Charlotte’s Web recommends shareholders vote for company nominees

The company said, “Charlotte’s Web Holdings comments on certain demands made to the Company’s Board of Directors by Joel and Jesse Stanley in connection with the Company’s upcoming June 15, 2023 annual general shareholder meeting. Late afternoon on Friday, June 9, 2023, Joel and Jesse delivered a letter to the Board demanding that the Board take immediate steps to facilitate the replacement of a majority of Board members, including all but one of the independent Board members with four individuals selected by Joel and Jesse. Two of the four individuals proffered were Joel and Jesse themselves and one of the individuals is their long-standing business associate. The Letter provided that the Board acquiesce to their demands within 48 hours of receipt of the Letter. Both the Letter, and a subsequent press release issued by Joel and Jesse on June 12, 2023, advise that they have communicated with certain Company shareholders in an effort to reconstitute the Board. The Letter demanded that the Board waive the application of the Company’s advance notice by-laws, which are designed to ensure that the Corporate Governance and Nominating Committee and the Board have sufficient time to vet potential Board nominees, including with respect to suitability and independence. Joel and Jesse’s demands generally, and the timing specifically, are designed to circumvent the procedures and processes in place to protect shareholders and allow them to make an informed decision with respect to the election of directors. There are significant ongoing business relationships between Charlotte’s Web and entities in which Joel and/or Jesse hold direct or indirect interests, certain of which are or will be subject to Board review and approval in the near future. The Board does not intend to abrogate its fiduciary responsibilities to shareholders by facilitating the removal of three independent Targeted Directors in favor of non-independents. This would effectively hand control of the Company to individuals of which at least two have significant conflicts of interest and who have elected to avoid appropriate vetting procedures. Such procedures are designed to, among other things, protect shareholders from conflicts of interest. The Board has a duty to act in the best interests of all its shareholders and to protect Company assets. The Board and the Company intend to comply with all legal requirements and appropriate protocols, as well as TSX and shareholder-approved Company policies, in connection with the election and appointment of any Board members. The Company notes that both ISS and Glass Lewis have recommended shareholders vote “FOR” the appointment of the nominees described in the Company’s Meeting information circular.”