Enthusiast Gaming executives seek CEO’s resignation in letter to board

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Four vice-president-level executives from publicly traded esports and gaming media company Enthusiast Gaming have penned a letter to Enthusiast’s board, demanding that the board ask CEO Adrian Montgomery to step down. In the letter, which was viewed by The Washington Post, the group cites failures in strategic planning and stock allocation, as well as staffing issues in the company’s human resources department, such as threats to Enthusiast’s long-term well-being.

The letter followed a controversial private call held on June 23, during which a larger group of Enthusiast executives called on Montgomery to step down, according to current Enthusiast employees familiar with the discussion. The confrontation took place at a weekly meeting scheduled for executive management and was attended by the company’s suite, as well as several vice presidents of the company.

Three of the letter’s signatories declined to comment when contacted by The Washington Post. A signer could not be reached.

“Enthusiast Gaming values ​​each of its engaged employees,” Enthusiast CEO Eric Bernofsky wrote in a statement to The Post. “The fact is that since the arrival of our current management, we have significantly improved our financial performance and significantly increased our position in the public markets.”

For Enthusiast, which owns a number of gaming-focused publications and brands, such as Upcomer and Addicting Games, as well as esports organization Luminosity Gaming, the internal call for the CEO’s resignation follows a months of bad news. On May 24, investment firm Greywood Investments, Enthusiast’s biggest shareholder, announced a campaign to replace the CEO and board with its own slate of nominees, citing “serious concerns” about the direction of the Toronto-based company.

“Greywood was not involved in any meetings or letters between senior executives and Enthusiast’s CEO,” said Greywood spokesperson Joel Shaffer in response to questions from the Post.

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In his statement to the Post, Bernofsky suggested that Greywood’s campaign was at odds with the best interests of other shareholders.

“Greywood Investments, a newly formed entity fighting a proxy battle against Enthusiast Gaming, has no plan, no funding and no management team to run the business,” Bernofsky said. “Hidden from these facts, Greywood has resorted to a campaign of distortion, jeopardizing shareholder value in the process. Enthusiast is confident in the support of its shareholders for its strategy to create the largest media and content platform enabling gaming and esports fans to connect and engage worldwide.

At Thursday’s management meeting, Montgomery was asked about the allocation of equity to staff. The CEO told attendees that in 2022, about 80% of restricted stock units, which are traditionally granted as employee incentives, have been distributed to the board and beyond, according to a current employee. Enthusiast familiar with discussion. In the letter to Enthusiast’s board, that 80% figure is mentioned as a factor in the band’s decision to seek Montgomery’s resignation.

Executives who confronted Montgomery on the call told the CEO they felt the company was adrift and said they believed management was not following strategic goals, according to several current Enthusiast employees familiar with the content of the call.

In March, Enthusiast abruptly fired a significant portion of the editorial staff of its sports and gaming news website, Upcomer. The layoffs followed dramatic changes in traffic goals for the team, as well as the sidelining of former Enthusiast founder Menashe Kestenbaum, who initially championed the vertical, according to Digiday. Kestenbaum declined to comment for this article, citing advice from his attorneys.

Similarly, on June 2, Luminosity Gaming, a subsidiary of Enthusiast, unexpectedly announced that it would be removing its “Valorant” roster. At the time, the team was in the midst of one of its best performances yet, qualifying for the North American Valorant Champions Tour playoffs. On Monday, a different organization, Shopify Rebellion, announcement he had chosen the highly successful Luminosity roster and its trainer.

“The business is really not running at 100% capacity,” said a current Enthusiast employee, who spoke on condition of anonymity because he was not authorized to speak to the press. “We have employees who I know are responding to job postings. I receive job offers. Because even though the economy is slowing down, we have great people at Enthusiast.

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On June 7, Greywood announced plans to appoint Shinggo Lu, a current Enthusiast employee and co-founder of U.GG, a “League of Legends” analytics platform and recent Enthusiast acquisition, to the new board of directors. Lu shared the news on an Enthusiast Slack channel with more than 250 employees, begging other employees to ask him questions and sparking a heated but largely cordial conversation between staff and some members of the company’s management on the direction. and Enthusiast’s treatment of employees, according to the posts. seen by La Poste.

Some of Lu’s posts were later deleted. In a post shared on the channel and seen by The Post, Lu wrote, “The above posts have been removed as I have been informed that they are defamatory and filled with misrepresentations. I apologize for inadvertently contributing misinformation to this employee channel.

On June 13, Enthusiast announced its own list of proposed board members, including six outgoing directors and three new nominees. Only one director refused to seek re-election: Francesco Aquilini, the Canadian investor whose family business, Aquilini Investment Group, owns the Vancouver Canucks team in the NHL.

“I am grateful to have served on the board and know that the company’s directors and management will continue to drive growth,” Aquilini wrote in a statement. “Shareholders should be excited about the future of Enthusiast Gaming – the right team is in place to take the company to the next level.”

Filings with the Securities and Exchange Commission in the first five months of 2022 show Greywood acquiring larger and larger stakes in Enthusiast. In those documents, Greywood is described as an investment manager for a company called Vantage Trading and a number of other investment vehicles primarily managed by investors Sasha Szabo and Marc Preston.

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