Further statement on Revolution Beauty Group plc

boohoo group plc
28 June 2023
 

FOR IMMEDIATE RELEASE

28 June 2023

                                                                                                                      

boohoo group plc

("boohoo")

Further statement on Revolution Beauty Group plc

 

boohoo, the beneficial owner of approximately 26.6% of the issued share capital of Revolution Beauty Group plc ("Revolution Beauty" or the "Company") yesterday attended the first Annual General Meeting ("AGM") of Revolution Beauty since its AIM IPO in July 2021.

 

boohoo wishes to record the serious concerns it has regarding the conduct of the board of Revolution Beauty at, and immediately following, the AGM, which it regards as self-serving and not in the best interests of shareholders as a result of the following actions:

 

·    the unilateral attempts of the Company's board to adjourn a quorate meeting without the approval of shareholders present, which subsequently failed due to the resolution attracting a 74% vote against adjournment;

·    the AGM subsequently proceeding with resolutions 2, 3 and 5 all being defeated, with approximately 74% of votes against each of these resolutions. This resulted in the removals of Bob Holt (CEO), Elizabeth Lake (CFO) and Derek Zissman (Chair and Senior Independent Director) from office; and

·    the conduct of the remaining independent director (Jeremy Schwartz), who post AGM, contravened corporate governance best practice and disregarded the expressed opinion of the Company's shareholders. This abuse of process resulted in the unilateral appointment of two new non-executive Directors and the re-appointment of the three former Directors who had just been removed from office by the Company's shareholders.

 

boohoo fails to see how such a board can claim to be acting in the best interests of shareholders, and is instead self-serving, as demonstrated by its actions over the last 24 hours. This will likely result in significant remuneration and share awards for members of a self-elected board at the lifting of the suspension of trading in its shares, which boohoo was pleased to hear is imminent.  It is notable that at no point did the remuneration committee seek prior shareholder consultation, or approval in relation to these awards, again contravening best practice in relation to corporate governance.

 

boohoo remains supportive of a lifting of the suspension, but not at the expense of doing so with a board that has proven to behave inappropriately.

 

boohoo calls on the board to convene the requisitioned General Meeting of Revolution Beauty proposing to remove Bob Holt, Elizabeth Lake and Derek Zissman and to appoint Alistair McGeorge and Neil Catto as directors without further delay and not to resort to further attempts to obstruct shareholders and adjourn that meeting, once convened.

 

boohoo remains committed to wholesale board changes at Revolution Beauty and the appointment of a new, majority-independent board with the right balance of skills and experience and believes that it is of paramount importance that the future board of directors of Revolution Beauty have direct and relevant experience of dealing with its customers.

 

Further background in relation to boohoo's serious concerns regarding the conduct of the board at the AGM, and subsequently, is set out below.

 

Enquiries


 

boohoo group plc


 

Shaun McCabe, Chief Financial Officer

Tel: +44 (0)161 233 2050

Alistair Davies, Investor Relations

Tel: +44 (0)161 233 2050

Mark Mochalski, Investor Relations

Tel: +44 (0)20 3239 6289

Clara Melia, Investor Relations

Tel: +44 (0)20 3289 5520

 


Zeus Capital - Nominated adviser and joint broker


Dan Bate / James Edis

Tel: +44 (0)161 831 1512

Benjamin Robertson

Tel: +44 (0)20 3829 5000

Jefferies - Joint broker


Ed Matthews / Harry Le May

Tel: +44 (0)20 7029 8000

Buchanan - Financial PR adviser

boohoo@buchanan.uk.com

Richard Oldworth / Toto Berger / Verity Parker

Tel: +44 (0)20 7466 5000

 

Background

 

On 19 June 2023, boohoo announced that it had notified the board of Revolution Beauty of its intention to vote against the reappointment of Bob Holt, Derek Zissman, and Elizabeth Lake at the AGM. In addition, boohoo requisitioned a General Meeting of Revolution Beauty proposing to remove Bob Holt, Elizabeth Lake, and Derek Zissman and to appoint Alistair McGeorge and Neil Catto as directors, with the proposed board committing to undertake a rigorous process to appoint additional independent directors such that the reconstituted board would be comprised of a majority of independent directors. Further, on 22 June 2023, boohoo announced Rachel Horsefield, a former CEO of Beauty at THG plc, would be included in the future independent board appointment process.

 

Conduct of the AGM

 

Present at yesterday's AGM were shareholders representing a majority of the issued share capital of Revolution Beauty, including representatives of boohoo. This was Revolution Beauty's first AGM since IPO in July 2021 and the resolutions proposed at the meeting included resolutions to appoint Bob Holt, Elizabeth Lake, and Derek Zissman to office given that their appointment to the board of Revolution Beauty had yet to be voted on by shareholders and would be required to resign from office if not appointed by shareholders in the meeting.

 

In its RNS statement released on 21 June, the board of Revolution Beauty stated that it would propose at the AGM that the meeting be adjourned to a new date.  In fact, no such proposal was made at the AGM.  Instead, the chairman Mr. Zissman started the meeting by announcing his decision to unilaterally use his powers to adjourn the meeting without proposing that adjournment to the meeting in order for the proposal to be voted on by shareholders in accordance with the Company's articles of association. 

 

This unilateral decision was said by the chairman to be justified by concerns that the board has regarding the potential voting of certain shareholders other than boohoo, and whether such voting might be in breach of private contractual obligations between those shareholders and the Company. The chairman declined, however, to provide further details of these concerns, citing further concerns regarding confidentiality.  Nevertheless, the chairman informed the meeting that in the board's view its concerns gave the chairman the ability to dispense with a shareholder vote on the question of an adjournment, and all other business at the meeting (including, conveniently, his own appointment and the appointment of his fellow board members) because it was clear to the board that the "business of the meeting could not be properly conducted".

 

Representatives of boohoo present at the meeting rejected the chairman's position, pointing out that any concerns of the board regarding the potential voting of certain shareholders should not result in all other shareholders being effectively disenfranchised on the day, particularly where all other shareholders (boohoo included) are not parties to these private contracts.  boohoo's representatives also pointed out that the meeting, which had been validly convened and at which a quorum was present, was patently capable of being properly conducted irrespective of the board's concerns. 

 

boohoo's representatives at the meeting further pointed out that if any shareholder in respect of which the board had contractual concerns did not, in fact, vote at the meeting, those concerns would in any case be removed.

 

In its RNS statement released after the AGM, the board states that "the boohoo representatives requested that the chairman obtain undertakings to the meeting from certain shareholders that they would not vote in breach of their contractual obligations". That is not correct: boohoo's representatives had no authority to make any such request and did not do so.  Rather, they explained to the chairman that if the relevant shareholders did not in fact cast votes in the meeting, the chairman had no proper basis on which to decide unilaterally that the meeting should not proceed.

 

This was a position which was ultimately accepted by the chairman.  That the meeting then proceeded without any procedural difficulties reveals, in boohoo's view, the inappropriateness of the chairman's attempt to disenfranchise all shareholders in attendance at the meeting irrespective of their contractual relationships with the Company (or lack thereof). That the meeting also proceeded to result in the chairman's removal from office, Bob Holt's removal from office, and Elizabeth Lake's removal from office, clearly suggests an alternative explanation for the chairman's attempt to stop the vote, linked not to the best interest of shareholders but to the personal interests of those directors who were then removed from office.

 

Action following the AGM

 

As it turns out, the board's apparent desire to disenfranchise shareholders did not stop after the AGM, when it was announced that the sole remaining director, Jeremy Schwartz, had promptly used his powers to reappoint all of the directors removed from office at the AGM and in addition to appoint additional directors chosen for appointment by those same directors before their removal. 

 

The effect of this is that Revolution Beauty's board of directors is entirely comprised of directors who have appointed each other, whose appointments have not been approved by shareholders and who (in the case of the chairman, the CEO and the CFO) were validly removed from office at a duly convened shareholder meeting despite the board's attempts to prevent voting at that meeting.

 

boohoo fails to see how a board comprised entirely of directors appointed by each other, the majority of whom (including the chairman, CEO and CFO) have attempted to prevent shareholders from voting on their reappointment at an AGM, can claim to be acting in the best interests of shareholders.

 

boohoo remains committed to ensuring that Revolution Beauty has a majority independent board with the right balance of skills and experience and believes that it is of paramount importance that the future board of directors of Revolution Beauty have direct and relevant experience of dealing with its customers. In light of the events of the last 24 hours boohoo also considers the current board of Revolution Beauty to lack not only this balance of skills and experience but also the ability to prioritise the interests of shareholders over their own self-interest. 

 

boohoo calls on the board to convene the requisitioned meeting without further delay and not to resort to further attempts to adjourn that meeting, once convened. 

 

-ends-

 

About boohoo group plc

"Leading the fashion eCommerce market"

Founded in Manchester in 2006, boohoo is an inclusive and innovative global brand targeting young, value-orientated customers, pushing boundaries to bring its customers up-to-date and inspirational fashion, 24/7.

In 2017, the group extended its customer offering through the acquisitions of the vibrant fashion brand PrettyLittleThing and free-thinking brand Nasty Gal. In March 2019, the group acquired the MissPap brand, in August 2019 the Karen Millen and Coast brands and in June 2020 the Warehouse and Oasis brands, all complementary to the group's scalable, multi-brand platform. In January 2021, the group acquired the intellectual property assets of Debenhams, with the goal of transforming a leading UK fashion and beauty retailer into a digital department store and marketplace through a new capital-light and low-risk operating model. In February 2021, the group acquired the intellectual property assets of UK brands Dorothy Perkins, Wallis and Burton. As at 28 February 2023, the boohoo group had 18 million active customers across all its brands around the world.

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