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RumbleOn, based in Irving, announced on Friday that its CEO, Marshall Chesrown, had resigned following claims of improper use of company resources and amid a proxy dispute.

The board appointed Mark Tkach, co-founder of RideNow, which was acquired by RumbleOn in August 2021, as interim CEO. RumbleOn is a website that sells new and secondhand motorcycles, ATVs, and other power-sport vehicles.

Tkach and Bill Coulter, managing partners of their family’s Phoenix-based auto dealer network, control 32% of RumbleOn. Tkach and Coulter have raised concerns with the board and written to shareholders urging them to vote against incumbents.

The company announced on Friday that it had struck a “agreement in principle” with Coulter and Tkach after they challenged the board’s composition and opposed RumbleOn’s proxy, which will be voted on at the company’s annual meeting on July 14. According to NASDAQ, RumbleOn has a market capitalization of approximately $170 million.

According to a federal filing on Friday, the board was informed of “certain allegations” regarding Chesrown’s “use of company resources” prior to his departure.

Tkach and Coulter claimed that a former chief operational officer was paid $3.375 million in severance after only 15 months with the company, during which time RumbleOn’s market value decreased by 80%. RumbleOn lost $11.4 million last year on revenue of $39.4 million.

“The independent directors take all such allegations seriously,” the board said in the filing, adding it has hired independent counsel to assist in an ongoing investigation. Chesrown will continue on the board, but the company has made no agreements with him as of Friday, the filing said. The board said it’s looking for a permanent CEO.

Under the agreement, the board expands temporarily from seven to nine members to allow Melvin Flanigan and Tkach to immediately join. Flanigan is the former chief financial officer of Camping World Holdings.

Coulter and Tkach haven’t been reached for comment. RumbleOn’s press release said the Coulter-Tkach group and all of the participants in their proxy statement will withdraw all existing nominations and proposals in connection with the 2023 annual meeting.

“The independent directors take all such allegations seriously,” the board stated in the filing, adding that it had recruited independent counsel to help with an ongoing inquiry. Chesrown will remain on the board, but the corporation has made no deals with him as of Friday, according to the filing. The board has stated that it is looking for a permanent CEO.

The board is temporarily expanded from seven to nine members under the agreement to allow Melvin Flanigan and Tkach to join immediately. Flanigan formerly served as Camping World Holdings’ chief financial officer.

Coulter and Tkach have not responded to requests for comment. According to RumbleOn’s news release, the Coulter-Tkach group and all participants in their proxy statement will withdraw all existing nominations and motions for the 2023 annual meeting.

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