MONTREAL _ DavidsTea probably can’t afford another wave of major changes such as those proposed by a co-founder who is trying to replace its board with a dissident slate of nominees, the company’s president and CEO Joel Silver said Tuesday.
Herschel Segal’s offensive, which includes the nomination of seven candidates to replace the current board of directors, risks compromising the initiatives deployed over the last year, he said.
“The whole process could be derailed and we will have to start again,” Silver said in an interview with The Canadian Press at its headquarters in Montreal.
A crucial vote will take place at DavidsTea’s annual meeting June 14, when shareholders will choose between the slate of candidates nominated by the current board and the one offered by Segal, who resigned from the board in March.
Since going public on the Nasdaq exchange in June 2015, the tea merchant has been facing profitability issues, leading to several reshuffles of senior management until the appointment of Silver, 47, last year.
Segal is the company’s largest shareholder. His holding company Rainy Day Investments Ltd., owns about 46 per cent of the outstanding shares.
However, three investment companies, that together control 36.5 per cent of the shares, oppose his plan.
In his long list of criticisms, the 87-year-old businessman blames the board for taking too long to turn to online commerce and failing in its expansion to the United States.
Silver said the current situation is not the result of decisions made over the past year but the last two to three years, which includes a period when Segal was a member of the board.
Aware that he might lose his job if shareholders support Segal, Silver said his team should still be given a chance.
The retailer spent $3 million to boost online sales to consumers and plans to enter into distribution agreements with partners such as supermarket chains to increase the brand’s reach.