Urges Stockholders to Vote “FOR ALL” Three of Box’s Highly Qualified Director Nominees on the BLUE Proxy Card
Highlights Significant Changes Implemented Over the Last Year – Tremendous Operational Progress, Reacceleration of Growth and Governance Enhancements
Underscores Starboard’s Short-Term Focus and Unnecessary Proxy Contest
Launches VoteBlueforBox.com, Providing Additional Information for Stockholders
REDWOOD CITY, Calif.–(BUSINESS WIRE)–Box, Inc. (NYSE: BOX) today announced that it has filed definitive proxy materials with the Securities and Exchange Commission (“SEC”) in connection with its upcoming Annual Meeting of Stockholders scheduled to be held on September 9, 2021. Stockholders of record as of July 12, 2021, will be entitled to vote at the meeting.
In conjunction with the definitive proxy filing, Box is mailing a letter to the company’s stockholders.
Highlights from the letter include:
- Box is in the strongest financial position in its history: Box’s recent financial results make it clear that the company’s strategy is working. Box delivered strong revenue growth and profitability in fiscal year 2021, which ended January 31, 2021, and that momentum has continued year-to-date in Box’s fiscal year 2022. Box’s revenue growth rate plus free cash flow margin of over 26% exceeded its stated target of 25%, and nearly doubled the results from fiscal year 2020. Year-to-date in 2021, Box’s share price has outperformed its SaaS Peer Set1 by over 36%.
Significant Board and governance changes have been made: As part of the Starboard settlement last year, Box appointed three new directors – Bethany Mayer, Jack Lazar and Carl Bass. With these appointments, seven new directors have joined the Board in the last three years. The Board also formed an Operating Committee, which included two of these new directors, and a Strategy Committee, which included all three of these directors. Since then, the Board separated the Chair and CEO roles and appointed Starboard’s approved directors to the majority of the leadership positions on the Board, including Board Chair, Compensation Committee Chair and Audit Committee Chair.
Box’s director nominees – Dana Evan, Peter Leav and Aaron Levie – are vastly superior to Starboard’s candidates and best positioned to advance Box’s strategy: We are confident that the skillsets of the company’s nominees outmatch Starboard’s slate in every critical area. Combined, Box’s nominees bring nearly seven decades of SaaS and enterprise software experience and have led multiple company sale transactions totaling tens of billions of dollars2, maximizing stockholder value. Collectively, the Box Board has significant public company experience serving as directors and C-suite executives of multi-billion dollar publicly traded SaaS and enterprise software companies.
- The KKR-led investment, subsequent self-tender and authorized share repurchase – which in combination is expected to be non-dilutive to stockholders – followed a multi-month comprehensive strategic review, and delivered an outcome expressly desired by certain stockholders: The KKR-led investment and subsequent self-tender provided the ability for stockholders to choose to either sell their stock at a 43% premium to the closing price on January 15, 2021, the last trading day prior to when the Board began its strategic review, or to continue as stockholders to participate in the upside potential alongside KKR as a long-term investor. This exit opportunity provided stockholders with the ability to sell their stock at a materially higher premium than a sale of the company in the low twenties that had been previously demanded by Starboard.
- The appointment of KKR’s John Park to the Board is a significant positive: KKR is one of Box’s largest stockholders and an active global investment firm with a deep understanding about the company’s business and strategy. Mr. Park brings extensive experience investing in technology companies with a focus on the cloud and a strong track record of helping companies drive disciplined growth and profitability.
- Starboard has a short-term focused agenda: Starboard’s course of action ignores Box’s tremendous progress and the strong financial performance and governance enhancements Box has already demonstrated. After praising the company’s operating improvements throughout much of 2020, in December, Starboard abruptly reversed course and threatened a proxy contest if Box didn’t either pursue a sale of the company, at a valuation lower than the current stock price, or fire the company’s CEO, which Starboard has consistently repeated over the past several months. The Board is unanimous in its unwillingness to allow this short-term thinking and pre-judgment into the boardroom.
- Box has attempted to settle with Starboard and avoid a proxy contest: Box has held at least 45 calls or meetings with Starboard over the past two years. In addition to having appointed Starboard-approved directors to the Board in 2020, and meeting Starboard’s demand to conduct a review of strategic options, the Box Board explored whether Starboard would be amenable to resolving the proxy contest by adding yet another Starboard approved candidate to the Board. Starboard refused this proposal and insisted that Peter Feld be added to the Board as a non-negotiable part of any settlement.
Box’s definitive proxy materials and other materials regarding the Board of Directors’ recommendation for the 2021 Annual Meeting can be found at VoteBlueforBox.com.
The full text of the letter being mailed to stockholders follows:
Preserve the Long-Term Value of Your Investment:
Vote “FOR ALL” Three of Box’s Highly Qualified Director Nominees – Dana Evan, Peter Leav and Aaron Levie – On the BLUE Proxy Card Today
July 19, 2021
Dear Fellow Stockholder,
Your Board of Directors is singularly focused on enhancing the value of your investment in Box, and we have been unified and unwavering in our commitment to acting in the best interests of all stockholders.
At the upcoming Annual Meeting you will have an important choice to make regarding the future of your investment in Box. There are five important reasons why we believe the choice is clear and you should vote “FOR ALL” three of Box’s director nominees – Dana Evan, Peter Leav and Aaron Levie – on the BLUE proxy card:
Over the last year, we have engaged with our stockholders extensively. Your Board listened to stockholder feedback and took a series of proactive actions, including making significant changes to the composition of the Board and its leadership positions. Your Board is effectively overseeing substantial improvement in growth and margin profitability and the successful execution of Box’s strategy to accelerate profitable growth and enhance the value of your shares. Our strategy is working, and Box is in the strongest financial position in its history.
Our March 2020 agreement with Starboard Value resulted in the appointment of three new directors to the Board, and the Box Board and management team have continued extensive good faith engagement with Starboard since that time. Nonetheless, Starboard is now attempting to elect its own slate of nominees in place of Box’s three vastly superior director candidates – Dana Evan, former Chief Financial Officer of VeriSign and 2019 ‘Director of the Year’ of the National Association of Corporate Directors (NACD), Peter Leav, CEO of McAfee and former CEO of BMC and Polycom, and Aaron Levie, Box’s Co-Founder and CEO. Notably, the experience of Box’s nominees includes an impressive track record of multi-billion-dollar value creation at SaaS-based companies, both as operators and as board members.
In stark contrast, Starboard’s nominees do not possess the industry, public company or operational experience necessary to serve as effectively on the Box Board. By seeking to unseat three members of the Board, including Box’s CEO, Starboard is attempting to implement change that we believe is not only unnecessary, but also destructive to stockholder value.
The answer is clear – a vote for Box’s director nominees is in the best interest of all stockholders: Is Box better off continuing its current positive momentum with a re-election of its three highly qualified directors – including its CEO – all of whom have impressive track records at SaaS-based companies? Or, despite the strong top- and bottom-line financial progress and the level of Board responsiveness since last year’s settlement, is replacing Box’s three highly qualified directors with three Starboard directors and changing course really in the best interests of all Box stockholders? We believe the answer is clear: re-electing Box’s nominees and having a Board focus on short- and long-term value will best position the company to successfully deliver Box’s vision. The addition of directors representing Starboard’s short-term, pre-set agenda would jeopardize the momentum underway and put future stockholder value at risk.
Box Has Taken Proactive Actions to Deliver Long-Term Value Creation, and Is Delivering Strong Results
Today, Box is in the strongest financial position in its history, while continuing to push the envelope and pioneer the content management industry as it serves more than 100,000 customers around the world.
Our strategy is working, and your Board and management team are best positioned to build on the company’s momentum and continue to create value for all stockholders. In fact, since January 15, 2021, the last trading day prior to when the Board began its strategic review, Box’s share price has increased over 30%, outperforming Box’s SaaS Peer Set3 by over 36%.
Box is executing a clearly defined plan to accelerate revenue growth while driving further margin improvement. With a more efficient and productive go-to-market strategy, a differentiated product portfolio and strong customer momentum, Box is on track to deliver the vision of the Content Cloud and primed to capture one of the largest markets in software – content management, collaboration, storage and data security, which represents a total addressable market of over $55 billion annually. We are:
- Expanding in key international markets;
- Enhancing sales productivity across geographies;
- Building market-leading products and capabilities in line with our Content Cloud strategy; and
- Enabling customers to power the full lifecycle of content management in the cloud.
Furthermore, as companies accelerate their move to the cloud, implement hybrid work strategies and seek to securely enable digital transformation, Box is extremely well positioned at the center of these megatrends. We are delivering the broadest and most innovative cloud content management platform on the market, strengthening our partner ecosystem and enhancing integrations with Google Workspace, Microsoft Teams, Okta, Salesforce, Slack, and Zoom, among others, and expanding our product portfolio through:
- Box Sign – the company’s first native e-signature product offering, which enhances our e-signature capabilities and represents a new multi-billion market opportunity;
- Box Shield – the company’s breakthrough content security solution, including automatic data classification and malware detection, to enable enterprises to protect their most valuable data in Box;
- Box Shuttle – one of the fastest and most cost-efficient large-scale content migration systems to help enterprises dramatically accelerate their transition to the cloud;
- Box Relay – allowing our end users to easily build, manage and track their own workflows; and
- Box Platform – further enabling customers and partners to build enterprise apps using our open APIs and developer tool.
Box delivered strong revenue growth and profitability in fiscal year 2021 and that momentum has not only continued but accelerated into the first quarter of fiscal 2022, the results of which we reported on May 27, 2021 4.
For Fiscal 2021, we achieved:
For First Quarter Fiscal 2022, we achieved:
In addition, with our first quarter fiscal 2022 earnings report, we also raised revenue and operating margin guidance for the full year fiscal 2022 to the following4:
- Revenue in the range of $845 million to $853 million, raised by $5 million, representing 11% year-over-year growth at the high end; and
- Non-GAAP operating margin in the range of 18% to 18.5%, up 3.1 percentage points year-over-year at the high end of this range.
The Board and management team are also confident in our ability to achieve our fiscal 2024 financial targets of 12% to 16% revenue growth and operating margins between 23% to 27%.
Your Board is Highly Qualified, Engaged and Diverse: Seven New Independent Directors Added Since 2018, Including Three Appointed in Starboard Settlement
The Box Board is meaningfully refreshed, resulting in a dynamic boardroom with new and varied perspectives. Your Board consists of ten directors – seven of whom joined since 2018 as independent directors. In addition, John Park, Head of Americas Technology Private Equity at KKR, was appointed in conjunction with the KKR-led investment in May.
Collectively, your directors have significant public company experience that is highly relevant to overseeing the execution of Box’s strategy, serving as directors and C-suite executives of multi-billion dollar publicly traded SaaS and enterprise software companies. We have also made substantial corporate governance enhancements, including separating the Chair and CEO roles by naming Bethany Mayer as the independent Chair of the Board and Chair of the Compensation Committee. Jack Lazar was also appointed as Chair of the Audit Committee.
Box Board of Directors Skills & Experience
Number of Box Directors
SaaS and Enterprise Software, as Executive or Director
Public Multi-Billion Dollar Company C-Suite Executive
Public Multi-Billion Dollar Technology Company Director
Leading Value-Maximizing Company Sale Transactions
Finance and Investment (at Technology or Financial Services Companies)
Global Go-to-Market Strategy and Business Operations
Furthermore, members of the Board have demonstrated a clear willingness to pursue a sale of a company when it generates the greatest value for stockholders. In fact, Box Board members have been directors or executives at no fewer than 30 companies that have been sold, including 14 public companies. And this does not even include the track record of John Park as Head of Americas Technology Private Equity at KKR.
Box’s Nominees Are Best Positioned to Advance Box’s Strategy and Vastly Superior to Starboard’s Slate
The company’s directors up for re-election at the Annual Meeting – Dana Evan, Peter Leav, and Aaron Levie – have played essential roles in designing and overseeing the execution of Box’s strategy, and have the expertise needed to continue to drive the company forward. We are confident that their skillsets are vastly superior to those of Starboard’s nominees for the Box Board. Combined they bring nearly seven decades of SaaS and enterprise software experience, either as operators or board members, and have led multiple company sale transactions totaling tens of billions of dollars5, maximizing stockholder value. More specifically:
- Dana Evan, former Chief Financial Officer of VeriSign and 2019 ‘Director of the Year’ of the NACD, has a powerful track record of maximizing stockholder value in her director roles, including, among others, in her role as Lead Independent Director of Proofpoint, which recently announced an agreement to be acquired for $12.3 billion6, and as a director at Omniture which was acquired by Adobe. Ms. Evan has significant experience investing in and serving on Boards of SaaS-based technology and internet companies, including Domo, Farfetch, and Momentive (formerly Survey Monkey).
- Peter Leav, CEO of McAfee, brings more than two decades of executive leadership expertise, including as the former CEO of BMC, which was acquired by KKR, and Polycom, acquired for $2.0 billion in cash. Mr. Leav has valuable experience in global go-to-market strategy and operations, having successfully scaled and led multiple multi-billion dollar SaaS and enterprise software businesses, and a strong track record of translating innovation to profitable growth. Mr. Leav brings considerable public company board experience across varied industries, including at BMC, HD Supply, McAfee, Proofpoint and Polycom.
- Aaron Levie, Box’s Co-Founder and CEO, a pioneer of the content management industry for the cloud era, continues to execute a clear vision for Box’s strategy, product, and purpose. Mr. Levie is the driving force behind essential customer and partner relationships across the Fortune 500 and is the direct sponsor of key partners including Microsoft, Google, IBM, Salesforce, Adobe, Zoom and Slack, among many others. Under his leadership, Box has reached over 100,000 customers globally, developed a disruptive and highly differentiated product, built a robust partnership ecosystem, and is successfully executing a clearly defined strategy to drive profitable growth.
Your Board Is Operating with the Best Interests of All Stockholders in Mind, and the KKR-Led Investment Demonstrates that Commitment
The Strategy Committee of our Board – which included all three directors appointed to the Board pursuant to the March 2020 settlement agreement with Starboard – led a multi-month comprehensive review of strategic options to drive stockholder value, which included evaluating a potential sale of the entire company as well as not entering into any transaction.
After the conclusion of the strategic review, the Strategy Committee unanimously recommended, and the full Board unanimously agreed, to approve the KKR-led investment and subsequent “Dutch auction” self-tender. We believe that this decision, coupled with continuing to execute the company’s strategic plan, is the path that maximizes value for all stockholders. Specifically:
- The self-tender allowed stockholders to either sell their stock at $25.75 per share, a 43% premium to the closing price on January 15, 2021, the last trading day prior to when the Board began its strategic review, or to participate in any additional upside potential alongside KKR as a long-term investor.
- The investment led by KKR, one of the world’s leading technology investors, is a validation of Box’s strategy and the potential to create future value for all stockholders as we build upon the progress made over the past year. KKR would not have made a significant investment in the company if it didn’t believe the stock price could appreciate well beyond the conversion price of $27 per share – an important endorsement for the sell-side and all of our investors.
- The appointment of KKR’s John Park to the Board is a significant positive for the company. KKR is one of Box’s largest stockholders and an active global investment firm with a deep understanding about the company’s business and strategy. In addition, Mr. Park brings extensive experience investing in technology companies with a focus on the cloud and a strong track record of helping companies drive disciplined growth and profitability.
It is important to note that the KKR-led investment and subsequent self-tender provided stockholders with the ability to sell their stock at a materially higher premium than a sale of the company that had been demanded by Starboard when the stock was trading at $17 to $18 per share.
Furthermore, the Board has previously stated it anticipates deploying the unused portion of the $500 million intended for the tender offer to repurchase shares. As a consequence, the KKR-led investment, and subsequent self-tender transaction, with the Board’s authorization to repurchase shares is expected to be non-dilutive to stockholders.
Box Has a Long History of Constructive Engagement with Starboard and Has Been Responsive to Starboard’s Suggestions
Over the past two years, the Board has consistently engaged in good faith with Starboard (including at least 45 calls or meetings with Starboard during this time period), has been responsive to Starboard’s suggestions and demands, and has itself taken proactive actions to enhance the company’s governance and oversee improved operating performance. As part of the March 2020 settlement with Starboard, we replaced three long-standing directors with three new directors – Ms. Mayer, Mr. Lazar and Mr. Bass. Pursuant to the settlement, we also formed an Operating Committee, which included two of these new directors and which has overseen an increased focus on growth and operating margin improvement. The Board later formed a Strategy Committee to complete a comprehensive review of strategic options, which Starboard had also demanded.
The Board has taken action to enhance the company’s corporate governance, including separating the Chair and CEO roles with Mr. Levie stepping down as Chair, naming Ms. Mayer as Chair of the Board and Chair of the Compensation Committee, and naming Mr. Lazar as Chair of the Audit Committee. As a result, the directors appointed pursuant to the Starboard settlement hold a majority of the leadership positions on the Board and have extensive representation on its committees, including:
- Chair of the Board;
- Chair of two of the three standing committees – Compensation Committee and Audit Committee;
- Two of the four seats on the Operating Committee, which was charged with working with management to identify and recommend opportunities for growth and margin enhancement; and
- Three of the four seats on the Strategy Committee, which was charged with overseeing the strategic review.
Importantly, the work of the Operating Committee and management, and these governance enhancements more generally, led to substantial progress across all facets of the business – strategic, operational and financial. These efforts were reflected in Box’s first and second fiscal quarter results announced in May 2020 and August 2020, respectively. In emails in the wake of these results, Starboard stated to the company that Box was “on a good path” and that Starboard was “thrilled to see the company breaking out.” Starboard further noted, “appreciate you guys working with us and accepting the counsel. Not everyone behaves that way and it is greatly appreciated.”
However, just three months later following two quarters of S
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