Activist investor Starboard wins proxy contest against Box Inc

Sept 9 Reuters - Starboard value won a proxy contest against Box Inc after the cloud services provider's shareholders backed all three board directors the hedge fund was challenging, Box said on Thursday.

Shareholders re-elected Dana Evan, Box's co-founder and chief executive officer, as well as directors Peter Leav and Aaron Levie to the company's 10 member board.

The vote was a blow to Box that criticized Starboard afresh this year, after having settled with the company last year.

Starboard, which owns a 9.4% stake in Box, has not lost a proxy vote in nearly a decade and is widely known in the industry for having won big victories at Darden Restaurants in 2014 and at GCP Applied Technologies last year. It holds traditionally more board seats than any other activist investor, according to bankers and analysts.

What was the reason behind Box's decline in last year? Stock climbed 20% since Starboard announced in May that it was nominating candidates to the board. On Thursday it traded at $24.50, off 3.3% in late-morning trading.

Box's criticisms of Starboard centered this year about the company's decision to raise capital, as well as its track record of being a publicly traded company and its ability to deliver on commitments.

Starboard was particularly concerned by a $500 million convertible preferred offering led by private equity giant KKR, described by the hedge fund as a defensive tactic.

This year Starboard nominated three directors, including Peter Feld, one of the hedge fund's partners and its Director of Research.

Starboard launched the fight this year after having reached a settlement with Box in March 2020 that allowed it to choose one director and have input in choosing a second. Both of those directors have assumed leadership roles on the board.

Proxy advisory firm Institutional Shareholder Services recommended investors elect company directors, arguing that even though Starboard deserves credit for operational and governance changes made since last year's settlement, the current board deserves more time to bear fruit.

Glass Lewis, a rival proxy adviser, recommended that shareholders elect Feld to the board, arguing that it would make sense to add a direct shareholder representative to the board.