There’s an internal war escalating within the boardroom of Charlotte’s Web (TSX: CWEB) (OTCQX: CWBHF), with its former founders demanding capitulation.
Ahead of the company’s annual general meeting, shareholders who represent nearly a quarter of the voting shares are publicly opposing four director nominees.
The concerned cohort, who collectively hold 24.66% of the company’s issued and outstanding shares and include former founders Jesse and Joel Stanley — as well as Major League Baseball — have declared they will withhold votes for John Held, Jacques Tortoroli, Thomas Lardieri, and Alicia Morga in an effort to shake up the board’s composition.
The showdown follows a major decline in the company’s performance over the past year. Since co-founder Joel Stanley stepped down from the board in March 2021, the company’s stock price has nosedived by a staggering 95%, with revenues falling 22.8%, from around $96 million in 2021 to roughly $74 million in 2022. The value of the company is now at its lowest level since going public.
The Stanley brothers, alongside other shareholders, attribute the downturn to poor management decisions, excessive spending, and a failure to innovate within the current regulatory framework.
“The significant cash burn rate with decreasing revenues must end immediately,” Jesse Stanley said in a Monday statement. “The current leadership blames general industry decline and regulatory headwinds to avoid taking responsibility for their actions.”
But, he added, “The truth is that the actions of this board have clearly contributed to the destruction of shareholder value.”
They have proposed a set of replacements for the director nominees, including themselves and two other individuals, Lynn Kehler and Angela McElwee. They hope these changes can help the company address current challenges and restore shareholder value.
“It is clear that the company needs to adopt a founders’ mentality and stop wasting resources on bad deals and bad hires,” the shareholders said Monday.
There are fears that the board might resort to stalling tactics to avoid endorsing the changes. Consequently, shareholders are pressing for the incumbent directors who fail to secure majority backing to promptly resign.