Mortgage fintech Better Home & Finance is locked in a boardroom battle with its former chief executive, and it's asking shareholders to take sides. The company's special committee is urging investors to reject Vishal Garg's attempt to remove five directors, warning that the move could effectively hand him back the keys to the company.
Better, which went public in 2023 via a merger with a blank-check company, has struggled since its listing. The company has racked up more than $2 billion in net losses, and its stock has fallen sharply. Now, Garg—who still holds a board seat—is trying to reshape the board in his favor.
What exactly is Garg proposing?
Garg is using a process called a "consent solicitation." Instead of calling a special shareholder meeting, he's asking shareholders to sign written consents approving his proposal. If enough shareholders sign, the changes can be approved without a formal vote at a meeting.
His proposal would remove five current directors and replace them with his preferred candidates. The special committee argues that this would give Garg effective control of the board, and by extension, the company.
The committee's argument is simple: Garg was removed as CEO for a reason. The company's massive losses occurred during his tenure, and putting him back in charge would be a risky move for shareholders.
"The board recently determined that Mr. Garg should no longer serve as CEO," the committee said in a statement. "His proposal to stack the board with his allies would undermine that decision and could lead to him regaining day-to-day control."
Why this matters for investors
Boardroom fights like this are not uncommon in the corporate world, especially at companies that are struggling. Activist investors or former executives often try to gain influence by changing the board's composition. But this one is notable because it involves a founder and former CEO who is trying to return to power.
For everyday investors, the key question is: what's best for the company's long-term value? The current board is arguing that Garg's return would be a step backward. Garg, presumably, would argue that he has a vision to turn the company around.
Investors should pay attention to how this plays out because it could have a significant impact on Better's future direction. If Garg succeeds, the company could take a different strategic path. If he fails, the current board will continue to lead.
This situation is reminiscent of other recent boardroom battles in the financial and tech sectors. For example, activist investors have pushed for board changes at JetBlue, and other companies have moved to refresh their boards to address governance concerns.
What's at stake?
Better Home & Finance is a digital mortgage lender that aimed to disrupt the traditional mortgage industry. But the company has faced headwinds, including rising interest rates that have cooled the housing market and increased competition.
The company's losses have been substantial, and its stock price has suffered. Investors who bought in at the time of the SPAC merger have seen their shares lose significant value.
The outcome of this proxy fight could determine whether the company continues on its current path or pivots under Garg's leadership. The special committee is clearly concerned that Garg's return would not be in the best interest of shareholders.
"We believe that the current board has the right mix of skills and experience to guide the company forward," the committee said. "We urge shareholders to vote against this proposal."
What investors should watch next
Shareholders will need to decide whether to sign the consent solicitation or not. The company will likely provide more details in the coming weeks, including the deadline for submitting consents.
Investors should also watch for any statements from Garg explaining his vision for the company. If he can convince shareholders that he has a credible plan to turn things around, he might gain support. If not, the board's argument may prevail.
This is a developing story, and the outcome is uncertain. But for Better's shareholders, it's a critical moment. The decision they make could shape the company's future for years to come.
As always, it's important to remember that boardroom battles can be distracting and costly. They can also create uncertainty, which can weigh on a stock. Investors should weigh the potential benefits of a change in leadership against the risks of disruption.
In the meantime, the broader market continues to digest other news, such as Nvidia's latest earnings and signals from the Federal Reserve about interest rates. But for Better's shareholders, the focus is squarely on this proxy fight.
