Dealnet Provides Details Regarding Small’s Excessive Compensation
TORONTO, April 28, 2020 (GLOBE NEWSWIRE) — Dealnet Capital Corp. (TSX VENTURE: DLS) (“Dealnet” or the “Company”) today provided a summary of bloated overhead costs and salaries under Dr. Steven Small’s (“Small”) leadership, and how the Board and the new management team have decisively cut these costs in the short time since Small was terminated for cause on April 8, 2018. Further examples of improvements under the new team can be found in an investor presentation available at www.dealnetcapital.com/additional-info/.
Small’s Excessive CompensationSmall’s compensation as Executive Chairman and the circumstances of its approval are a matter of concern to Dealnet and the current Board and form part of the Counterclaim against Small in his wrongful dismissal litigation.As outlined in the pleadings, Small’s compensation as Executive Chairman was approved by the former Dealnet Board at Small’s urging as one of their very last acts before the majority of the Directors resigned, and prior to any of the current Directors’ appointments to the Board.During Small’s tenure, the Company reported total losses from continuing operations of over $64 million and had no credible plan to reaching profitability. Despite this, Small’s total compensation over his 34 months tenure as Executive Chairman of the Company was $2,041,000, or an average of $60,000 per month. To put that number in context, in 2016, Small earned more than the Chair of the Board of Directors of any of Canada’s largest banks.Small’s compensation package contained additional terms including the rights to:guaranteed future option grants to ensure that Small always had options equal to at least 2% of the outstanding shares of the Company (in the event the bonus pool was insufficient to grant Small options equal to 2% of the outstanding shares, Small was to receive a grant of common shares equal to 200% of the value of the options which should have been granted);up to twelve weeks, or three months, of paid vacation each year;automatic 25% salary increases annually, regardless of performance; andguaranteed bonus awards not less than the greatest short term, medium term, long term, transaction or special bonus received by any other executive at any time. Dealnet alleges in its Counterclaim that many elements of Small’s compensation package were non-commercial and self-interested, and that they were unfair, prejudicial to Dealnet and its shareholders, and were in breach of his fiduciary duties.Despite Small’s termination for cause, he continues to seek additional compensation from Dealnet in the form of damages for wrongful dismissal equal to $16 million. Small has also advised the Company that he believes that his claim against Dealnet is strong and that in the event he and his dissident director nominees are elected to the Board, he intends to engage the Company with the goal of reaching a settlement. It continues to be management’s view that this could have a detrimental impact on Dealnet and its shareholders.Significant Reduction of Compensation Following Small’s TerminationFollowing Small’s departure, the Board and the new management team moved with urgency to cut overhead costs at Dealnet. By 2019, overhead and compensation had been slashed in half. A senior management team that had been as large as 14 under Small was reduced to seven, and the Board had also been rightsized down to four directors from seven. Starting in Q4 2018, management has kept overhead costs at approximately $3 million per quarter, less than half of what they were at their peak under Small.Shareholders are urged to review the investor presentation with further details at www.dealnetcapital.com/additional-info/.About Dealnet Capital Corp.Dealnet is the parent company of subsidiaries operating in two market segments, consumer finance and call centre. The Company operates in the consumer finance segment in Canada through EcoHome Financial Inc. (“EcoHome”) and its call centre segment under the One Contact banner (“One Contact”).EcoHome is a specialty finance company serving the $20 billion Canadian home improvement finance market. EcoHome develops and supports consumer sales financing programs for approved dealers and distributors under agreements with original equipment manufacturers (OEMs) that supply a wide range of home improvement products to the retail market. Through a dealer network, EcoHome underwrites, originates, funds and services the prime quality loans and leases that homeowners need to finance the acquisition and installation of capital assets that improve the quality, comfort and safety of their homes.One Contact offers customer support services to third-party institutions across Canada and the U.S. and to EcoHome.For additional information please visit www.sedar.com.Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.Forward-looking StatementsThis news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “would”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company’s Management’s Discussion and Analysis. The Company undertakes no obligation to update forward-looking information if circumstances or management’s estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking information.Contact Information