The fight over the future of Better Home & Finance has moved to a new dispute: how much shareholder support former CEO Vishal Garg actually has for his effort to remove five directors.
Better's special committee said Wednesday that Garg has "not obtained consents from anywhere near" the more than 46% of voting power his group says has submitted written consents supporting its proposals.
Garg's group disclosed the 46% figure Monday, describing it in an SEC filing as a preliminary tabulation that has not been independently verified and could change through revocations before the consents are formally delivered.
Better offered a sharply different account Wednesday.
"Based on our visibility into the banks and brokers that custody Better's shares and the consents Garg previously submitted, Garg has not obtained consents from anywhere near the 46% of the Company's voting power he now claims," the special committee said.
Better further alleged that most of the support Garg is counting comes from his own super-voting shares and shares held by a small number of longtime allies.
The conflicting claims mark the latest turn in a nearly two-month fight that began after Garg stepped down as CEO on Aug. 3 and Daniel Lewis was named interim CEO. Garg remains a member of Better's board.
From A Majority Claim To 46%
The disagreement over the latest count follows an earlier dispute over whether Garg had already secured enough voting power to prevail.
In August, Garg announced that shareholders representing a majority of Better's voting power supported a plan to reconstitute the board. His subsequent consent statement acknowledged that the declarations did not constitute a majority because of an administrative error.
Garg's filing also says written consents delivered Aug. 17 were initially believed to represent a majority but were later determined not to do so, again citing an administrative error involving information provided by Better's in-house securities counsel.
The Garg Group subsequently began a formal consent solicitation seeking to remove directors Daniel Lewis, Harit Talwar, Arnaud Massenet, Bhaskar Menon, and Prabhu Narasimhan.
Its original goal was to collect consents by Sept. 8. That target was later moved to Sept. 18 and has since been extended to Oct. 2.
The legal window extends beyond that target. Garg's definitive consent statement says properly completed and unrevoked written consents must be delivered to Better by Oct. 20, 60 days after the earliest dated written consent was delivered to the company.
Garg Names Potential Directors
Garg has also identified three candidates he intends to nominate if the consent solicitation succeeds: longtime technology investor Bing Gordon, David Heidecorn, a senior adviser at L Catterton, and Steve Sarracino, founder and partner of Activant Capital.
There is an important limitation to that proposal.
Removing the five Better directors would not automatically install Garg's three candidates.
The Garg Group disclosed that the candidates have expressed willingness to serve but have not entered into agreements to do so. Garg would nominate them following a successful consent solicitation, and their appointments would require approval by a majority of the directors then serving.
Another Dispute Over Shareholder Access
Wednesday's response from Better followed another round of accusations from Garg a day earlier.
Garg alleged Tuesday that Better had failed to provide his group with a list of shareholders who do not object to having their names disclosed, which he argued was limiting his ability to communicate directly with those investors.
He also repeated the claim that his group had secured support representing more than 46% of Better's voting power.
Better disputed the shareholder-list allegation Wednesday.
The special committee said Garg's counsel had been provided with three separate share-ownership lists requested by his campaign. Better further claimed that Garg's own legal counsel had failed to share those lists with Garg or his proxy solicitor.
Better also accused Garg of violating federal proxy rules by publicly promoting the level of shareholder support for his campaign. Garg had previously rejected Better's allegations concerning his solicitation activities.
The dispute over solicitation practices has already reached federal court. Better sued Garg in August, alleging violations of federal securities laws and seeking to restrict what it characterized as improper solicitation activity. Garg has disputed the company's allegations.
A federal judge subsequently declined to immediately stop Garg's shareholder solicitation while the litigation proceeds. The ruling did not determine the merits of Better's securities-law allegations.
Proxy Advisers Split
Outside proxy advisers have not reached a unanimous conclusion about the board fight.
Institutional Shareholder Services recommended that shareholders oppose Garg's effort and revoke previously submitted consents.
Glass Lewis subsequently also recommended against removing the five directors, concluding that Garg had not presented a sufficiently compelling case for the proposed board changes.
Egan-Jones Proxy Services reached a different conclusion, recommending that shareholders support the Garg Group's proposals. Its analysis questioned the board's rationale and timing in removing Garg and cited Better's performance during the two years preceding the leadership change.
What It Means
The control fight is playing out while Better continues to operate a sizable mortgage and home-equity business and attempts to expand its technology platform.
Better funded $1.67 billion in loans during the second quarter, up 38% from a year earlier. Net revenue totaled $54.7 million, while the company recorded a $30.6 million net loss. Platform loan volume reached $912 million, or 55% of total loan volume.
The company is also continuing a search for a permanent CEO while pursuing cost reductions, a potential sale of its U.K.-based bank, and the planned launch of a wholesale program powered by TinmanGo, according to the special committee.
Garg has laid out his own operating proposal. His 90-day plan calls for increasing quarterly funded-loan volume to $2 billion, eliminating what he described as approximately $4 million in monthly cash burn, pursuing additional partnerships, and establishing a share-repurchase program of up to $30 million using proceeds from a proposed sale of Better's U.K. bank and other sources.
He reiterated several of those priorities in a Sept. 17 social media video subsequently filed with the SEC, including selling the U.K. bank, pursuing a stock buyback after a sale, closing five prospective partnerships, improving conversion, and moving the company toward profitability.
For mortgage professionals, that leaves a consequential corporate dispute unfolding alongside Better's efforts to grow its origination and technology businesses.
And the central question in the latest round remains unresolved.
Garg's group says holders representing more than 46% of Better's voting power have submitted written consents supporting its proposals. Better says the actual support is nowhere near that level.
Until the consents are formally delivered and the results independently verified, the final level of shareholder support remains unknown.
Timeline: The Better-Garg Board Fight
Date | What Happened |
|---|
Aug. 3 | Better announces Vishal Garg is stepping down as CEO and names board member Daniel Lewis interim CEO. Garg remains a director. |
Aug. 7 | Lewis says Better will miss its September adjusted EBITDA break-even target and outlines a reset focused on costs, contribution margins and profitable partnership growth. |
Aug. 13 | Better says Garg was fired rather than leaving through a mutually agreed transition after Garg moves to oust five directors and claims majority shareholder support. |
Aug. 17 | Better says Garg does not have enough shareholder support to remove a majority of its directors as the dispute develops into a formal fight for shareholder votes. |
Aug. 18-19 | Better sues Garg in federal court, alleging securities-law violations involving his disclosures and solicitation activities. Garg's subsequent filing acknowledges an "administrative error" left his earlier consents short of a majority. Garg disputes Better's allegations. |
Aug. 20 | Better adopts a limited-duration shareholder rights plan, commonly known as a poison pill, with a 15% ownership trigger as Garg continues soliciting shareholder support. |
Aug. 21 | Garg delivers a written consent establishing the record date for the solicitation. His definitive consent statement later identifies Oct. 20 as the 60-day deadline for delivery of valid, unrevoked consents. |
Aug. 24 | Better's board argues Garg should have no continuing operating role while pointing to its permanent CEO search, cost reductions and planned wholesale expansion. |
Aug. 26 | A court filing reveals Better offered Garg a vice chairman and advisory role potentially worth more than $15 million three days after removing him as CEO. Better says the proposal was intended to facilitate an orderly transition without restoring operating control. |
Aug. 28 | Better's special committee discloses that several heavily promoted partnerships had generated less than $50,000 each, adding questions about the economics of the company's enterprise strategy to the governance fight. |
Aug. 31 | Better publicizes a Proxyanalyst review using Claude, Gemini, Grok and OpenAI models, all of which recommended against Garg's proposals under the analysis methodology. A federal judge also declines to immediately halt Garg's solicitation while Better's lawsuit proceeds. |
Sept. 3-4 | Garg releases a 90-day operating plan targeting $2 billion in quarterly funded mortgage volume, elimination of monthly cash burn and a potential $30 million share repurchase. Better's board calls the proposal "unworkable." |
Sept. 8-9 | Garg moves his consent collection target from Sept. 8 to Sept. 18. Proxy adviser Institutional Shareholder Services recommends shareholders oppose Garg's effort to remove the five directors. |
Sept. 16-17 | Glass Lewis joins ISS in recommending against Garg's proposals, while Egan-Jones recommends supporting them. The split comes as Better attempts to preserve and expand its Tinman strategy without restoring Garg to operational control. |
Sept. 18 | Garg identifies Bing Gordon, David Heidecorn and Steve Sarracino as potential director candidates and moves his consent collection target to Oct. 2. His filing indicates the candidates would not automatically join the board if the five directors are removed. |
Sept. 21 | Garg says holders representing more than 46% of Better's voting power have submitted written consents supporting his proposals. His filing describes the count as preliminary, says it has not been independently verified, and notes that it can change through revocations. |
Sept. 22 | Garg accuses Better of failing to provide shareholder information his group says it needs to communicate directly with some investors and repeats the 46% support claim. |
Sept. 23 | Better disputes Garg's 46% figure, saying he has "not obtained consents from anywhere near" that level. Better also says it provided Garg's counsel with three requested shareholder lists. The final level of shareholder support remains unverified. |
Oct. 2 | Current Garg Group target date for shareholders to submit consents. It is the campaign's collection target rather than the ultimate deadline identified in Garg's definitive consent statement. |
Oct. 20 | Garg's definitive consent statement identifies this as the 60-day deadline for delivery of valid, unrevoked consents following the Aug. 21 earliest-dated written consent. |
Source: NMP reporting, Better Home & Finance and Garg Group SEC filings, company statements, and federal court proceedings. Claims made by either side are attributed accordingly.
