Dye & Durham Ltd. CEO Matt Proud has announced his resignation, bringing an end to his tenure marked by rapid growth and controversy. The Toronto-based legal software company revealed that Proud would remain in his role for three more months as they seek a replacement.
Proud’s departure follows a period of unrest among investors dissatisfied with the company’s governance and management decisions. Despite the significant growth experienced under Proud’s leadership, some large shareholders expressed a belief that a change in management would benefit the business. This sentiment was echoed by BMO Capital Markets analyst Thanos Moschopoulos, who suggested that a leadership change could improve the company’s valuation.
In recent days, Proud and other executives reportedly considered legal action against major shareholders they felt were attempting to seize control of the company. Negotiations ensued between Proud and the board regarding his exit, resulting in a reported severance package of approximately $10 million. This payment contradicts Proud’s employment agreement, which stipulates no cash compensation upon termination.
Dye & Durham has faced challenges from investors regarding its financial leverage, acquisition strategy, and board oversight. The company has undergone restructuring efforts, staff reductions, and is under investigation by the Competition Bureau for potential anticompetitive practices. Additionally, Dye & Durham has faced backlash from legal customers due to price increases and regulatory requirements to divest certain assets.
The decision to halt the sale process, despite receiving conditional bids, was influenced by shareholder reluctance. The stock price has suffered in comparison to previous highs, reflecting investor concerns and uncertainty surrounding the company’s future direction.
Proud expressed his desire to ensure a smooth transition for the company, stating that ongoing disputes with activists were becoming a distraction. Board chair Colleen Moorehead commended Proud for his contributions to Dye & Durham’s growth but declined to comment on the severance agreement.
The upcoming annual meeting on December 17 will feature a contested election for board positions, with activist investor Engine Capital proposing a new slate of directors. Engine Capital criticized the board’s handling of Proud’s departure and advocated for significant changes in management. The company’s circular to shareholders defends its current strategy while proposing new board members and a focus on reducing debt.
Despite the ongoing challenges and changes within Dye & Durham, the company’s future remains uncertain as stakeholders await the outcome of the upcoming annual meeting and the search for a new CEO. Proud’s legacy as a driving force behind the company’s growth and transformation is now at a crossroads, with shareholders and industry observers closely monitoring the developments.
