Elliott Management Corporation
(“Elliott”) today sent a letter to the Board of Directors of
Riverbed Technology, Inc. RVBD.
The full text of the letter is as follows:
“May 27, 2014
Riverbed Technology, Inc.
199 Fremont Street
San Francisco, California 94105
Attn: Jerry Kennelly, Chief Executive Officer and Chairman of
the Board
Dear Members of the Board of Directors:
I am writing to you on behalf of Elliott Associates, L.P. and
Elliott International Limited (collectively, “Elliott” or “we”),
which collectively own or have economic exposure to
approximately 10.6% of the common stock and equivalents of
Riverbed Technology, Inc. (“the Company” or “Riverbed”), making
Elliott one of the Company's largest shareholders.
The results of last Thursday's annual meeting reflect a clear
and unmistakable message from Riverbed's shareholders to its
Board: Your behavior this year has been wrong - stop entrenching
and engage. As you are now aware, Shareholders by an
overwhelming majority:
- Voted OFF the only Board member up for election this year, and
- Voted AGAINST the Company's executive compensation plan
This clear message from your shareholders follows the
resignation of the other two Board nominees who were up for re-
election this year and who thereby avoided this year's
shareholder vote by leaving the Board. Since January,
Riverbed's Board has gone from nine to just six members. Had
the entire Board been up for a vote at last week's meeting, we
have no doubt that Riverbed would have a completely new Board
today.
This is a powerful message from shareholders and we hope the
Board views it as a wake-up call. This clear rejection of the
Board's strategy to date is all the more striking when one
considers that shareholders took this action entirely of their
own volition, without the prompting of a proxy fight.
Shareholders and ISS and Glass Lewis -- the nation's two leading
shareholder advisory services -- independently recognized that
corporate governance at Riverbed is too self-serving and the
Board is too entrenched. Riverbed's Chairman and CEO recently
defended the Board's entrenchment by telling a reporter that the
Company has “nothing broken to fix.” This statement reflects a
profound disconnect from shareholder sentiment as evidenced by
last week's vote.
It is time for the remaining Board members to start behaving in
a manner consistent with your fiduciary duties. Elliott today
proposes a meeting among the Board, senior management and
Elliott to discuss a path forward with the goal of maximizing
shareholder value. I had hoped to meet some of the Board
members at the annual meeting last week - incredibly, all of the
non-executive Board members chose to dial in rather than meet
the shareholders face-to-face.
Inaction is no longer an option for this Board. It is time to
stop ignoring the clear will of your shareholders. You are well
aware that there are a number of potential buyers that are
interested in pursuing an acquisition at a significant premium,
and our $21 per share offer remains outstanding. Access to
diligence combined with a competitive process could lead to an
extraordinary outcome for shareholders. A meeting - in the next
two weeks - is the right place to start.
Elliott remains committed to this effort and intends to exercise
all rights at its disposal to ensure that the Board's duties to
shareholders are fulfilled. In that regard, we feel that we must
urge the Board to resist any temptation to take measures beyond
those already taken to thwart or interfere with the rights of
shareholders to support a sale of the Company. As you know,
your Chairman and two key directors are up for reelection next
year. If the Board fails to listen to its shareholder base and
insists on further entrenchment, we are confident shareholders
will again vote down these three Board members and replace them
with nominees who are focused on maximizing shareholder value.
We are hopeful that will not be necessary and that the Board
will now commit to open-minded engagement with shareholders. As
one of Riverbed's largest shareholders, we think a meeting
between Elliott and the Board is the right place to start. We
request such a meeting in the next two weeks and are prepared to
discuss immediately with you and your advisors how best to move
forward. As always, I remain personally available to answer any
questions that you may have in preparation for our meeting.
Very truly yours,
Jesse Cohn
Portfolio Manager
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