In the past year, twillio It has been under pressure from activist investors, who have urged the software vendor to shake up its board of directors and even seek to sell the company. Twilio founder and longtime CEO Jeff Lawson resigned in January.
Anson Funds, an activist group that pushes for change at companies, stepped up its advocacy this week after Twilio made a series of board changes, including a push to overhaul its board structure.
On Monday, Twilio announced a settlement with activist investor Sachem Head, whose involvement in the company had not been previously reported. The agreement resulted in Twilio, which sells communications software, awarding a board seat to Sachem Head partner Andy Stafman.
Two days later, Twilio said Byron Deeter, a well-known venture capitalist and early investor in the company, would leave the board of directors.inside same versionTwilio said it will ask shareholders to vote on board declassification at its upcoming annual meeting, meaning all directors, not just some of them, will be up for re-election each year.
Anson portfolio manager Sagar Gupta said the measures don’t go far enough.
“While this agreement represents incremental positive change, we do not believe it is sufficient to prevent continued board consolidation and ensure an end to Twilio’s continued underperformance,” Gupta said in a statement. Press release Thursday. “On behalf of all Twilio shareholders, we plan to hold the entire board accountable in the public domain going forward.”
Gupta said that over the course of several months of engagement, Twilio “repeatedly rejected” proposals to improve governance, and that “only under intense pressure” did the company address the issues.
Twilio shares are down 21% this year, while the Nasdaq is up nearly 7%.
Gupta’s campaign at Twilio began in early 2023, reportedly via Conference series He worked with Legion Partners during his tenure there. Twilio’s dual-class share structure was winding down at the time, meaning Lawson’s massive control would no longer exist.
Later that year, Gupta moved to Anson and continued his activities. At the same time, according to previous reports by CNBC, Legion Partners continues to be involved in promoting changes in the company.
Anson and Legion each own less than 0.5% of Twilio, according to FactSet. Their outspoken demands were enough to spur an expanded stock buyback program, oust Lawson and trigger an operational review of the business the company is pushing to sell off Twilio.
But they haven’t gotten everything they want yet.
Twilio completed an operational review in March and decided not to sell the segment. It also authorized smaller stock buybacks than what the two activists had sought.
On March 11, less than a week after Twilio completed its review, Sachem Head told the company it planned to nominate candidates for the board.Communication between the company and Twilio has just been completed Public this week, when Staffman was offered a board seat. Sachem Head has $4 billion in assets under management and is currently working on two other activist campaigns in Europe.
Gupta said on Thursday that Anson would carefully review “all matters” in strategy, operations and governance. Twilio’s announcement of Deeter’s departure comes amid ongoing discussions among activists and company advisers, he said.
Anson also highlighted unspecified related-party transactions between Twilio and Deeter’s employer, Bessemer, “which have harmed Twilio shareholders in the past,” the statement said.
In 2018, Twilio acquired SendGrid, also powered by Bessemer, for $2 billion. Dieter was a director of both companies at the time, but he recused himself from the negotiations. Bessemer declined to comment for this story.
Even with Deeter leaving, Bessemer will still have representation at Twilio. The company’s chairman, Jeff Epstein, is the venture capital firm’s operating partner.
“Despite Mr. Dieter’s departure, this issue remains relevant given that another Bessemer partner continues to serve as a director,” Gupta said.
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