Customers walk into DavidsTea at 336 Queen Street West in Toronto.Tibor Kolley/The Globe and Mail
A key proxy advisory firm is backing the management board nominees in a fight at DavidsTea Inc. between the company and a co-founder of the tea shop chain looking to replace the board.
DavidsTea said Friday that proxy advisory firm Glass, Lewis & Co. has recommended shareholders vote for the management nominees to the board of directors at the company’s annual meeting on June 14.
In its report, Glass Lewis said Rainy Day Investments Ltd., which is controlled by DavidsTea co-founder Herschel Segal, failed to make a compelling case for the removal of the incumbent directors or for the appointment of any of the dissidents.
“While DavidsTea’s financial performance has been highly unfavourable in recent years, we believe Mr. Segal, the controlling shareholder of the dissident, bears considerable responsibility for this poor performance given his role as co-founder and largest shareholder of the company and as a director of the company until his resignation in March 2018,” Glass Lewis said.
“During the vast majority of the company’s history as a public company the board has been occupied by at least four close affiliates of the dissident, including Mr. Segal. We find it disingenuous for Mr. Segal to blame the incumbent directors for the company’s poor performance given his outsize role and influence there.”
Rainy Day Investments has nominated a dissident slate of seven directors including Segal himself, who would become executive chairman.
The firm, which holds a 46.4 per cent stake in DavidsTea, says management is not focused on the right priorities and is seeking changes at the company.
However, DavidsTea says Segal is trying to gain control of the board without paying a premium.
The company urged shareholders, no matter how many shares they own, to vote to support the management nominees.