Hedge fund FrontFour Capital has gone public with its unhappiness with MDC Partners in a new SEC filing submitted Wednesday.
The fund, which holds a 5.1% stake in the agency holding company, has engaged in talks with management and its board about "enhancing shareholder value," including changes to the company's board of directors.
Members of the MDC board include former Obama staffer Desiree Rogers, casino operator and commercial retailer Clare Copeland, and presiding director Irwin Simon, CEO of organic food company Hain Celestial Group.
FrontFour first started private conversations with MDC in August 2018 in an attempt to "constructively outline a strategy" that would result in the replacement of Scott Kauffman as CEO with a "candidate better suited to leverage the strength of the Issuer’s agencies and grow the Issuer’s market share in key industries," per the filing.
Shortly thereafter, the company states, the board hastily announced Kauffman’s intention to resign as CEO by December 31, 2018 without having commenced a search for his replacement, and then announced the launch of a strategic review process a week later. The board has rejected proposals related to its composition.
Now, FrontFour is calling for "significant" changes to the board, adding that it may seek changes via a special meeting requisitioned for such purpose.
FrontFour wants representation on the Board that better aligns with the best interests of shareholders, states the filing.
For its part, MDC issued a statement that acknowledged this "ongoing dialogue" and says we are "disappointed that they elected to go public with their concerns at this time."
"While we expect communication with FrontFour to continue, our focus remains on conducting our previously announced strategic review and CEO search process, and we remain committed to delivering value for all our shareholders," the company states.