Revolution Beauty defends counter-revolution after Boohoo’s shareholder revolt
Revolution Beauty defended the unusual actions it took at its AGM this week, after it reinstated three members of its executive team who had been voted out by shareholders.
The beauty company said its actions had been “firmly validated” by the stock market response, with its shares rising yesterday.
Without taking the action it did, its shares – which have been suspended since September last year – would not have been readmitted to trading on AIM, Revolution claimed.
“The response from the stock market and the group’s wider stakeholders firmly validate the actions taken following the AGM earlier this week, which were lawful and entirely consistent with the directors’ legal duties,” Revolution said.
Revolution’s chief executive, chief financial officer and chair were all booted out at the AGM after online retailer boohoo, which holds a 26.6 per cent stake in the company, led a successful vote against the board members.
75 per cent of shareholders backed the decision but the trio were then reappointed by independent director Jeremy Schwartz.
Revolution argued that this was the only way to secure readmission to AIM, as firms need a full board of directors. However, Schwartz could have appointed the directors proposed by boohoo to the board.
“The directors did not and do not intend to frustrate shareholder democracy but were put in an extremely difficult position by boohoo’s actions,” the company said.
“The directors faced a binary choice between taking action which would result in the re-admission to trading of the Company’s shares the very next day (unquestionably in all shareholders’ interests) or taking action (or inaction) which would have resulted in no re-admission to trading for an unknown amount of time,” it explained.
Revolution also rejected the claim that 75 per cent of shareholders had voted with boohoo.
It pointed out only around 39 per cent of the shareholder base cast votes at the AGM, with only 29 per cent of the shareholder base backing the decision. As boohoo holds a 26.6 per cent stake, only 2.4 per cent of the company’s other shareholders voted with Boohoo, Revolution alleged.
The low turnout also meant that only 10 per cent of shareholders supported Revolution’s preferred directors.
Following the AGM, boohoo accused Revolution of “contravening best practice in relation to corporate governance”.
boohoo slammed Revolution for granting share awards to certain executive directors that shareholders voted off the board.
Revolution said the share awards reflect the “hard work and commitment needed over the past 12 months to secure the Company’s solvency and restore the trading of the shares on AIM”.
The awards were granted upon Revolution Beauty’s trading suspension lifting and are currently valued at £2.7m (as per a 24.5p share price.) The awards were not put to a shareholder vote, contravening corporate governance norm.
A spokesperson for boohoo said: “We retain serious concerns about the Revolution Beauty board’s conduct and actions, both at its AGM and since. As its largest shareholder, we continue to strongly believe Revolution Beauty needs to be run by an effective and experienced team with directly relevant beauty experience.
“Certain Revolution Beauty directors should not be in situ, having already been voted off once by a c75 per cent majority. The total disregard for the expressed wishes of shareholders justifies why they need to be voted off a second time at our requisitioned general meeting,” it continued.