Large Shareholder Questions Governance of the SPAR Group Board of Directors

Rhea-AI Summary

SPAR Group's 2025 Annual Shareholders' Meeting revealed significant governance concerns as three directors, including Linda Houston, John Bode, and Michael R. Matacunas, failed to secure re-election. Despite company bylaws requiring immediate resignation upon failed re-election, these directors continue to serve until their successors are appointed. Notably, Houston and Bode, who serve on the Governance Committee responsible for nominating new directors, are now in the position of selecting their own replacements. The press release also highlights potential bylaw violations regarding board quorum requirements, as SPAR operated with only 5 directors instead of the required 7 during 2024, and failed to hold an annual shareholder meeting that year, effectively denying shareholders their voting rights.

Positive

• None.

Negative

• Three directors failed to secure re-election but continue to serve against shareholder wishes
• Two non-reelected directors on the Governance Committee are responsible for nominating their own replacements
• Company operated with insufficient board members (5 instead of required 7) during 2024
• Failed to hold annual shareholder meeting in 2024, denying shareholders voting rights
• Potential violations of company bylaws regarding board quorum requirements

Palm Beach Gardens, Florida--(Newsfile Corp. - June 23, 2025) - SPAR Group, Inc. ("SPAR") held the 2025 Annual Shareholders' Meeting on June 12, 2025 (the "2025 Shareholder Meeting"), to, among other proposals, elect nominees to the Board. Of the 7 nominees for election to the Board, 3 of the then-serving directors nominated for reelection were not reelected.^[1]

Section 3.11 (Director Re-election) of the SPAR Amended and Restated Bylaws, as amended through January 25, 2022 (the "Bylaws"), states that: "A person shall not be qualified for election or reelection as a director unless he or she tenders, before his or her election or re-election, a written irrevocable letter of resignation and retirement (which shall constitute an irrevocable resignation for purposes of DGCL Section 141(b)), pursuant to which the departing director shall be deemed to have retired for all purposes (including all plans and other benefits) which letter shall be effective as and when, and effective upon, such person failing to be re-elected by the required majority vote at any future meeting of stockholders at which such person is subject to re-election."

The Form 8-K, filed by SPAR with the SEC on June 18, 2025, states, "in each nominee's Resignation Letter, each nominee has agreed to retire if not reelected effective when [']my successor has been duly elected or appointed and seated on the Board[']."^[2]

Furthermore, 2 of the 3 directors who were not re-elected are also members of SPAR's Governance Committee,^[3] which is tasked with nominating directors (i.e., these directors are in charge of nominating to the Board their own replacements).^[4]

The Board, given the Bylaws, should review its good governance standards and ability to fulfill the Board's fiduciary responsibility to the shareholders to have directors not reelected by the shareholders nevertheless: (1) continuing to serve on the Board in breach of the Company by-laws, and (2) in the case of Linda Houston and John Bode (as members of the nominating committee), be responsible for the timing and selection of nominating their respective replacements.

For and Against votes for the directors not reelected were as follows:

Linda Houston	8,041,083	For;	9,714,561	Against
John Bode	8,023,093	For;	9,747,031	Against
Michael R, Matacunas	7,282,163	For;	10,473,481	Against

 

Section 3.06(a) of the Bylaws says, "At each meeting of the Board the presence of the Required Number (as defined below) of its members then serving in office shall be necessary and sufficient to constitute a quorum for the transaction of business. . . . [']Required Number['] shall mean at least 70% of its members, including a majority of the Super Independent Directors, then serving in office...absence of a quorum, a majority of those present at the time and place of any meeting may adjourn the meeting from time to time until a quorum shall be present and the meeting may be held as adjourned without further notice or waiver."

Section 3.01 of the Bylaws says, "The number of directors that shall constitute the whole Board shall be seven (7)."

The Board is asked to review if the initial nomination and appointment of Linda Houston and John Bode occurred at a meeting of the Board lacking a quorum to determine if the election of Linda Houston and John Bode complied with the Bylaws (including Section 3.11 of the Bylaws), adhered to standards of good governance and was in the best interests of the shareholders. After these two directors were appointed to the Board as of October 1, 2023, the Board consisted only of 5 directors from January 1, 2024,^[5] through December 31, 2024^[6] (including the three directors not re-elected by the shareholders at the 2025 annual shareholder meeting), and the Company did not have an annual shareholder meeting in 2024.^[7] These failures deprived the shareholders an opportunity to elect directors in 2024.

The Governance Committee is composed of three members,^[8] two of whom were not re-elected to the Board, and are responsible for vetting and recommending nominees for new directors for the Board.^[9] The Board should review their governance policies which allow directors not re-elected to the Board by the shareholders to remain on the Board until a successor is named, with the authority to determine who will be nominated as successor directors.

There are substantive reasons for concern that the Board may not be following good governance or fulfilling their fiduciary responsibility to shareholders by allowing directors not re-elected by the shareholders to remain on the Board until such time as the directors who were not re-elected nominate successors to themselves.

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^[1] SPAR Grp., Inc., Current Report (Form 8-K) (June 18, 2025).
^[2] Id.
^[3] Board of Directors, SPAR https://investors.sparinc.com/board-of-directors (last visited June 20, 2025).
^[4] Art. IV, Section 6(a)-(d) of the Governance Committee Charter, available at https://investors.sparinc.com/static-files/f794141d-fa89-4692-b5cd-ac2d7a250b13; Section 8 of the Statement of Policy Regarding Director Qualifications and Nominations, available at https://investors.sparinc.com/static-files/4171707d-9903-42bd-b344-eb2840cd6b20.
^[5] SPAR Grp., Inc., Current Report (Form 8-K) (Oct. 4, 2023); SPAR Grp., Inc., Definitive Proxy Statement (Form DEF14A) (Oct. 13, 2023).
^[6] SPAR Grp., Inc., Current Report (Form 8-K) (May. 6, 2025).
^[7] SPAR Grp., Inc., Current Report Exh. 99.1, (Form 8-K) (Jan. 3, 2025).
^[8] Art. II, Section 1 of the Governance Committee Charter, available at https://investors.sparinc.com/static-files/f794141d-fa89-4692-b5cd-ac2d7a250b13;
^[9] Board of Directors, SPAR https://investors.sparinc.com/board-of-directors (last visited June 20, 2025).

IMPORTANT NOTICES:

THIS IS NOT A PROXY SOLICITATION AND NO PROXY CARDS WILL BE ACCEPTED. PLEASE DO NOT SEND ANY PROXY FORMS TO MR BROWN.

THE INFORMATION CONTAINED HEREIN HAS BEEN PREPARED FROM SOURCES BELIEVED RELIABLE BUT IS NOT GUARANTEED BY MR. BROWN AS TO ITS TIMELINESS OR ACCURACY, AND IS NOT A COMPLETE SUMMARY OR STATEMENT OF ALL AVAILABLE DATA. THIS DOCUMENT IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RESEARCH REPORT.

For questions regarding the matters set forth above, please contact Robert Brown via email at rbrown6@msn.com.

Disclaimers

The views expressed herein are those of Mr. Brown as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be a forecast of future events or a guarantee of future results. These views may not be relied upon as investment advice. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. This document is rendered solely for informational purposes.

This filing is not an attempt to either appoint or remove any director.

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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/256459

FAQ

What happened at SPAR Group's (SGRP) 2025 Annual Shareholders Meeting?

Three directors failed to win re-election: Linda Houston, John Bode, and Michael R. Matacunas, with each receiving more 'Against' than 'For' votes from shareholders.

Why are SGRP's non-reelected directors still serving on the board?

Despite failing re-election, they continue to serve until their successors are appointed, based on their resignation letters stating they will retire when successors are elected and seated.

What are the main governance concerns raised about SPAR Group (SGRP)?

Key concerns include directors continuing to serve after failed re-election, non-reelected directors nominating their replacements, operating with insufficient board members, and failing to hold a 2024 annual meeting.

How many directors should SPAR Group (SGRP) have according to its bylaws?

SPAR Group's bylaws require seven directors to constitute the whole Board, but the company operated with only five directors during 2024.

What was the voting outcome for the three non-reelected SGRP directors?

Linda Houston received 8,041,083 For vs 9,714,561 Against, John Bode received 8,023,093 For vs 9,747,031 Against, and Michael Matacunas received 7,282,163 For vs 10,473,481 Against votes.