AP
TheStreet.com co-founder Jim Cramer
In a letter Wednesday, Spear Point Capital Management, which has a 10% stake in the company, accused the board of manipulating the process to elect new directors.
Rodney Bienvenu, Spare Point's co-founder, wrote that after board member Keith Hall resigned on Monday, he created a second vacancy following the resignation of CEO Elisabeth DeMarse in February.
And now, the shareholders are concerned that the board is stifling their recommendations, bent on appointing someone instead of opening up the process to a vote.
An appointment is the board's prerogative. But the problem, Bienvenu said, is that most of TheStreet's current directors were appointed by the board and not through a shareholder vote.
"Over the past year alone we have seen the Board block stockholder director nominations, including ours, add or subtract Board seats to apparently avoid stockholder elections, and abuse its limited power to appoint new directors," he wrote.
And here's the excerpt that stings (our emphasis):
Considering the value destruction that the Board has inflicted on shareholders over the years, we would think it would bend over backwards in regard to shareholder concerns, rather than hiding behind questionable legal justifications to block shareholders from exercising their rights to have a say on who sits on the Board. Common sense would dictate that as well. In comparison, the Board's view of corporate democracy makes Kim Jong-un look like a veritable Thomas Jefferson. No matter what the Board may feel about shareholders, they work for us. If they find that concept so distasteful, perhaps they should find other things to do with their time or take this Company private at a fair price to shareholders.
In a letter Thursday, TheStreet CEO Larry Kramer said he discussed these concerns with Spear Point last week, and the letter "is particularly surprising and disappointing."
"We have in fact taken steps to add transparency to the nomination process and better align ourselves with best practices for public companies," Kramer said.
Spare Point nominated two board members in March: Johannes Minho Roth, CEO of FiveT Capital, and Lex Fenwick, former Bloomberg CEO. However, the board did not think either of them had the mix of industry expertise and financial chops required for a seat, Kramer said.
And now, Spear Point wants to deny quorum at the next annual meeting by withholding its 3.4 million shares from being counted.
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