Further details have emerged of the feud between the founders of CDA Health and Cronos Australia as both parties prepare for a tense shareholder meeting next month.
In a notice of the firm’s annual general meeting, Cronos revealed it fired its former chief medical officer and director Dr Ben Jansen, claiming “a repeated pattern of inappropriate behaviour, lack of judgement and poor performance”.
Cronos announced in June that the CDA co-founder would step down from his medical role, but offered no explanation at the time. He formally departed the company in September.
Cronos chief executive Rodney Cocks and executive director Guy Headley, meanwhile, were accused by Jansen’s wife, Elizabeth, of receiving excessive pay packets in an executive structure which, she claimed, created a “conflict of interest and nepotism”.
Ben Jansen’s cousin, Matua, has proposed a resolution to oust Cocks and Headley from the company, calling for the “complete separation of the board and executive management”.
A second resolution to reinstate Ben Jansen as director was withdrawn by his wife last week. In a letter to shareholders, she explained the couple “need a break from the business to spend more time with our family”.
Elizabeth Jansen, acting as trustee for Stanford Investment Trust, is the largest Cronos shareholder with 23.43% of the company, while Matua Jansen holds 9.93% through the Whanau Family Trust.
The resolution requires 50% shareholder backing to pass.
Central to the Jansen’s complaints are bonus payments of $92,000 received by Cocks and Headley, in addition to their executive salaries and share options.
In the letter, in which she defended her husband and voiced support for Matua’s resolution, Elizabeth Jansen claimed there was “no independent committee who reviewed KPIs (Key Performance Indicators) or possible bonuses, or even judged whether KPIs were met”. She added that both Cocks and Headley voted in favour of each other’s bonuses.
“These unnecessary cash bonuses would have been better spent in company expansion, for example spending on the now delayed Canview 2.0 and now increased expenses from the Canview 2.0 roll out, or on the delayed drug registration,” she wrote.
Jansen also praised her husband as a “brilliant doctor” who was the “original founding director of Cannabis Doctors Australia”.
“Ben has lectured, taught and tirelessly worked on behalf of the company since its inception” she wrote. “Ben is honourable and outspoken which… had put him in conflict with those who have sought to pay themselves more and more money and benefit. Ben is about patients-over-pay.”
Cronos dismissed the claims as the “attempt of a disgruntled former executive to reshape the narrative and misconstrue the truth”.
“In the board’s view, it contains mistruths, half-truths, and selective omissions in an attempt to besmirch and harm the reputation of the company, its board and its executives,” Cronos said.
“This is done at a time when the company has delivered strong operational and financial results for shareholders and declared its first-ever dividend.”
Among those benefitting were the Jansens, who received a fully-franked dividend of more than $1.25m “in respect of the shares held by E. Jansen in which Benjamin Jansen has a relevant interest”, it added.
In urging shareholders to vote against the resolution, Cronos said it “categorically rejects” the claim that “mercenary executives” deprived strategic projects of investment.
It said the executive incentives at the centre of the row had previously been supported by Elizabeth Jansen when her husband was a company director.
“Benjamin Jansen… also received similar incentives during this time,” Cronos added, noting that all renumeration packages had been detailed in the Cronos-CDA Health merger document at the end of 2021.
The company also picked apart the resolution of Matua Jansen who, in his own letter to shareholders, argued that there must a “complete separation of the board and the executive to avoid conflicts of interest regarding wages and incentives paid”.
“Furthermore, I believe that only a committee of non-executive directors should oversee the remuneration packages of the executive,” he added.
Cronos said its nomination and remuneration committee is already “comprised entirely of independent non-executive directors and does not include the two executive directors M. Jansen is proposing to remove”.
It added: “Cronos Australia supports the widely accepted view that the board should comprise a majority of independent directors. The current board satisfies this requirement with 60% of the current directors, including the interim chair, being independent”.
The “overarching reason” why shareholders should reject the resolution, it said, is because Cronos “not only meets all of the external requirements for good governance, but also includes an appropriate balance of oversight and detailed knowledge of the company and its operations”.
Cannabiz has approached Ben Jansen for comment.