ISS Recommends Stockholders of Pitney Bowes Vote FOR Meaningful Board Changes Proposed by Hestia Capital
April 27 2023 - 9:00AM
Business Wire
A Leading Independent Proxy Advisory Firm
Recommends Stockholders Elect Four of Hestia’s Director Candidates
to Pitney Bowes’ Nine-Member Board
Recommended Director Candidates Possess
Experience in Capital Allocation, Corporate Governance, Debt
Reduction, the Shipping and Postage Industries and Strategic
Planning
Hestia Capital Management, LLC (collectively with its
affiliates, “Hestia” or “we”), which is the third largest
stockholder of Pitney Bowes, Inc. (NYSE: PBI) (“Pitney Bowes” or
the “Company”) and has a beneficial ownership position of 8.5% of
the Company’s outstanding common stock, today announced that
Institutional Shareholder Services Inc. (“ISS”), a leading
independent proxy advisory firm, has recommended that Pitney Bowes’
stockholders support meaningful boardroom change by voting for
Milena Alberti-Perez, Todd Everett, Katie May and Kurt Wolf at the
Company’s 2023 Annual Meeting of Stockholders (the “Annual
Meeting”). All four individuals were nominated by Hestia.
Kurt Wolf, the Founder and Chief Investment Officer of Hestia,
commented:
“We appreciate that ISS has endorsed our case for meaningful
boardroom change and recommended that stockholders vote for four of
our nominees – Milena Alberti-Perez, Todd Everett, Katie May and
myself – at the upcoming Annual Meeting. We also appreciate that
ISS has acknowledged that some stockholders may feel it necessary
to elect our full slate and that Lance Rosenzweig is equipped to be
interim Chief Executive Officer. After more than a decade of
abysmal financial performance and insular governance, we firmly
believe it is time for stockholders to elect directors who are
committed to improving the Company’s capital allocation, corporate
governance, credit rating and long-term strategy. Our slate
recognizes that it still has a lot of work to do, and it looks
forward to engaging with more stockholders and hopefully working
with the remaining incumbents to enact value-enhancing changes
following the Annual Meeting. Time is of the essence at Pitney
Bowes given its protracted losses, reduced cash flows and
significant debt load.”
In its report, ISS validates practically every aspect of
Hestia’s case for meaningful change:1
- “In summary, shareholders have endured a decade of
underperformance and disappointment, there are unanswered questions
and serious concerns about the path forward, and power on the board
is concentrated in the hands of those directors who objectively
have the most potential for a conflict of interest by virtue of
their past experience and tenure.”
- “[…] ISS has received volumes of unsolicited inbound statements
of support for the dissident. This suggests that there is an
elevated likelihood that all five dissident nominees will be
elected. If this occurs, there is no specific reason to believe
that Lance Rosenzweig cannot be effective as a director and interim
CEO.”
- “Ultimately, nearly every objective measure contradicts the
board's position, and PBI has a history of failing to deliver on
important self-established expectations, which diminishes the trust
that shareholders can place in the board's vision for the future…
Thus, board composition and the ability of directors to exercise
effective, independent oversight of management are particularly
important considerations.”
- “Moreover, there is certainly a sense of urgency after ten
years of decline, but PBI does have adequate time to weigh its
options … if the reconstituted board, after close examination of
the available alternatives, concludes that management change is
necessary.”
- “[…] the dissident is attuned to the most important issues
plaguing PBI. This understanding was evident during engagement with
ISS.”
- “… there are concerns about the willingness of the leadership
team to be objective in all cases when considering GEC moving
forward.”
- “Power has instead been concentrated in the hands of those
directors who objectively have the most potential to be ineffective
when overseeing management.”
- “[…] management has a history of failing to meet
self-established expectations, yet is now asking for the trust of
shareholders. Thus, board composition and the ability of directors
to exercise effective, independent oversight of management are
particularly important considerations.”
- “The board has made bizarre and arguably misleading statements
about the dissident, including criticisms about the dissident's
experience at GameStop.”
- “The dissident has raised credible concerns about the
trajectory and prospects of GEC, related corporate governance
considerations, and other factors, such as competitive pressures
and headwinds facing GEC, as well as the impact of GEC on PBI's
overall financial condition.”
ISS details Pitney Bowes’ governance deficiencies and poor
performance:
- “[…] selecting appropriate additions and establishing the
correct board leadership structure are just as important as ongoing
refreshment. It is therefore unclear why the board selected
Dutkowsky to succeed Roth as board chair. Dutkowsky and Lautenbach
are both former employees of IBM, spending at least 20 and 27 years
at the company, respectively. Lautenbach is also on record in a
March 2019 third-party media spotlight of Dutkowsky stating, ‘I
have had the opportunity to work with Bob Dutkowsky for over 20
years ...’ This preexisting relationship raises questions about
Dutkowsky's suitability to serve as board chair in this setting,
which calls for an unquestionably independent counterbalance to
management.”
- “A similar dynamic exists with Sanford and Busquet […] Busquet
is the longest-tenured director on ballot, and she is a
longstanding member of the governance committee. Thus, Busquet
bears more responsibility than any other incumbent director for
deficiencies with board composition.”
- “[…] deficiencies extend to other links between directors
beyond those highlighted above. For instance, Sanford and Guilfoile
both serve on the board of the Interpublic Group of Companies,
where Roth served as CEO and board chair.”
- “TSR has historically been disappointing in both absolute and
relative terms.”
- “The board notes that PBI has reduced debt over the past
decade. However, PBI's credit ratings have been consistently
revised downward over the course of the transformation, and PBI's
net debt to adjusted EBITDA ratio has nearly doubled from 2.7x in
FY2013 to 5.0X in FY2022.”
***
As a reminder, Hestia is seeking to elect
five highly qualified and independent candidates to Pitney Bowes’
nine-member Board at the Company’s Annual Meeting on May 9,
2023.
To maximize the likelihood of a turnaround
at Pitney Bowes, we urge you to vote for Hestia’s full slate on the
WHITE universal proxy card or
WHITE voting instruction form.
Visit www.TransformPBI.com to
download a copy of our investor presentation and receive future
updates.
***
About Hestia Capital
Hestia Capital is a long-term focused, deep value investment
firm that typically makes investments in a narrow selection of
companies facing company-specific, and/or industry, disruptions.
Hestia seeks to leverage its General Partner’s expertise in
competitive strategy, operations and capital markets to identify
attractive situations within this universe of disrupted companies.
These companies are often misunderstood by the general investing
community or suffer from mismanagement, which we reasonably expect
to be corrected, and provide the ‘price dislocations’ which allows
Hestia to identify, and invest in, highly attractive risk/reward
investment opportunities.
1 Permission to quote ISS was neither sought nor obtained.
Emphases added.
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Longacre Square Partners Charlotte Kiaie / Miller Winston,
646-386-0091 hestia@longacresquare.com Saratoga Proxy Consulting
LLC John Ferguson / Joe Mills, 212-257-1311
info@saratogaproxy.com
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