By Svea Herbst-Bayliss
(Reuters) -Activist investor Elliott Management Corp has nominated a slate of directors to the board of cloud-based software provider Salesforce Inc, a source familiar with the matter said on Wednesday.
The source declined to name Elliott’s director candidates or say how many there were.
Elliott said it has been in substantive dialogue with Salesforce leading up to its earnings statement, and “today’s announcements represent progress towards regaining investor trust”.
“The acceleration of margin targets, commitment to responsible capital-return priorities, creation of a business transformation committee and disbanding of the M&A committee are necessary steps forward,” Elliot said in a statement without making any reference to board nominations.
The steps are consistent with our recommendations, the activist investor said, adding that they will help restore value at Salesforce.
The software provider forecast its first-quarter revenue above analysts’ estimates and doubled its share repurchase to $20 billion, indicating a strong cash flow.
Elliott also took an aim at Salesforce’s leadership, stating that it required a sustainable plan and a board that would provide accountability through proper oversight.
“To fully earn back the confidence and support of investors, Salesforce leadership must now deliver on its promises.”
The hedge fund said it intends to continue working with Salesforce as they evaluate the “level of engagement necessary to achieve the best outcome for the company”.
Elliott became the latest activist investor to establish a position in Salesforce when it unveiled its multi-billion dollar stake in January.
Other hedge funds with stakes include Jeff Ubben’s Inclusive Capital Partners, Jeff Smith’s Starboard Value, ValueAct Capital and Third Point.
Some activists have pushed for the company to increase growth and margins, buy back more shares, and raised concerns about recent acquisitions.
Salesforce could not be reached for comment.
News of the nominations was first reported by CNBC.
To address some of its issues, the company had been working for months to refresh its board and earlier this year added three new directors. These include ValueAct Capital’s Chief Executive and Chief Investment Officer Mason Morfit, Mastercard finance chief Sachin Mehra, and former Carnival Corp CEO Arnold Donald.
Morfit helped to boost Microsoft’s market value when he served on the board from 2014 to 2017.
The slate nominated by Elliott signals the pressure such an investor can bring to bear on its target, analysts said, noting that many are using this tool more frequently.
Salesforce, valued at $164 billion, said in January it planned to cut a tenth of its jobs and close some offices after rapid pandemic hiring left it with a bloated workforce.
Tech companies have shed more than 150,000 workers in 2022. Other technology giants such as Meta Platforms Inc, Google parent Alphabet Inc and Microsoft Corp have also announced job cuts in recent months.
(Reporting by Svea Herbst-Bayliss and Gokul Pisharody; Editing by Saumyadeb Chakrabarty, Richard Chang and Sherry Jacob-Phillips)
