Emphasizes the Company’s Director Nominees are
Highly Qualified and Engaged, and their Election is in the Best
Interest of All Shareholders
Urges Shareholders to Vote the Universal
WHITE Proxy Card Today “FOR” ONLY LL
Flooring’s Three Highly Qualified Director Nominees
Visit www.VoteLLFlooring.com for More
Information
LL Flooring Holdings, Inc. (“LL Flooring” or “Company”) (NYSE:
LL) today mailed a letter to shareholders in connection with the
Company’s upcoming 2024 Annual Meeting of Stockholders.
The letter contains critical information for shareholders’
decision making, including highlighting the Board’s view that
Thomas Sullivan is pushing a personal agenda, that Mr. Sullivan and
his nominees are conflicted and would not be truly independent
given Mr. Sullivan’s ongoing interest in buying the Company and
that Mr. Sullivan has a track record that shareholders are urged to
question. The letter also emphasizes LL Flooring’s director
nominees are highly qualified and engaged and how they are the
right directors to oversee the Company’s path forward.
The LL Flooring Board of Directors unanimously urges
shareholders to vote using the universal white proxy card today
“FOR” only LL Flooring’s three highly qualified director
nominees.
Visit www.VoteLLFlooring.com, to find additional information and
resources to help shareholders vote at the 2024 Annual Meeting of
Stockholders.
The full text of the letter follows:
Dear Fellow Shareholders,
We are seeking your support at LL Flooring’s
upcoming 2024 Annual Meeting of Stockholders for our three highly
qualified nominees – Douglas T. Moore, Ashish Parmar and Nancy M.
Taylor – who are standing for re-election to your Board of
Directors.
The costly and distracting proxy contest that
has been launched by Thomas Sullivan is self-serving and not in the
best interests of all shareholders. We believe that he may be
attempting to force a sale of LL Flooring to himself at a price
that may undervalue the Company by installing himself and two of
his hand-picked employees on your Board. Mr. Sullivan has long
wanted to acquire the Company and we believe he and his other
nominees would not be truly independent, rather they would push Mr.
Sullivan’s personal agenda.
Mr. Sullivan and his other two nominees or
Jerald Hammann, another individual shareholder of LL Flooring who
has nominated himself to the Board of Directors, offer no
incremental value to your Board. In fact, if these nominees were
elected, they would remove superior talent, critical skills and
three independent directors from your Board and risk derailing the
progress being made in executing on the Company’s set of five
strategic priorities and completing the evaluation of strategic
alternatives that is underway.
We urge you to support your Board by
voting the universal WHITE proxy card
today “FOR” ONLY LL Flooring’s three highly qualified director
nominees – Douglas T. Moore, Ashish Parmar and Nancy M.
Taylor.
Mr.
Sullivan is Pushing a Personal Agenda, is Conflicted Given His
Ongoing Interest in Buying the
Company and Has a Questionable Track Record
Based on Mr. Sullivan’s actions during the
Company’s strategic review process and even more recently, we
believe that his focus would be to push a personal agenda to
acquire LL Flooring at a price that may undervalue the Company if
he were appointed to your Board. The two additional candidates
being put forth by Mr. Sullivan have longstanding relationships
with him, and currently work for F9 Investments or Cabinets To Go,
both owned and controlled by Mr. Sullivan and the latter of which
competes with LL Flooring.
While Mr. Sullivan misleadingly claims he is
not trying to take control of LL Flooring, his actions demonstrate
the opposite. Your Board initiated good faith discussions with Mr.
Sullivan to reach a proposed compromise in this proxy contest by
appointing one of his nominees. However, in those discussions, Mr.
Sullivan’s representatives requested as part of such compromise
that he receive diligence access to the Company under a
confidentiality agreement. Mr. Sullivan is seemingly more focused
on advancing his self-serving objectives than the best interests of
all shareholders.
In addition to questioning Mr. Sullivan’s
true motives, we encourage shareholders to ask themselves if an
individual with Mr. Sullivan’s track record should be overseeing LL
Flooring’s path forward. Some of the “highlights” in Mr. Sullivan’s
history include:
- In 2013, Mr. Sullivan was the subject of a civil racketeering
derivative complaint filed by condominium and hotel associations in
Miami bankruptcy court on behalf of all debtors of Elcom Hotel
& Spa LLC, which Mr. Sullivan co-founded. The bankruptcy
clawback lawsuit sought more than $20 million for Mr. Sullivan’s
actions involving his ownership of 51 units and the common areas of
Bal Harbour Hotel & Spa. The lawsuit accused Mr. Sullivan of
fraud, racketeering, gross negligence and breach of fiduciary duty,
among other counts, for his personal use of funds that were
intended to be allocated for building operations.
- In 2013, while Mr. Sullivan served as Executive Chairman of LL
Flooring (then Lumber Liquidators) the government served search
warrants on the Company related to an investigation into
environmental crimes. In October 2015, after Mr. Sullivan had
stepped into the role of Interim CEO following the departure of the
previous CEO, the Company pleaded guilty in federal court to
charges related to its sourcing of illegally logged timber from Far
East Russia, as well as false statements on Lacey Act declarations
which concealed the true species and source of the timber. This was
the largest criminal fine ever under the Lacey Act at the
time.
- In March 2015, when Mr. Sullivan was serving as Executive
Chairman, LL Flooring (then Lumber Liquidators) was also the
subject of a 60 Minutes exposé regarding claims that the laminate
flooring imported by the Company from China had unsafe levels of
formaldehyde. Mr. Sullivan chose to appear on the program as a
spokesman for the Company, and following the airing of the program,
the Company experienced significant negative impact to its stock
price and reputation. In this same timeframe, the Company was also
the target of a class action lawsuit, and the California Air
Regulation Board started an investigation into the Company’s
products.
- In 2019, three years after his departure from the Company as a
director and executive, Mr. Sullivan made public statements about
his interest in acquiring LL Flooring. He then reversed those
statements while timing his trades of LL Flooring stock in a manner
that benefitted his own personal portfolio and whipsawed other
investors. Mr. Sullivan disclosed he had increased his stock
ownership in LL Flooring (then Lumber Liquidators). Shortly
thereafter, he publicly expressed interest in taking the Company
private through a transaction with Cabinets To Go, which led to a
significant increase in the stock price. Shortly after, Mr.
Sullivan sold down his stock ownership after which he made a
subsequent public statement noting he was no longer interested in
acquiring the Company, which sent the stock price down after he had
already profited from his stock sales.
- In 2019, Mr. Sullivan’s company, Cabinets To Go, was involved
in litigation with LL Flooring related to Cabinets To Go violating
the terms of a Memorandum of Understanding signed between the
companies under which Cabinets To Go would not sell flooring in
competition with LL Flooring. Cabinets To Go later settled with LL
Flooring regarding the violation of terms.
As a result of actions taken by prior
management while serving under the oversight of Mr. Sullivan as
Executive Chairman and during the time Mr. Sullivan served as
Interim CEO, the Company paid a total of $112.2 million to settle
litigation and pay fines related to product quality, sourcing
issues and securities fraud1. Mr. Sullivan does not bring the
skills and expertise appropriate for your Board, is conflicted
given his interest in acquiring the Company and has a history of
questionable actions.
LL
Flooring’s Highly Qualified and Engaged Nominees Are the Right
Directors to Oversee the
Company’s Path Forward and Maximize Value
We firmly believe that LL Flooring’s current
directors are the right directors with the right experience and
skillsets to oversee the Company’s strategic direction and to
maximize value.
Consistent with your Board’s commitment to
independence, eight of LL Flooring’s nine directors – all but the
Company’s CEO – are independent, including all three nominees who
are up for re-election at this year’s Annual Meeting. In addition
to ensuring true independence, your Board is committed to ongoing
refreshment, as evidenced by the voluntary replacement of nearly
one-third of your Board over the last five years.
Most recently, this deliberate and thoughtful
group has supported management’s definition and initial execution
of the Company’s five clear strategic priorities along with the
ongoing thorough consideration of strategic alternatives.
We strongly encourage shareholders to vote
for LL Flooring’s three directors who are up for re-election:
Douglas T. Moore Former Chairman and
CEO of CleanCore Solutions, Inc.; Former CEO of 1847 Goedeker, Inc.
and Goedeker’s Through his more than 25 years of merchandising and
retail experience, Mr. Moore has developed an understanding of
strategic and tactical business issues that include store
operations, supply chain, sourcing, and human resource planning. He
also possesses marketing, risk assessment and retail knowledge. He
recently stepped down from his role as Chairman and CEO of
CleanCore Solutions, Inc., and previously served in other chief
executive officer and senior executive roles at companies in the
home goods, home improvement and broader retail industry. He has
been a member of our Nominating and Corporate Governance Committee
since our initial public offering and a member of our Compliance
and Regulatory Affairs Committee since May 2016. Mr. Moore also
served as a member of our Audit Committee from our initial public
offering until May 2016 and as Chairperson of our Nominating and
Corporate Governance Committee from our initial public offering
until May 2019.
Ashish Parmar Current Chief
Information Officer of Standard Industries, Inc. Mr. Parmar brings
more than 20 years of leadership experience in leading digital
transformations and delivering a seamless omnichannel experience.
He is a key leader in strategic change initiatives to drive growth,
develop corporate strategy, and drive new business opportunities.
Mr. Parmar also has a breadth of international experience in both
technology and supply chain and his experience as a Chief
Information Officer is helpful to our oversight of cybersecurity.
Mr. Parmar has attained the designation of NACD Directorship
Certified and the CERT Certificate in Cybersecurity Oversight.
Nancy M. Taylor Current LL Flooring
Independent Board Chair; Former CEO of Tredegar Corporation Public
company director at TopBuild Corp. and Malibu Boats, Inc. Ms.
Taylor brings significant experience as a chief executive officer
of a publicly-traded international manufacturer. Through her
decades of experience, she has gained and developed extensive
business, finance, and leadership skills. Further, she possesses an
understanding of strategic planning, risk assessment and
international operations. Ms. Taylor has been a member of our
Nominating and Corporate Governance Committee since January 2015
and a member of our Compliance and Regulatory Affairs Committee
since May 2019. Ms. Taylor also served as a member of our
Compensation Committee from May 2014 until May 2019. Additionally,
Ms. Taylor was appointed Chairperson of your Board in November
2015. Ms. Taylor has attained the designations of Board Leadership
Fellow and NACD Directorship Certified.
Over the course of their respective tenures as members of your
Board, Messrs. Moore and Parmar and Ms. Taylor have been active and
engaged, leveraging their deep collective experiences and expertise
to provide critical, independent oversight and decision making to
drive value.
Vote today “FOR” ONLY LL Flooring’s three
highly qualified and engaged director nominees on the universal
WHITE proxy card
Your Board unanimously recommends that you vote “FOR” the
election of each of the three nominees proposed by your Board,
Messrs. Moore and Parmar and Ms. Taylor, on your universal
WHITE proxy card.
Your Board does not endorse Mr. Sullivan and his other two
nominees, who are conflicted due to their roles at F9 Investments
and Cabinets To Go, the latter of which competes with LL Flooring,
or Mr. Hammann. Your Board strongly urges you to DISCARD and NOT
vote using any gold proxy card that may be sent to you by Mr.
Sullivan or any proxy card that may be sent to you by Mr. Hammann.
If you have already voted using a gold proxy card or other proxy
card sent to you by either Mr. Sullivan or Mr. Hammann,
respectively, you have every right to change your vote and we
strongly encourage you to revoke that proxy by using the
WHITE proxy card to vote in
favor of ONLY the three nominees recommended by your Board ‐ by
Internet or by signing, dating and returning the enclosed
WHITE proxy card in the
postage‐paid envelope provided. Only the latest validly executed
proxy that you submit will be counted ‐ any proxy may be revoked at
any time prior to its exercise at the Annual Meeting.
Your vote is very important. Even if you plan to attend the
Annual Meeting, we request that you read the proxy statement and
vote your shares by signing and dating the enclosed universal
WHITE proxy card and returning it in
the postage‐paid envelope provided or by voting via the Internet by
following the instructions provided on the enclosed universal
WHITE proxy card.
If you have any questions or
require
any assistance with voting
your
shares, please contact our
proxy
solicitor, Saratoga, at (888)
368‐0379
or (212) 257‐1311 or by email
at
info@saratogaproxy.com.
Additional Information
On June 7, 2024, Mr. Moore resigned from his positions as
Chairman, Chief Executive Officer and President of CleanCore
Solutions, Inc. Mr. Moore is expected to continue to serve as a
senior advisor for a transition period.
About LL Flooring
LL Flooring is one of the country’s leading specialty retailers
of hard-surface flooring with more than 435 stores nationwide. The
Company seeks to offer the best customer experience online and in
stores, with more than 500 varieties of hard-surface floors
featuring a range of quality styles and on-trend designs. LL
Flooring's online tools also help empower customers to find the
right solution for the space they've envisioned. LL Flooring's
extensive selection includes waterproof hybrid resilient,
waterproof vinyl plank, solid and engineered hardwood, laminate,
bamboo, porcelain tile, and cork, with a wide range of flooring
enhancements and accessories to complement. LL Flooring stores are
staffed with flooring experts who provide advice, Pro partnership
services and installation options for all of LL Flooring's
products, the majority of which is in stock and ready for
delivery.
Learn More about LL Flooring
- Our commitment to quality, compliance, the communities we serve
and corporate giving: https://llflooring.com/corp/quality.html
- Follow us on social media: Facebook, Instagram and
Twitter.
Forward Looking Statements
Certain statements in this press release may include statements
of the Company’s expectations, intentions, plans and beliefs that
constitute “forward-looking statements” within the meanings of the
Private Securities Litigation Reform Act of 1995. These statements,
which may be identified by words such as “may,” “will,” “should,”
“expects,” “intends,” “plans,” “anticipates,” “assumes,”
“believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,”
“projects,” “targets,” “potential,” “will likely result,” and other
similar terms and phrases, are based on the beliefs of the
Company’s management, as well as assumptions made by, and
information currently available to, the Company’s management as of
the date of such statements.
These statements are subject to risks and uncertainties, all of
which are difficult to predict and many of which are beyond the
Company’s control. These risks include, without limitation, the
impact of any of the following: reduced consumer spending due to
slower growth, economic recession, inflation, higher interest
rates, and consumer sentiment; our advertising and overall
marketing strategy, including anticipating consumer trends and
increasing brand awareness; the results of our ongoing strategic
review; a sustained period of inflation impacting consumer
spending; our inability to execute on our key initiatives or if
such key initiatives do not yield desired results; stock price
volatility; competition, including alternative e-commerce
offerings; liquidity and/or capital resources changes and the
impact of any changes or limitations, including, without
limitation, ability to borrow funds and/or renew or roll over
existing indebtedness; transportation availability and costs,
including the impact of the war in Ukraine and the conflict in the
middle east on the Company’s European and Asian suppliers;
potential disruptions to supply chain and product availability
related to forced labor and other trade regulations; including with
respect to the Uyghur Forced Labor Prevention Act; inability to
hire and/or retain employees; inability to staff stores due to
overall pressures in the labor market; the outcomes of legal
proceedings, and the related impact on liquidity; reputational
harm; inability to open new stores with acceptable financial
returns, find suitable locations for our new stores, and fund other
capital expenditures; managing growth; disruption in our ability to
distribute our products, including due to severe weather; operating
an office in China; managing third-party installers and product
delivery companies; renewing store, warehouse, or other corporate
leases; maintaining optimal inventory for consumer demand; our and
our suppliers’ compliance with complex and evolving rules,
regulations, and laws at the federal, state, and local levels
having an overreliance on limited or sole-source suppliers; damage
to our assets; availability of suitable hardwood, carpet and other
products, including disruptions from the impacts of severe weather
and supply chain constraints; product liability claims, marketing
substantiation claims, wage and hour claims, and other labor and
employment claims; sufficient insurance coverage, including
cybersecurity insurance; disruptions due to cybersecurity threats,
including any impacts from a network security incident; the
handling of confidential customer information, including the
impacts from the California Consumer Privacy Act, California
Privacy Rights Act and other applicable data privacy laws and
regulations; management information systems and customer
relationship management system disruptions; obtaining products
domestically and from abroad, including tariffs, the effects of
antidumping and countervailing duties, and delays in shipping and
transportation whether due to international events, such as the Red
Sea shipping crisis, or scenarios outside of the Company’s control;
impact of changes in accounting guidance, including implementation
guidelines and interpretations related to Environmental, Social,
and Governance matters; deficiencies or weaknesses in internal
controls; and anti-takeover provisions.
The Company specifically disclaims any obligation to update
these statements, which speak only as of the dates on which such
statements are made, except as may be required under the federal
securities laws.
Additional factors are set forth in the Company’s Annual Report
on Form 10-K and Form 10-K/A for the year ended December 31, 2023,
under the captions “Risk Factors”, the Company’s quarterly report
on Form 10-Q for the quarter ended March 31, 2024, and subsequent
filings with the SEC.
_________________________
1 Based on Company SEC filings filed on
February 29, 2016, November 6, 2019, August 5, 2020 and February
25, 2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240610513011/en/
For further information: LL Flooring Investor Relations
ICR Bruce Williams ir@llflooring.com Tel: 804-420-9801
For media inquiries: Leigh Parrish / Ed Trissel Joele
Frank, Wilkinson Brimmer Katcher 212-355-4449
For Investors: Saratoga Proxy Consulting LLC: John
Ferguson / Joe Mills info@saratogaproxy.com Tel: 212-257-1311
LL Flooring (NYSE:LL)
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