Enthusiast Gaming is under fire from its largest shareholder, which is campaigning for a change of leadership -- including the CEO and board of directors.
In an open letter addressed to the board, long-running shareholder Greywood has called for chief executive Adrian Montgomery to be removed from his position. The letter requests that Montgomery be replaced by chief operating officer Thamba Tharmalingam on an interim basis until a suitable candidate is found.
Greywood also wants to replace the majority of the board of directors with people who are more experienced in the gaming media, esports, and events industries Enthusiast operates in. It will be submitting its suggestions ahead of the company's annual shareholders meeting in June.
Enthusiast Gaming is the Canada-based digital media company, behind video games websites such as The Escapist, Destructoid, Daily Esports and Upcomer. It also owns Steel Media, which runs Pocket Gamer, PC Games Insider and events like Pocket Gamer Connects.
Enthusiast also owns esports teams, including Luminosity Gaming, and runs the Enthusiast Gaming Live Expo in Toronto, where it's based.
It was listed on the NASDAQ Capital Market in 2020, and before that it was on the Toronto Stock Exchange.
Greywood says it has been investing in Enthusiast since before it was publicly traded, reporting that it has poured over $30 million into 9.3% of the company's outstanding shares. This, it claims, is more than the entire board of directors combined.
"Our investment in Enthusiast reflects our belief in the Company's enormous potential," Greywood wrote. "Unfortunately, under current leadership, that potential is being squandered.
"We came to this conclusion after a lengthy, careful and diligent assessment, during which we consulted with independent third-party firms, industry players, executive recruiters, prior employees, current employees, shareholders and other stakeholders.
"Our primary and clear conclusion is that the company's current CEO, Adrian Montgomery, is a detriment to the company's management, operations, communications, and growth strategies and Enthusiast is failing to realise its potential under his leadership and under the direction of the Board of Directors, as it is currently constructed."
Greywood claims Montgomery's leadership and the board's governance is the root of "significant issues" with Enthusiast's culture, which is "materially impeding its performance" and is "eroding [Enthusiast's] industry-wide reputation."
The investor says the board also seems to be "completely unaware of the work atmosphere propagated by Mr Montgomery and the many dysfunctional management relationships." It claims that "valuable employees" have left or threatened to leave (including Tharmalingam), and that the company has had difficulty recruiting new talent.
It also claims the board "failed to provide proper oversight" when it came to "alleged impropriety." This is suggested as another factor in which Enthusiast is having difficulty recruiting and retaining leadership -- "particularly women."
Beyond that, Greywood raised concerns around Montgomery's compensation and warned the board "not to excessively reward the CEO."
"The frustrating part for shareholders is that the company does in fact possess extremely talented personnel developing and/or implementing notable strategies," the investor added.
"We believe Enthusiast should have a market value of $1-2 billion, not the anemic $250-300 million market value under the current leadership. With proper leadership and focus we see a realistic path to a $4-5 billion company."
GamesIndustry.biz has reached out to Enthusiast Gaming for comment.