A boardroom barney between Revolution Beauty and Boohoo has ramped up after the former’s executive team was removed by shareholder vote then reinstated.

Almost three-quarters of investors voted to oust the makeup brand’s CEO Bob Holt, CFO Elizabeth Lake and chair Derek Zissman at a shareholder meeting on Tuesday.

However they were subsequently reinstated by independent director Jeremy Schwartz, with Rachel Maguire and Matthew Eatough also appointed as non-executive directors.

FUEL Manchester

Boohoo, which owns a 26.6% stake in the company, said it “fails to see how such a board can claim to be acting in the best interests of shareholders, and is instead self-serving, as demonstrated by its actions over the last 24 hours”.

This morning it criticised the award of free share options to Holt and Lake. “Despite the free share awards having a dilutive impact of 3.4% on existing Revolution Beauty shareholders, they were not consulted, did not approve its terms, nor approve the appointment of its two main beneficiaries as directors,” it stated.

“Those main beneficiaries, Bob Holt and Elizabeth Lake, have only served very short tenures of eight and 13 months respectively and, based on the closing price of Revolution Beauty yesterday, received approximately £2.1m of free share awards, notwithstanding shareholders voting to remove them from office by an overwhelming majority.

“The only disclosure Revolution Beauty has made around the terms of the Free Share Awards prior to today’s announcement is five sentences hidden in its annual report for the period ended 28 February 2022 published on 26 May 2023. They were not referred to in any public announcement prior to yesterday morning. This all demonstrates a lack of transparency and actions which are self-serving and not in the best interests of shareholders.”

Revolution is considering legal proceedings against former CEO Adam Minto, who founded the company with Tom Allsworth in 2014 and retains a stake of approximately 15.8%.

After Revolution failed to file its FY22 accounts and concerns were raised by auditors BDO over the state of its books, its shares were suspended from trading on 1st September 2022. An independent investigation then found the founders had made personal loans or other investments worth £1m without the board’s knowledge and that sales had been overstated by £9m. 

It also criticised the terms of the acquisition of  haircare and skincare products manufacturer Medichem, owned by Allsworth. The report led to the resignation of Allsworth as executive chair and Minto as CEO.

Revealing Manchester Startups 2.0

Revolution floated in July 2021 with valuation of almost £500m, raising £300m in funding in the process to accelerate its business selling budget makeup online and in stores such as Superdrug. However its market cap currently stands at just £76m.

Following the resumption of share trading yesterday morning, its share price climbed from 26p to almost 30p before dropping over the course of the day to 24.5p.

Revolution hit back at Boohoo for what it termed a “value-destructive, opportunistic and self-serving” attempted coup.

 “At a time when, thanks to management’s tireless efforts, the company’s fortunes are significantly improved, with business back on track and restoration to trading on AIM… Boohoo is seeking to stage a board and management control coup without making a general offer, or paying a single penny, to independent shareholders of the company.

“The fundamental changes to the company’s board proposed by Boohoo could potentially lead to the company not having an appropriate board of directors for a listed business.”

$100m Wejo merger terminated, still no administration