Revolving door at Revolution Beauty sees CFO switch and settlement with co-founder

14 Dec 2023 --- While many companies start winding down for the holidays, Revolution Beauty is keeping busy with executive shifts and settlements.

The company says Elizabeth Lake will exit the role of CFO at the end of the year and be replaced by Neil Catto, the former CFO of Boohoo Group, which is also Revolution Beauty’s largest shareholder and has long called for shakeups at the management level.

Revolution Beauty has had a tumultuous time with Boohoo, previously calling out “hostile shareholder actions” by Boohoo, claiming the shareholder was acting in a “reckless” manner.

Chairman Alistair McGeorge says he’s confident about Catto stepping in as CFO in the new year: “Neil has been a trusted member of the board since joining five months ago, and I am pleased that he is now becoming CFO. I have no doubt that his considerable and relevant experience will prove a real asset as Revolution Beauty embarks on its next phase of growth. We are also delighted to welcome Erin. She brings a highly relevant skill set, and I am confident she will make a significant contribution to our future success.”

“On behalf of the board, I would like to express my sincere thanks to Elizabeth. Her leadership of the finance team over the past 18 months has proven invaluable in returning the business to a steady state. I wish her every success for the future.”

Boohoo requested that members of Revolution Beauty’s board step down (Image credit: Revolution Beauty).Switching roles
Revolution Beauty appointed Erin Brookes to the board to replace Lake as an independent non-executive director. Brookes is a managing director with Alvarez & Marsal (A&M) in London.

She currently leads the European Retail and Consumer Practice, specializing in retail turnaround and transformation. Prior to joining A&M, Erin spent five years at The Body Shop International, a leading global cosmetics retailer, where she held various senior commercial roles.

Company investigation
In January, Revolution Beauty released the results of an independent investigation conducted by law firm Macfarlanes and forensic accountant Forensic Risk Alliance, which divulged “a number of issues” regarding historical sales, inventory provisioning and personal loans involving former CEO and co-founder Adam Minto, who stepped down in November 2022 amid the accounting probe.

Settlement agreement
Revolution Beauty also said it came to an agreement with Tom Allsworth, the former executive chairman and co-founder of Revolution Beauty. The parties agreed to the full and final settlement of specific claims between them, with no admission or acceptance of liability by either party.

The agreement regarded the settlement of certain claims between Revolution Beauty and Allsworth, the timing of future payments relating to the prior acquisition of Medichem Manufacturing (now called Revolution Beauty Labs) from Allsworth by Revolution Beauty Holdings and Allsworth’s future role within Medichem.

Under the settlement agreement, Revolution Beauty agreed to pay Allsworth a payment of £270,000 (US$341,766) net in respect of specific historical legal fees incurred by Allsworth in connection with, among other things, the investigation of matters related to the Medichem sales and purchase agreement (SPA). Elizabeth Lake, CFO, will leave Revolution Beauty at the end of the year (Image credit: Revolution Beauty).

The investigation of Medichem relates to when Allsworth and Revolution Beauty Holdings agreed to the sale and purchase of the entire issued share capital of Medichem for a total consideration of up to £27.5 million (US$34.8 million).

As announced in March of 2023, Revolution Beauty Holdings and Allsworth varied the Medichem SPA such that the outstanding consideration payable to Allsworth would be paid in annual installments of up to £5.125 million (US$6.5 million) between October 2025 and October 2028, with interest accruing on outstanding balances at a rate of 2.5% per annum.

The new arrangements entail Allsworth staying on as “founder and director of Revolution Labs” — but he will not be a statutory director.

Revolution Beauty is still seeking a settlement agreement with Adam Minto relating to the events that led to the delay of the audit of Revolution Beauty’s FY22 results during his time as chief executive.

By Sabine Waldeck

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