WisdomTree has hit back at recent calls for Jonathan Steinberg to resign by offering its full support to the chief executive and two board seats to the activist investors.
WisdomTree said settlement discussions with the activist duo – made-up of ETF Stream’s parent company ETFS Capital and Lion Point Capital – broke down “at the eleventh hour”.
On 4 May, the activist investors, which own a combined 13.5% of WisdomTree, said discussions over the past month were “thwarted” by Steinberg who “made clear his determination to preserve the status quo and not make any change to the way the company is operated”.
However, the ETF issuer has responded to this letter with claims both parties reached a “final definitive” cooperation agreement before the activist investors “abandoned” the settlement in place.
According to WisdomTree, the terms of the agreement included the appointment of Lynn Blake – one of the duo’s nominees – as a new independent director as well as giving the ability for them to appoint an additional director.
The issuer said the agreement would also have seen the creation of an operations and strategy committee and the termination of the stockholder rights plan, known as a ‘poison pill’.
Frank Salerno, chair of the board at WisdomTree, said: “We were shocked that, mere hours before its planned announcement, ETFS Capital and Lion Point abruptly and irresponsibly discarded the cooperation agreement and announced their intention to engage in a proxy fight.”
Referring to ETFS Capital and Lion Point Capital’s statement that “we and many other stockholders strongly believe that WisdomTree critically needs a new CEO”, Salerno said ETFS Capital founder and CEO Graham Tuckwell’s “sole focus was to push for our CEO and founder to step down”.
“If anyone was operating in bad faith, it was Tuckwell, who appears to have allowed these negotiations to proceed with no real intention of accepting any outcome other than the ouster of our CEO, a result he could never achieve through a vote at the 2022 annual meeting,” he added.
Responding, Tuckwell commented: “The fact they have to resort to personal attacks against me shows they have no real substance to defend the underperformance of the company caused by its CEO.”
Despite calls for Steinberg to resign, the WisdomTree board has issued its backing of the CEO and the management team, adding statements from the activist investors about the business “are disingenuous”.
ETFS Capital – then known as ETF Securities – acquired a stake in WisdomTree via the sale of its European and North American asset management businesses in 2018. As part of the deal, Tuckwell was not allowed to seek management changes for three years.
At the time of the acquisition on 11 April 2018, WisdomTree shares were trading at $9 and briefly traded as high as $11.7 the following month. The issuer is currently trading at $5.5 a share, as at 6 May.