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The directors of custom printing e-commerce group Articore (ASX: ATG), formerly known as Redbubble, have slammed a motion from co-founder Martin Hosking and former chairman Richard Cawsey to overhaul the entire board, claiming the changes would disrupt a "deliberate and staged reform program that began in 2023".
Hosking stepped down as CEO in June amidst a motion he backed alongside Cawsey to remove three directors Robin Low, chair Anne Ward and Ben Heap, with the latter two leaving of their own volition.
Hosking and Cawsey, who own approximately 14 per cent and 1.4 per cent of the company respectively, filed a notice last month calling for a meeting to vote out board members Low, John Lewis, Robert Sherwin, and recently promoted chair Robin Mendelson.
The shareholder faction plans to appoint Cawsey himself, Andrew Nash, Carole Campbell and Christine Christian in their place.
If their overhaul attempt is successful, the board composition would go from its current high US weighting to a more Australia-based directorship, which the incumbents oppose given 90 per cent of revenue is generated outside of Australia.
That said, board is already seeking an Australia-based non-executive director to chair the people, remuneration and nominations committee, while Sydney-based Low currently chairs the audit and risk committee.
The board has described the proposed extraordinary general meeting (EGM) for the vote as "unnecessary, expensive and disruptive", highlighting that prior to 2023 the company didn't have a single board member who was based in the US despite it being such an important market.
The recently appointed chair, Mendelson, is based in Seattle where she worked in senior roles at Amazon for more than two decades, while Sherwin and Lewis are based in Boston and San Francisco respectively. Lewis is also the founder of hedge fund Osmium Partners, which owns more than 9 per cent of Articore.
To strengthen its positioning in the US, the company replaced Hosking with New York-based Vivek Kumar as its CEO last month.
Kumar, who was previously CEO of TeePublic which Articore acquired for $57 million in 2018, is not explicitly facing the cut under the proposed resolutions, although in its arguments the directors include his appointment as key to a broader process of board and executive renewal they believe the EGM will disrupt.
"The board's unwavering focus continues to be to unlock shareholder value through disciplined execution of our strategy and ensuring our governance reflects the scale and ambition of this business," says Mendelson.
"Their proposal to remove the entire Board would eliminate critical continuity and expertise at a pivotal time for the group.
"With over 90 per cent of revenue generated outside Australia and approximately 60 per cent of employees based in the US, their proposal to install a geographically concentrated Board introduces risks which undermine effective oversight, weaken governance and potentially overlook key strategic opportunities tied to our global operations."
She says the implication of the proposal is that "16 per cent of the shareholder base should dictate 100 per cent of the board positions", alleging Cawsey has not outlined a plan or any changes to Articore's current strategy to improve the group's fortunes other than these board changes.
"We have met with Mr Cawsey several times. We have offered multiple pathways for engagement to avoid a costly and disruptive EGM especially so close to the AGM, all of which he has rejected," she says.
"His proposal to replace the entire board without a clear alternative strategy is both unwarranted and destabilising.
"The recent progress achieved and underway to unlock value for all shareholders must not be derailed. The board unanimously recommends shareholders vote against all resolutions."
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