NEW YORK–(BUSINESS WIRE<\/a>)– \nThe Radoff-Sudbury Group has nominated three highly qualified and independent candidates \u2013 Dayton Judd, Michael Lohner and Bradley L. Radoff \u2013 for election to LifeVantage\u2019s Board of Directors (the \u201cBoard\u201d) at the Annual Meeting and issued the following letter to the Company\u2019s stockholders.<\/p>\n \n***<\/p>\n \nFellow Stockholders,<\/p>\n \nThe Radoff-Sudbury Group owns approximately 12.8% of LifeVantage, signaling our strong alignment with your interests and all Company stakeholders. We believe that LifeVantage\u2019s health products, sales model and growth strategy have the potential to create significant value over the long-term. Regrettably, this potential has been hindered over the past decade by Chairman Garry Mauro and certain over-tenured directors, who lack relevant experience, have delivered persistently poor performance and taken actions that run directly counter to stockholders\u2019 interests.<\/p>\n \nWe believe the time for stockholder-driven change is now. That is why we have attempted to engage privately and constructively with LifeVantage for the past several months on a viable Board refresh that includes stockholder representatives and designees. Unfortunately, these efforts have been met with fierce resistance that likely stems from the fact that Mr. Mauro has served as Chairman for nearly 10 years<\/span> and on the Board for more than 15 years<\/span><\/b> \u2013 and appears intent on spending millions in stockholder resources to further entrench himself. This is particularly troubling when considering the immense destruction of stockholder value<\/b> that has occurred during his tenure.<\/p>\n \nIn light of these facts, the Radoff-Sudbury Group has nominated director candidates with relevant capital allocation, direct selling, wellness industry C-suite and public company board experience to LifeVantage\u2019s Board. Notably, two of our director candidates are significant long-term stockholders, meaning our interests are squarely aligned with yours. Voting for Dayton Judd, Michael Lohner and Bradley L. Radoff on the BLUE<\/span> Proxy Card<\/b> ahead of this year\u2019s Annual Meeting can help ensure stockholder perspectives are appropriately considered in LifeVantage\u2019s boardroom. Our director candidates are fully committed to helping ignite a lasting turnaround following a decade of poor performance and anti-stockholder governance.<\/p>\n THE CASE FOR CHANGE: THE BOARD\u2019S MISMANAGEMENT AND LACK OF ACCOUNTABILITY HAS DESTROYED VALUE FOR LIFEVANTAGE STOCKHOLDERS<\/i><\/b><\/p>\n \nWhether it stems from the Board\u2019s limited stockholdings or lengthy tenure of certain directors, the reality is that a great deal of stockholder value has been erased under Mr. Mauro and the incumbent directors\u2019 watch. While Mr. Mauro served as Chairman over the last decade, stockholders have watched the value of their investment decline more than 70%<\/b>. Meanwhile, relevant indices have more than doubled over the same time period.<\/p>\n \n\u00a0<\/p>\n<\/td>\n 1-Year TSR<\/b><\/p>\n<\/td>\n 3-Year TSR<\/b><\/p>\n<\/td>\n 5-Year TSR<\/b><\/p>\n<\/td>\n 10-Year TSR<\/b><\/p>\n<\/td>\n<\/tr>\n \nLifeVantage Corporation<\/p>\n<\/td>\n 26.71%<\/b><\/p>\n<\/td>\n -60.64%<\/b><\/p>\n<\/td>\n -53.69%<\/b><\/p>\n<\/td>\n -70.02%<\/b><\/p>\n<\/td>\n<\/tr>\n \nS&P 500 Consumer Staples<\/p>\n<\/td>\n \n\u00a03.31%<\/p>\n<\/td>\n \n\u00a029.66%<\/p>\n<\/td>\n \n\u00a064.64%<\/p>\n<\/td>\n \n\u00a0141.13%<\/p>\n<\/td>\n<\/tr>\n \nS&P 500 Household & Personal Products Industry Group Index<\/p>\n<\/td>\n \n\u00a02.02%<\/p>\n<\/td>\n \n\u00a012.03%<\/p>\n<\/td>\n \n\u00a080.30%<\/p>\n<\/td>\n \n\u00a0122.30%<\/p>\n<\/td>\n<\/tr>\n \nRussell 2000 Index<\/p>\n<\/td>\n \n\u00a0-0.88%<\/p>\n<\/td>\n \n\u00a025.92%<\/p>\n<\/td>\n \n\u00a021.67%<\/p>\n<\/td>\n \n\u00a0109.43%<\/p>\n<\/td>\n<\/tr>\n<\/table>\n Source: Bloomberg. Calculated as of market close on August 10, 2023, the last day prior to the public announcement of the nomination of the Radoff-Sudbury Group\u2019s nominees.<\/i><\/p>\n \nThough the directors we are seeking to replace will undoubtedly try to convince stockholders that LifeVantage\u2019s one-year TSR justifies their continued service on the Board, do not be fooled. Recent improved performance is really just a by-product of the immense destruction of value that occurred previously during their service as directors and does not deserve praise. Despite claims that the Board\u2019s \u201ctransformation plan\u201d is working, the Company reported a drop in earnings per diluted share from $0.79 in fiscal year 2020 to $0.20 per share in fiscal year 2023. Clearly performance is still down drastically, and in our view, the Board does not deserve stockholder support for taking one step forward after ten value-destructive steps back. The<\/b>LifeVantage Board, under Mr. Mauro\u2019s leadership as Chairman, has been delivering<\/b>persistently poor performance for over a decade<\/b>.<\/p>\n \nWe believe LifeVantage is a fundamentally sound business that has been mismanaged by a Board lacking capital allocation, wellness industry and public company governance experience. In our view, the Company should be delivering double-digit EBITDA margins, but instead delivered a $10 million guidance miss in 2022 (even with aggressive EBITDA adjustments). And though revenue levels have recently steadied, in our view, there is not enough accountability at the Board-level to generate meaningful returns for stockholders. Over the past several years, the number of LifeVantage distributors and active customers has been in perpetual decline. We believe new, stockholder-aligned perspectives are needed in the boardroom to better understand why this is the case, particularly since the success and growth of LifeVantage\u2019s business is \u201cprimarily based on the effectiveness of our independent consultants\u2019 [ability] to attract customers and sell our products and our ability to attract new and retain existing independent consultants.\u201d1<\/sup><\/i><\/p>\n \nEqually concerning is the Board\u2019s erraticness when it comes to capital management. Stockholders should look no further than LifeVantage\u2019s 10-year, $30 million deal inked with major league soccer team Real Salt Lake for jersey and stadium sponsorship. At the time of announcement, sports media described the deal as \u201cone of the league\u2019s largest\u2026about $1.3 million more per year than the team\u2019s naming-rights deal to Rio Tinto Stadium, and three times more per year than what was being paid”<\/i> by the original sponsor.2<\/sup> Real Salt Lake marketing and event costs have been a significant drag on LifeVantage\u2019s selling, general and administrative expenses over a period in which the Company also destroyed significant stockholder value.<\/p>\n \nWe also question the Board\u2019s decision to commit to an 11-year lease for office space just outside Salt Lake City that will cost LifeVantage approximately $17.3 million by the end of 2031.3<\/sup> The Company is paying a premium per square foot compared to average asking price in the Salt Lake City region and will pay an astounding $1.89 million in 2031 alone for just two floors of office space.<\/p>\n \nIt seems proper checks and balances are missing from the boardroom when it comes to allocating capital to accretive investments that will improve the Company\u2019s bottom line. Perhaps this is due to the fact that directors serving on key committees lack legitimate financial or capital allocation experience. Mr. Mauro, in particular, is a Texas politician with seemingly no relevant business experience, while Michael Beindorff (who has served on the Board for nearly 12 years) and Darwin Lewis (who has served on the Board for over 6.5 years) possess marketing and sales backgrounds. We find it especially concerning that Mr. Lewis serves as Audit Committee Chair when he is a sales and operations executive with no apparent financial or audit experience.<\/p>\n \nWe believe that the directors serving on the Audit Committee \u2013 Messrs. Beindorff, Lewis and Mauro \u2013 should be held responsible for LifeVantage\u2019s poor capital allocation decisions, considering one of the committee\u2019s key functions is to review the performance of the Company\u2019s investments and recommend modifications to the rest of the Board. This is just one of the reasons why we are seeking to replace these three long-tenured directors with our highly qualified director candidates, all of whom have substantial finance and accounting experience, and two of whom have experience serving as Audit Chair at other publicly traded companies.<\/p>\n THE CASE FOR CHANGE: ANTI-STOCKHOLDER ACTIONS AND POOR GOVERNANCE UNDER MR. MAURO\u2019S 10-YEAR REIGN AS CHAIRMAN<\/i><\/b><\/p>\n \nWhile the Board\u2019s mismanagement of capital is concerning, the most egregious decisions made under Mr. Mauro\u2019s \u201cleadership\u201d as Chairman have been those that seek to entrench the current directors at the expense of the Company\u2019s stockholders. Ahead of this year\u2019s Annual Meeting, it is essential investors have all the facts related to the Board\u2019s track record and specific anti-stockholder actions taken in recent months:<\/p>\n Perhaps the current directors\u2019 focus on protecting their own positions and maintaining the status quo at LifeVantage stems from the fact that<\/i><\/b>our group owns significantly more stock than the entire Board and management team combined.<\/i><\/b> Further, almost all of the shares owned by the current directors were granted to them \u2013 despite the Company\u2019s horrible performance \u2013 through aggressive share grants that dilute the value of the stock purchased by the rest of us. The Board\u2019s misalignment with its stockholders must come to an end. By adding stockholder representatives and designees to the boardroom, we can ensure that the Company begins to operate with a true owner\u2019s mindset to help LifeVantage begin delivering enhanced value for all stakeholders.<\/p>\n THE PATH FORWARD: HIGHLY QUALIFIED DIRECTOR CANDIDATES WHO WOULD BRING ADDITIVE EXPERIENCE AND STOCKHOLDER PERSPECTIVES TO LIFEVANTAGE\u2019S BOARDROOM<\/i><\/b><\/p>\n \nThe three highly qualified director candidates we have nominated to represent a minority of LifeVantage\u2019s seven-member Board were selected to address experience gaps and enact much-needed change in the boardroom. Notably, two of our nominees \u2013 Dayton Judd and Bradley L. Radoff \u2013 each beneficially own approximately 6% or more of the Company\u2019s outstanding stock,4<\/sup> meaning they each own far more than all of the independent directors combined. Additionally, our nominee Michael Lohner would bring extensive direct selling industry experience to the Board, which is highly relevant experience that the majority of the Board is lacking.<\/p>\n \nWe encourage stockholders to closely review the summarized biographies below before deciding whether to vote for long-tenured directors who have destroyed significant value, or for new, independent directors with real skin-in-the-game who will be committed to acting in stockholders\u2019 best interests:<\/p>\n Dayton Judd<\/b><\/p>\n Mr. Judd is a Chief Executive Officer and public company financial expert with relevant consumer wellness product experience and a track record of value creation. We believe Mr. Judd would bring valuable experience in the areas of audit, corporate finance and capital allocation to LifeVantage\u2019s Board.<\/i><\/p>\n Michael Lohner<\/b><\/p>\n Mr. Lohner has extensive experience as an investor and as an executive of companies in the direct selling industry. We believe Mr. Lohner would bring valuable experience in the areas of corporate finance and capital allocation to LifeVantage\u2019s Board.<\/i><\/p>\n Bradley L. Radoff<\/b><\/p>\n Mr. Radoff is a financial expert with deep knowledge and experience in multiple industries, including consumer goods. We believe Mr. Radoff would bring a valuable perspective as a meaningful stockholder and experienced public company board member with a track record of value creation to LifeVantage\u2019s Board.<\/i><\/p>\n \nWe look forward to being in touch in the coming weeks with more information. If elected to the boardroom, our director candidates are committed to taking the steps that they believe are necessary to improve stockholder value and will ensure the Board does not lose sight of its true owners: LifeVantage stockholders.<\/p>\n \nThank you in advance for your support.<\/p>\n \nSincerely,<\/p>\n
\nBradley L. Radoff and Sudbury Capital Fund, LP (together with their affiliates, the \u201cRadoff-Sudbury Group\u201d or \u201cwe\u201d), who collectively own approximately 12.8% of the outstanding stock of LifeVantage Corporation (Nasdaq: LFVN) (\u201cLifeVantage\u201d or the \u201cCompany\u201d), today announced that they have filed a definitive proxy statement with the U.S. Securities and Exchange Commission (the \u201cSEC\u201d) in connection with LifeVantage\u2019s fiscal 2024 Annual Meeting of Stockholders (the \u201cAnnual Meeting\u201d) scheduled for November 6, 2023.<\/p>\n\n
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