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A battle between Box and its controlling shareholder Starboard Value for control of the board ended today when the company’s roster easily beat that of Starboard. This resulted in months of maneuvering on both sides as they fought for control of the company.
Box, in a somewhat generic statement, expressed gratitude for the results:
Box appreciates the support and insight we have received from our shareholders throughout this process. The Board of Directors and management team will remain focused on continuing to transform Box and execute Box’s strategy to grow profitably and deliver meaningful value to all Box shareholders.
In contrast, as might be expected, Starboard was not happy with the outcome and did not hide it in a letter to shareholders released earlier today.
“We are certainly disappointed with the results of this election, which were heavily skewed by the voting rights associated with the preferred stock financing and the use of share capital to aggressively buy back shares before the date of registration with shareholders. likely to support change. At this point, the future of Box is in the hands of the board, and there is still a lot of work to be done. Many commitments have been made and we hope that Box will finally be able to deliver on its promises to improve results, accountability, governance and compensation practices, ”CEO Peter A. Feld wrote in the letter.
It all started when Starboard Value invested in Box, taking a 7.5% stake, which eventually grew to 8.8% in the company. With this stake, she became one of the major shareholders, but remained relatively calm until March of this year. It was then that public rumors began that Starboard was unhappy with the direction of the company, a conflict that could ultimately have resulted in the ousting of founder and CEO Aaron Levie or the sale of Box.
The situation took an interesting turn when Box announced it was taking a $ 500 million investment from KKR, a move Starboard strongly opposed and made clear in a letter published in early May that it wanted important changes are taking place. As we wrote at the time:
Although they wrote the letter in mostly polite language, it’s clear Starboard is infuriated by Box. “While we appreciate the dialogue we have had with the management team and the Board of Directors of Box (the ‘Board’) over the past two years, we are increasingly frustrated by poor results, questionable capital allocation decisions and lower returns to shareholders. Starboard wrote in his letter.
Less than a week later, Starboard stepped for the board seats and the battle was on for control. Box’s position was bolstered by two decent income reports ahead of the vote; the company took the unusual step of releasing the results earlier in order to give voters this information ahead of the vote.
The company also took the unusual step of filing a document with the SEC that pushed back Starboard’s nominee list. Ultimately, Box won the battle. Alan Pelz-Sharpe, founder and senior analyst at Deep Analysis, which oversees the content management space where Box has operated for years, sees this as a victory for Levie and Box.
“It was no surprise to me that Box won the day. In my opinion, Starboard misinterpreted and underestimated the loyalty generated by Aaron Levie. The point is that for most of Box’s employees and investors, the business is a success, and they also know that the customer base is quite engaged and that there is a lot of room for future growth, ”he said. -he declares.
“For Box, this vote of confidence means that they can (if they wish) make acquisitions and invest more in R&D in the future, without an aggressive investor constantly looking over their shoulder,” Pelz-Sharpe added.
It’s hard to know what will happen next, but Starboard is still holding its actions for now, and it still has some influence over those numbers. Throughout his tenure, Box has performed better, as recent earnings results have shown, and the company says that remains the ultimate goal.
“As we have said on several occasions, our sole focus has been to help Box perform better and adopt best practices in operational performance, financial results, governance and compensation in order to create value. long term for the benefit of all shareholders. We will continue to monitor Box’s progress and hope to see the company embrace the changes catalyzed by our involvement and create long-term value, ”Feld of Starboard wrote.
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