Dye & Durham ex-CEO Matthew Proud rejoins board of embattled software company

Dye & Durham Ltd. has made peace with former chief executive officer Matthew Proud, who is rejoining the board nearly two years after he left the company under pressure from an activist investor.

The Toronto legal software company said Thursday it had reached standstill and voting support agreements with its two largest shareholders – Mr. Proud’s holding company Plantro Ltd. and Toronto fund manager EdgePoint Investment Group, which control a combined 36 per cent of the stock. The agreements last until next September. The deal ends all ongoing litigation between Plantro and D&D.

“Dye & Durham is a great business,” Mr. Proud told The Globe and Mail. “I’m excited to see stakeholders come together around a shared vision for creating long-term value after a few challenging years.”

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He said he plans to “collaborate closely with the board and management to drive long term performance” at D&D.

Under its new agreement, Edgepoint gets to nominate a director; its choice is firm partner Lee Matheson.

Mr. Proud joins the board as Plantro’s nominee, under an agreement dating to when D&D went public in 2020 giving him the right to nominate a director. His current nominee, Norman Findlay, will stay put until next month’s annual meeting.

Another ex-D&D director, Peter Brimm, is rejoining the board. Software executive Patrick Dennis becomes a board observer.

“With our Board and our largest shareholders behind us, our teams can put their full attention where it belongs – on our platform, our products, and the customers who rely on us every day,” D&D interim CEO Todd Schulte said in a release.

Mr. Matheson said in the statement “these agreements provide the stability the company needs and we believe this sets the stage” for D&D to improve its operating performance and balance sheet.

It’s the latest chapter in one of Canada’s longest-running corporate soap operas. The trouble began after some investors – including Matt’s brother Tyler Proud and Edgepoint – grew disaffected by the company’s governance and leadership after a debt-fueled acquisition binge. Those investors supported an activist campaign led by New York’s Engine Capital Management LP in 2024 that forced Matt Proud’s exit and a board overhaul.

But the Engine board failed to deliver quick changes as promised. D&D’s results disappointed and the company was hit with a cease-trading order after it was late filing audited financial statements last year. Mr. Proud engaged in his own successful proxy challenge to add directors to the board and made several conditional bids to buy D&D.

Meanwhile, Tyler Proud turned on the Engine-led board last fall with his own proxy challenge. That prompted the departure of Engine founder and D&D chair Arnaud Ajdler, and the appointment of several directors Tyler had proposed. Tyler also soured on CEO George Tsivin, who he had a hand in hiring last year, and was on the board when Mr. Tsivin was oustered in June. There was more director turnover this year and from June through September, Tyler Proud led D&D as chair of a special board committee that assumed leadership.

Tyler Proud, a one-time D&D chairman when it was a private company, remains a director under a long-standing agreement with the company that allows him to nominate one board member. He is also subject to a standstill deal that ends next September.

With its governance issues settled, D&D faces other challenges. A weak housing market and increased competition have weighed on results. (Its main software products help real estate professionals to manage transactions.) D&D has a high debt-to-operating earnings ratio of 9.5-times and limited financial flexibility. In June, S&P Global downgraded its junk-level credit rating to CCC+.

D&D stock, which topped $50 a share in 2021, has lost more than 60 per cent of its value this year, trading below $2 recently.

The board quietly shelved a sales process for the whole company earlier this year, although it is still open to selling its financial services unit.