8-K: RumbleOn Announces Leadership Shakeup: New CEO and COO Appointed Amidst Board Compliance Issues

RumbleOn has appointed a new CEO and COO, while also facing a temporary non-compliance issue with Nasdaq listing rules regarding board composition.

Summary

• RumbleOn announced a leadership transition, with Michael Kennedy stepping down as CEO and board member, effective January 13, 2025.
• Michael Quartieri, previously Chairman of the Board, has been appointed as the new CEO, also effective January 13, 2025.
• Cameron Tkach, formerly Vice President of Dealership Operations, has been promoted to Executive Vice President and Chief Operating Officer, also effective January 13, 2025.
• Becca Polak has been named Vice Chairman and Lead Independent Director.
• The company is temporarily not in compliance with Nasdaq listing rules because a majority of the board is not comprised of independent directors due to the CEO departure.
• RumbleOn has until the earlier of its next annual stockholders meeting or January 13, 2026, to regain compliance, or July 14, 2025, if the next annual meeting is before that date.
• The company expects to finalize separation and employment agreements with the departing and new executives, respectively, and will file amendments to this report with further details.

Sentiment

Score: 5

Explanation: The document presents a mixed picture with positive leadership changes but also a negative non-compliance issue. The sentiment is neutral to slightly negative due to the compliance issue.

Positives

• The appointment of Michael Quartieri as CEO brings a tenured C-suite executive with significant leadership, strategic planning, financial acumen, and corporate governance expertise.
• Cameron Tkach's promotion to COO leverages his 15 years of experience in the powersports industry and operational expertise.
• Becca Polak's appointment as Vice Chairman and Lead Independent Director brings a seasoned executive with a record of driving business strategy and technology transformation.
• The company has made significant progress in strengthening its balance sheet with the payoff of convertible notes earlier this month.

Negatives

• The company is temporarily not in compliance with Nasdaq listing rules due to the departure of the CEO and the resulting lack of a majority of independent directors on the board.
• The departure of the CEO and the need to finalize separation agreements may create some uncertainty.

Risks

• The company faces the risk of not regaining compliance with Nasdaq listing rules within the cure period, which could potentially impact its stock listing.
• The leadership transition may pose challenges in maintaining business continuity and executing strategic plans.
• There are risks and uncertainties related to the company's ability to implement a smooth leadership transition.
• General economic, industry, or political conditions could impact the company's performance.

Future Outlook

The company's focus will be on driving growth, improving profitability, and producing strong cash flow. The company is also focused on regaining compliance with Nasdaq listing rules.

Management Comments

• Ms. Polak stated, 'On behalf of the Board, I am extremely excited to have Mike Quartieri serve as RumbleOn's next CEO.'
• Mr. Tkach said, 'I am excited to serve as Chief Operating Officer of the Company and leverage my unique operational and strategic expertise.'
• Mr. Quartieri said, 'With the payoff of our convertible notes earlier this month, we have made significant progress in strengthening our balance sheet. As we move forward, my focus will be on driving growth, improving profitability and producing strong cash flow.'

Industry Context

The leadership changes at RumbleOn occur within the context of the powersports retail industry, where operational expertise and strategic planning are crucial for success. The company is the largest powersports retailer in North America, and these changes could impact its competitive position.

Comparison to Industry Standards

• RumbleOn's leadership transition is similar to other companies undergoing strategic shifts, but the non-compliance with Nasdaq listing rules is a specific challenge.
• The appointment of a new CEO with a strong financial background is a common practice in companies seeking to improve profitability and cash flow.
• The promotion of an internal candidate to COO is also a common practice, leveraging existing operational knowledge.
• The company's focus on operational excellence and market leadership is consistent with industry best practices.

Management Changes

Related Party Transactions

• Samantha Tkach, spouse of Cameron Tkach, has been employed by a subsidiary of the company since 2019 and received approximately $130,000 in compensation since the beginning of the last fiscal year.
• Mark Tkach, father of Cameron Tkach, is a holder of Class B common stock and party to certain transactions with the company as described in previous filings.

Stakeholder Impact

• Shareholders may be concerned about the temporary non-compliance with Nasdaq listing rules.
• Employees may experience changes due to the leadership transition.
• Customers may not be directly impacted by these changes.
• Suppliers and creditors may monitor the company's financial performance and compliance status.

Next Steps

• The company will finalize separation and employment agreements with the departing and new executives.
• The company will file amendments to this report with further details.
• The company will work to regain compliance with Nasdaq listing rules.
• The company will focus on driving growth, improving profitability, and producing strong cash flow.

Key Dates

Keywords

RumbleOn, Leadership Change, CEO, COO, Board of Directors, Nasdaq, Compliance, Powersports, Michael Quartieri, Cameron Tkach, Becca Polak