Leslie O’Donoghue is resigning from Dye & Durham Ltd.’s DND-T board of directors, as the company tries to avoid a contested shareholder meeting scheduled for August.
The Toronto legal software company is under fire by some of its major shareholders, several of whom have proposed to replace nominees of the seven-member board with their own picks.
Huss Hirji, D&D’s vice-president of investor relations, told The Globe and Mail that Ms. O’Donoghue voluntarily stepped down in order to make room for new nominees and help the company avoid the expense of a shareholder meeting.
“Leslie stepping down has nothing to do with her performance or any external noise, other than the fact of helping to facilitate efforts to find a replacement that all parties would agree upon,” Mr. Hirji said. “I think she ultimately thought that it would help the company moving forward.”
“No one wants that proxy contest,” he added. “It’s costly and a distraction to business.”
The company’s stock price was down 2.7 per cent Friday after the announcement, and is down 75 per cent since its February, 2021, peak.
D&D expanded quickly by buying legal software providers in Canada and subsequently increasing fees for such services as property transfers. Recently, investors have voiced concerns about D&D’s high debt levels.
The vote on directors is scheduled to take place during a special shareholder meeting on Aug. 20, called at the behest of unhappy hedge funds, Engine Capital LP and Blacksheep Fund Management.
Engine has accused the company of an alleged pattern of poor strategic decision-making and financial mismanagement, though D&D says the criticism belies a fundamental misunderstanding of its key drivers and track record.
Ms. O’Donoghue was among the three directors that Engine had requested be replaced with its own nominees, along with Brian Derksen and Colleen Moorehead. In March, D&D said Mr. Derkse would not stand for re-election, and Ms. Moorehead would succeed him as chair in the interim.
In a press release, Ms. Moorehead said the board is working to find “an equitable alternative that avoids a contested shareholder meeting,” and seek resolutions with parties who have nominated individuals for election.
Meanwhile, the younger brother of D&D’s chief executive officer Matthew Proud has made his own contested proposal to replace a board member. Tyler Proud, who has the right to designate a nominee through share ownership in holding company OneMove, proposed that long-time board nominee Edward Prittie be replaced with New York alternative asset manager Eric Shahinian.
D&D rejected OneMove’s proposal to remove Mr. Prittie, saying it was motivated by personal grievances. But at the same time, DND said it “currently intends to honour its obligations” under the shareholder agreement and nominate Mr. Shahinian, and that it intends to replace Mr. Prittie “because of the ongoing governance issues and performance of the business over the last 24 months.”
Ms. O’Donoghue, a former Nutrien Inc. executive, was the first woman nominated to the company’s board. Before she took the role, D&D was the last remaining member of the S&P/TSX Composite with an all-male board.
With reports from Sean Silcoff
