(Bloomberg) — Starboard Value’s efforts to revamp Box Inc.’s board are expected to fall short, with shareholders likely to elect three of the software company’s nominees at a meeting Thursday, according to people familiar with the matter.
The New York-based hedge fund had been seeking three seats on the board in an effort to improve Box’s performance and governance. Preliminary tallies show that investors rejected the activist investor’s calls for change and supported management’s three nominees, including Chief Executive Officer Aaron Levie, the people said, asking not to be identified.
The figures are preliminary and may still change ahead of the meeting, the people said.
Representatives for Starboard and Box were not immediately available for comment.
Starboard has been locked in a months-long battle with Box, arguing the company is underperforming peers and has made a series of questionable decisions, including a $500 million investment by private equity giant KKR & Co. Starboard has argued that financing was unnecessary and served no corporate purpose.
Box rose 0.1% to $25.38 at 10:44 a.m. in New York trading, giving the company a market value of about $3.9 billion.
The activist managed to win the support of some Box investors, including P. Schoenfeld Asset Management, which said the KKR financing was just the the latest example of the board exercising poor corporate governance.
Starboard also won partial support for its campaign from prominent proxy advisory firm Glass Lewis & Co., which urged investors to elect Peter Feld, a managing member at the hedge fund.
Another advisory firm, Institutional Shareholder Services Inc., also credited Starboard’s campaign for improvements at the company. Total shareholder returns have been more than 70% since Starboard first disclosed its stake in Box in September 2019. The company has also implemented other changes, including separating the CEO and chairman positions.
ISS argued, though, that additional Starboard presence on the board wasn’t warranted after the firm reached a settlement last year for two directors that it backed to be appointed. ISS urged investors to support two of management’s nominees, and to withhold their votes for lead director Dana Evan over the ongoing governance issues at the company.
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