Adam JacksonEditor’s note: This article has been updated to include a response from Charlotte’s Web
Jesse and Joel Stanley, the co-founders of Charlotte’s Web Holdings, Inc. (TSX: CWEB) (OTCQX: CWBHF), have accused the company’s board of ignoring shareholders’ demand for change.
Rather than engaging with their concerns, the brothers claim that the board has pointed them towards legal counsel.
“One of the number one responsibilities of a director is to engage with their shareholders,” Jesse Stanley said in a statement Tuesday. “On all accounts this board has failed.”
The news comes a day after the former honchos publicly requested a C-suite shuffle ahead of the annual general meeting on Thursday, citing poor company performance over the past year.
The Stanleys, along with other shareholders making up almost a quarter of the company’s common shares, have expressed intent to withhold votes for four of the six nominated directors: John Held, Jacques Tortoroli, Thomas Lardieri, and Alicia Morga. The Stanleys allege that their response comes at the expense of shareholders’ time and resources.
“We share both their surprise and disappointment that, rather than facilitate a smooth and cost-efficient transition, the board has been silent,” he added.
On Monday, the concerned shareholders proposed their own candidates for the board election: themselves, Lynn Kehler, and Angela McElwee, provided the board waives the company’s advance notice requirements. They also expressed support for Susan Vogt and Jonathan Atwood election to the board.
“The board needs to return to a founder’s mentality, end wasteful spending and assemble a team that knows what it takes to grow the company,” Joel Stanley said Tuesday.
Additionally, the cohort is advocating for an independent chair to oversee the upcoming meeting to ensure impartial proceedings. The chair would be the one to fulfill a request to waive the advance notice requirements.
Charlotte’s Web Responds
In a response to the demands, the board stressed its commitment to uphold its fiduciary responsibilities and follow TSX and shareholder-approved company policies. The board noted that facilitating the removal of independent directors could introduce potential conflicts of interest, given the significant business relationships between the Stanley brothers and Charlotte’s Web.
“The board has a duty to act in the best interests of all our shareholders and to protect company assets,” the company said in a statement Tuesday, adding that it intends to “comply with all legal requirements and appropriate protocols.”
The company said that the advance notice bylaws are designed to ensure potential board nominees undergo proper vetting for suitability and independence. The request raised concerns about circumventing established procedures intended to protect shareholders and support informed decision-making.
