the addition of our nominee to the Board of Directors and other customary terms. By compromising with Rocky Mountain, we hope to facilitate improved corporate governance and enhanced value creation over the long-term. We intend to engage in good faith to expeditiously finalize a cooperation agreement that can benefit all of the company's stockholders." Source
On August 3, 2022, AB Value-Radoff Group stated that the company issued a false and misleading press release claiming that the AB Value-Radoff Group made an "illusory proposal with a brand-new last-minute candidate (their seventh so far) who was not included in any of AB Value's prior nomination or proxy materials. Also, the group suggested another highly-qualified female candidate as a potential mutually agreed upon nominee in response to the company's request for a good faith proposal to reach a settlement after it disparaged its current nominee." Source
On August 4, 2022, AB Value Partners filed proxy materials seeking support for its nominee.
On August 8, 2022, AB Value Partners filed proxy materials seeking support for its nominee. Also, it announced that ISS has recommended the stockholders vote on the BLUE proxy card to elect the AB Value-Radoff Group’s independent nominee. Source
On August 10, 2022, AB Value Partners announced that Glass, Lewis & Co has recommended the Company’s stockholders vote on the BLUE proxy card to elect the AB Value-Radoff Group’s independent nominee.
On August 13, 2022, AB Value-Radoff Group entered into a cooperation agreement with the company and pursuant to it, the company agreed to appoint Mary Bradley to the Board. Subsequently, AB Value-Radoff Group irrevocably withdrew its nomination notice in connection with the 2022 Annual Meeting.
On August 16, 2022, the company announced that AB Value-Radoff Group unexpectedly notified the Company that Mary Bradley will not serve on the Board.
On September 6, 2022, AB Value-Radoff Group provided notice to the company of termination of the Cooperation Agreement. It stated that as of September 6, 2022, the company failed to cure its material breaches of the Cooperation Agreement. Source
On September 29, 2022, Bradley L. Radoff (9.9%) issued a press release regarding the decision by the Company’s Board to initiate litigation against himself, Andrew T. Berger, AB Value Partners LP, AB Value Management LLC and former director candidate Mary Bradley: In the Press Release, he expressed his extreme disappointment at the company’s low-road tactics and stated that such tactics will not silence him as he fully intends to nominate a full slate of director candidates for election at the next annual meeting of stockholders. He further cautioned the Board against authorizing any dilutive actions for an improper purpose or further mistreating female directors and candidates.
On December 14, 2022, the AB Value-Radoff Group entered into a Settlement Agreement with the company and pursuant to it, the AB Value-Radoff Group may designate a female director candidate (the "New Director") who has at least 5 years of fast-moving consumer goods franchise operational experience and 3 years of prior public company board experience. The New Director must also qualify as an independent director under Rule 5605 of the Nasdaq Listing Rules, subject to the Board’s reasonable approval. The company agreed, among other things, to appoint the New Director to the Board within 10 business days following the New Director’s satisfactory completion of certain customary onboarding requirements, and the term of the New Director will expire at the 2023 Annual Meeting. The company further agreed (i) to nominate the New Director for election at the 2023 Annual Meeting and the company’s 2024 annual meeting of stockholders and (ii) that the Board will take the necessary steps to appoint the New Director to the Nominating and Corporate Governance Committee and Audit Committee of the Board, subject to the Board’s reasonable approval and the New Director’s qualifications to serve on such committees under applicable rules and regulations.
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