Jan 26, 2023
Salesforce Discusses Appointing New Board Members
(Bloomberg) -- Salesforce Inc. is discussing the potential appointment of new board members amid pressure from activist investors, people with knowledge of the matter said.
The enterprise software company is in talks to bring on Arnold Donald, the former chief executive officer of Carnival Corp., and Mastercard Inc. Chief Financial Officer Sachin Mehra as independent directors, according to the people. It’s also discussing the possibility of giving a board seat to ValueAct Capital Management CEO Mason Morfit, the people said, asking not to be identified because the information is private.
Salesforce had been working on refreshing its board for several months, one of the people said. Deliberations are ongoing, and there’s no certainty that Salesforce will reach an agreement on the board appointments.
ValueAct, run by Morfit, has won board seats on big companies, including financial technology giant Fiserv Inc. A representative for Salesforce declined to comment, while a spokesperson for ValueAct didn’t immediately respond to a request for comment.
Elliott Investment Management has taken a multibillion-dollar stake in the enterprise software company, which has been rocked by a deep stock swoon and executive turnover. Salesforce earlier this month said it would cut 10% of its workforce, about 8,000 jobs. In October, Starboard Value also took a stake in the San Francisco-based company. Jeff Ubben’s Inclusive Capital also is a shareholder, CNBC reported.
Elliott is talking with technology executives and those from other industries as it prepares to nominate a slate of directors, according to a person familiar with the matter. The nomination window opens Feb. 12. The Wall Street Journal earlier reported on Elliott’s plan to propose board candidates.
The shares jumped 5.7% to $165.09 at the close in New York. The stock plunged 48% in 2022 amid a sharp decline in technology shares, but has gained almost 25% this year through the close.
Pressure is mounting on Salesforce to boost profits and shareholder returns after a half-decade of fast hiring and large acquisitions, including the purchase of business communications app Slack in 2021 for $27.7 billion. In addition to board changes, activist investors will likely push the company to cut more jobs or spin off big acquisitions in search of greater profit, Wall Street analysts said.
In February, Marc Benioff will become sole CEO of the company he co-founded after the departure of co-CEO Bret Taylor, who was appointed to the post in November 2021 and widely seen as a potential successor. Other top executives such as Slack CEO Stewart Butterfield and Chief Strategy Officer Gavin Patterson also have departed. Some investors feared an unchecked Benioff would make more large acquisitions.
While Paul Singer’s Elliott has pushed for new CEOs at other companies, Jesse Cohn, managing partner, said the firm has developed a “deep respect” for Benioff.
(Updates with Elliott’s plans in the sixth paragraph.)
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