Time to Build Better Corporate Governance at BETR

Better Home & Finance Holding Co. (Nasdaq: BETR) ousted founder & CEO Vishal Garg in early August coup led by interim replacement, Orange Capital Managing Partner Daniel Lewis

Better Home implemented poison pill on Aug. 20, potentially preventing Mr. Garg from naming his own specific slate of directors

Garg instead proceeded with a consent solicitation asking shareholders to replace five directors, including Mr. Lewis

Even before naming board nominees, Mr. Garg's consent solicitation had over 45% of shareholder support, just shy of 50% threshold to win, according to person familiar with the matter

Such a level of support should prompt company to negotiate, according to governance expert Charles Elson, who says poison pill appears to be "an entrenchment device"

Some investors also voted with their feet: shares down 55% since Mr. Garg's ouster

In surprise announcement. Mr. Garg named three highly-qualified potential director candidates Thursday, including Silicon Valley heavyweight and Amazon director William "Bing" Gordon

Garg's slate also includes David Heidecorn, Senior Advisor and former Partner at L Catterton, Steve Sarracino, Founder and Partner, Activant Capital

Better Home & Finance Holding Co. (Nasdaq: BETR), along with other home-equity finance platforms, has faced an uphill battle amid rising mortgage rates. That is no excuse for the board's latest corporate governance stumble.

Better Home has been a pioneer in the use of AI to gauge credit risk and connect borrowers with lenders more efficiently. But as the company recently faced industrywide headwinds, one investor and director, Orange Capital Managing Partner Daniel Lewis, grew impatient and ousted founder Vishal Garg from his CEO seat in early August. Mr. Lewis is now interim CEO and the company says it's seeking a full-time replacement.

The sudden exit led to a high-stakes standoff between Mr. Lewis and Mr. Garg, which has become more complex than a typical proxy fight. On Aug. 20, the company implemented a poison pill provision, which effectively prevents Mr. Garg from working with other shareholders in a group that holds more than 15% of the outstanding stock.

As a result, Mr. Garg has taken the matter to shareholders with a so-called consent solicitation that runs through Oct. 2. The vote is essentially a referendum on five directors, including Mr. Lewis, who would be removed from the board with a vote above 50% of shares outstanding.

Many shareholders have already sided with Mr. Garg, even before knowing who he might invite to join the board. More than 45% of shareholders have cast votes in support of the consent solicitation, according to a person familiar with the matter.