Activist investor Starboard set to provoke a battle for Box

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The activist investor company has nominated four director candidates, setting the scene for a showdown.

Starboard Value LP is heating up its activism efforts at Box. The company announced this week that it has nominated four director candidates to the software company’s board of directors.

Starboard criticized recent actions from Box in a press release announcing the nominations. Starboard MD Peter Feld argued that “not enough progress has been made to put Box on a better path” to address the “years of missed expectations, poor results, and generally poor governance”.

Of course, it was these very actions that prompted Starboard to originally invest in the company back in 2019, according to MarketWatch.

One of the nominees would replace Box Chief Executive Officer Aaron Levie on the company’s board. The investment firm is asking investors to approve the candidates at the cloud-based file-sharing provider’s next annual shareholder event.

Temperature rises amid public back and forth

“Our investment thesis focused on a clear opportunity to drive profitable growth, improved capital allocation, and enhanced governance in order to address the significant valuation gap between Box and its closest peers,” Starboard stated in its letter to Box investors this week.

“Unfortunately, despite repeated promises by management and the Board to address these issues over the past two years and to create shareholder value, performance has not sufficiently improved.”

But Box refuted Starboard’s arguments in their own statement a few hours later. The company pointed out that it increased revenues by 11% during its most recent fiscal year. Box also noted it has added six independent directors to the board since 2018. 

“The Box Board of Directors does not believe the changes to the Board proposed by Starboard are warranted or in the best interests of all stockholders,” the company stated.

“The Board continues to be open to feedback from all of its stockholders, including Starboard, to drive long-term value,” they added.