Institutional Shareholder Services recommended shareholders support Better Mortgage's incumbent board slate over a competing nomination from founder Vishal Garg, setting the stage for a contentious vote at the digital lender valued at $7 billion in its last funding round. The proxy advisory firm's endorsement arrives three years after Garg fired 900 employees over a Zoom call, triggering his temporary removal and a public relations crisis that stalled the company's SPAC merger plans.
The ISS recommendation carries weight with institutional holders who control roughly 60% of Better's voting shares, according to filings reviewed in late 2024. Garg's competing slate seeks to install four directors aligned with his vision for the company, which has undergone multiple restructurings since abandoning its $6.9 billion SPAC combination with Aurora Acquisition Corp in November 2022. Better has since raised $565 million in private capital and refinanced $750 million in debt, though at terms reflecting a compressed valuation environment for fintech lenders.
The proxy contest exposes governance fractures at a company navigating mortgage market contraction and rising rate sensitivity. Better originated $14.2 billion in mortgages during Q4 2024, down from $26.8 billion in Q4 2021, per industry data. The company eliminated 3,000 positions across 2022 and 2023, including a second mass termination in March 2022 that reduced headcount by 900 additional employees. Garg's public statements have oscillated between contrition and defiance, complicating investor relations at a moment when digital mortgage platforms face margin compression and legacy lender competition.
For allocators, the ISS stance signals that governance hygiene matters even in growth-stage private companies with charismatic founders. Better's board composition now includes representatives from SoftBank Vision Fund, which led the $750 million Series D in 2021, and Ally Financial, which maintains a strategic partnership providing Better access to retail banking channels. The outcome determines whether the company pursues a disciplined path toward profitability or re-centers around Garg's direct influence, a distinction that matters for debt covenant compliance and future refinancing.
The shareholder vote is scheduled for the week of March 17, 2025, with proxy materials distributed to holders of record as of February 28. Watch whether SoftBank and Ally vote with ISS guidance, and whether any institutional holders publish contrary voting rationales. Also monitor whether Better files an S-1 revival in Q2 2025, a scenario that becomes less probable if Garg wins board seats and introduces execution uncertainty.
Better's forward trajectory hinges on whether mortgage origination volumes stabilize above $50 billion annually, a threshold the company has not sustained since 2022. The proxy fight is a data point on founder durability in an industry where operational discipline eclipses vision when rates remain elevated and purchase money demand stays constrained.