Activist investor Hestia Capital has proposed a majority slate of seven directors to replace current board members at Pitney Bowes, citing poor performance and what it termed strategic missteps over the past decade, with the company responding that Hestia is not interested in a good faith discussion.
Pitney Bowes said in its response that Hestia only wants a public fight that advances its own takeover interests vs. those of the ecommerce and shipping company and its shareholders.
All of this sets the stage for a bruising proxy fight at Pitney Bowes’ annual meeting, which has typically been held in early May, barring any meeting of the minds ahead of that.
In a lengthy deck detailing its position, Hestia put forward a slate that includes former Stamps.com chairman and CEO Ken McBride, former ShippingEasy CEO Katie May, former Newgistics CEO Todd Everett and Kurt Wolf, principal of Hestia. Newgisitics was acquired by Pitney Bowes in 2017 for $475 million when Everett was at the helm, to enhance the latter’s domestic parcel business.
Hestia and Wolf came to fame through their role in the 2020 takeover of GameStop, along with Chewy.com founder Ryan Cohen, now GameStop’s chairman. The struggling retailer’s shares skyrocketed in value as a Reddit-fueled meme stock before falling back to earth, as Cohen steered the firm toward ecommerce. The stock grew so rapidly, in fact, that Wolf was forced to give up his board seat last year, Reuters reported.
Hestia, which has increased its stake in Pitney Bowes to 7.5%, is joined in its desire for wholesale change at the top of the company by BWM Value Investing and Domo Capital Management, both of which hold a 1% stake.
Among other things, Hestia detailed the company’s sliding market capitalization (with its stock hovering around $5 per share), forecast misses, credit rating downgrades and what it characterized as a lack of attention to shareholder concerns and poor investment choices. These include the combined $875 million spent on Borderfree and Newgistics, and a $23 million investment last year in automation startup Ambi Robotics.
Borderfree was acquired last year by Israeli cross-border and fintech firm Global-e for $100 million, about a quarter of the $395 million Pitney Bowes spent seven years earlier.
This has all come, Hestia notes, during the tenure of Pitney Bowes CEO Mark Lautenbach and board chairman Michael Roth, who has been a director since 1995. Hestia even called out Lautenbach’s golfing habits during particular low points of the company, as well as his aggregate compensation of $17.8 million during the trailing three years prior to its 2022 proxy statement.
“To the best of our knowledge, Pitney Bowes has not substantively addressed any stockholder concern through public or private communication – suggesting a fundamental disregard for major investors, in our view,” Hestia said in its deck.
In its response, Pitney Bowes said its board and management team have engaged in dialogue with Hestia for months to address shareholder issues, and been open to suggested board members, even offering to appoint two Hestia-proposed directors in December.
Instead, Hestia through public pronouncements “demonstrate(d) they are more interested in fighting than in engaging in constructive conversations to benefit all shareholders, not just themselves.” The leadership team added Hestia showed “a fundamental misunderstanding of the company and have failed to articulate a strategy that would justify ceding control … to them.”
“Pitney Bowes will continue to seek the right path forward that is in the best interests of all shareholders, including potential additions of well-qualified candidates to the board of directors,” Pitney Bowes continued. “The company will not let Hestia’s unwillingness to seek common ground stand in the way.”