The Endeavour Group Ltd (ASX: EDV) share price is 0.28% higher at $5.29 amid reports today that the company's largest shareholder has threatened a legal challenge against the board.
Endeavour's largest shareholder, Bruce Mathieson Snr, is supporting Woolworths executive and fellow Endeavour shareholder Bill Wavish, who has nominated himself for a seat on the board.
While at Woolworths between 1999 and 2004, Wavish oversaw the expansion of Dan Murphy's and the creation of BWS, and led the acquisition of Mathieson's hotels business.
Mathieson and Wavish are both critical of the current board, which is chaired by Peter Hearl.
Wavish says, "It's a travesty to see the amount of money that's being lost" under the current leadership.
Mathieson calls the board a "disgrace". He points to a loss of $4.5 billion in market capitalisation over the past two years under the current management.
The Endeavour share price has fallen 23% since September 2021.
Board says it may deny a vote on Wavish
In Endeavour's notice of annual general meeting (AGM) this week, the board recommended that shareholders vote against Wavish's nomination for a seat.
The board said Wavish did not have the regulatory approvals required by Endeavour's company constitution in place, and the board had not had sufficient time to assess his suitability.
Further, Endeavour advised that if Wavish did not obtain the approvals before the AGM, he would be ineligible for a vote.
The Australian cited a stinging letter of rebuke from Mathieson to Hearl today.
What did Endeavour's biggest shareholder say?
In it, Mathieson took issue with the board's decision not to allow a vote if Wavish did not receive the regulatory approvals before the AGM.
Such approvals often take months. Mathieson said Endeavour had announced previous director appointments — including that of his own son — before they had received their approvals.
Mathieson wrote:
This is preposterous as there is no realistic prospect that anyone could obtain all necessary regulatory approvals in such a short time frame.
This tactic could only be a cynical attempt to further entrench the insider's club on the Endeavour board – applying one standard for those in the club, and a different standard for those, like Bill, who are extremely well credentialed but are not insiders.
The legal game begins
In the letter, Mathieson also told Hearl he had retained law firm Arnold Block Leibler.
The firm has requested a copy of the shareholders' register.
He threatened to mount a legal challenge if the board did not allow a vote on Wavish's candidacy, saying:
Endeavour's suggestion that its policy with respect to Mr Wavish is one required by law will be robustly challenged.
Especially because given your approach, I do not understand how a third party director candidate could reasonably expect to be elected to the board of Endeavour without your endorsement.
Your position effectively denies Endeavour shareholders their legal right to determine the composition of their company's board.
Mathieson's son Bruce Mathieson Jnr is up for re-election at the AGM and has the board's endorsement.
Mathieson Jnr is also supporting Wavish's candidacy.
Earlier this week, Wavish told The Australian he was "committed to securing a board seat and working collaboratively on a much-needed turnaround".
In his statement in the AGM notice, Wavish told shareholders he had taken Woolworths past Coles to become the market leader for liquor sales.
He also expanded the business from 42 outlets to 574 in five years.
