The letter followed a controversial private conversation on June 23, during which a larger group of executives at Enthusiast asked Montgomery to resign, according to current Enthusiast employees familiar with the discussion. The showdown took place at a scheduled weekly executive leadership meeting and was attended by the company’s c-suite, as well as several company vice presidents.
Three of the letter’s signatories declined to comment when approached by The Washington Post. One signer could not be reached.
“Enthusiast Gaming values each of its dedicated employees,” Eric Bernofsky, Enthusiast’s Chief Corporate Officer, wrote in a statement to The Post. “Since joining our current leadership, we have dramatically improved our financial performance and significantly increased our exposure to public markets.”
For Enthusiast, owner of a number of video game-focused publications and brands, such as Upcomer and Addicting Games, as well as the esports organization Luminosity Gaming, the internal call for the CEO’s resignation follows a month of bad news. On May 24, investment firm Greywood Investments, Enthusiast’s largest shareholder, announced a campaign to replace the CEO and board of directors with its own list of nominees, citing “serious concerns” about the direction of the Toronto-based company.
“Greywood was not involved in any meetings or letters between Enthusiast’s senior leaders and CEO,” said Joel Shaffer, a Greywood spokesperson, in response to questions from The Post.
Investment firm launches campaign to oust CEO and board of Enthusiast Gaming
In his statement to The Post, Bernofsky suggested that Greywood’s campaign was at odds with the interests of other shareholders.
“Greywood Investments, a newly formed entity that is proxying Enthusiast Gaming, has no plan, no funding and no management team to run the company,” Bernofsky said. “To mask these facts, Greywood has resorted to a campaign of distortion, endangering shareholder value. Enthusiast is confident in the support of its shareholders for its strategy to build the largest media and content platform for video game and esports fans to connect and engage globally.”
In Thursday’s executive leadership meeting, Montgomery was questioned about the distribution of equity among the workforce. The CEO told attendees that in 2022, according to a current Enthusiast employee familiar with the discussion, by 2022 about 80% of the restricted shares, traditionally awarded as employee incentives, would be distributed among the board and the c-suite. . In the letter to Enthusiast’s board of directors, that 80% is cited as a factor in the group’s decision to request Montgomery’s resignation.
The executives who confronted Montgomery during the conversation told the CEO they felt the company was adrift, and said they believed the leadership was not living up to its strategic objectives, according to multiple current Enthusiast employees familiar with the content of the conversation.
In March, Enthusiast abruptly fired a significant portion of the editorial board of his esports and gaming news website Upcomer. The layoffs followed dramatic changes in traffic targets for the team, as well as the sidelining of former Enthusiast founder Menashe Kestenbaum, who initially favored the vertical, according to Digiday. Kestenbaum declined to comment on this article, citing the advice of his lawyers.
Similarly, Luminosity Gaming, a subsidiary of Enthusiast, unexpectedly announced on June 2 that it was leaving the competitive “Valorant”. At the time, their “Valorant” team was on one of its best performances to date, reaching the North American playoffs in the Valorant Champions Tour. On Monday, the high-performing Luminosity roster and coach were handed over to another organization, Shopify Rebellion.
“The company really isn’t operating at 100% capacity,” said a current Enthusiast employee, speaking on the condition of anonymity as they were not authorized to speak to the press. “We have employees that I know are handling vacancies. I get vacancies. Because even if the economy is bad, we have some very good people at Enthusiast.”
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On June 7, Greywood announced it plans to nominate Shinggo Lu, a current Enthusiast employee and co-founder of U.GG, a “League of Legends” analytics platform and a recent Enthusiast acquisition, to the new management. Lu shared the news in an Enthusiast Slack channel with more than 250 employees, begged other employees to ask him questions, and sparked a lively but largely cordial conversation between the staff and some members of the company’s leadership about the direction and treatment of employees by Enthusiast, according to reports viewed by The Post.
Some of Lu’s posts were later deleted. In a post shared on the channel and viewed by The Post, Lu wrote: “The above posts have been removed as I have been told they are defamatory and misrepresented. My apologies for accidentally posting misinformation on this employee channel.”
On June 13, Enthusiast announced its own list of proposed board members, including six incumbent directors and three new nominees. Only one director declined to seek reelection: Francesco Aquilini, the Canadian investor whose family-owned company, the Aquilini Investment Group, owns the Vancouver Canucks NHL team.
“I am grateful for my time on the Board of Directors 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 that Greywood is acquiring increasing stakes in Enthusiast. In those filings, Greywood is described as an investment manager for a company called Vantage Trading and a number of other investment vehicles mainly managed by the investors Sasha Szabo and Marc Preston.