Starboard, Citing Box’s ‘Poor’ Results, Is to Nominate Directors

Molly Schuetz, Bloomberg News

The Box Inc. headquarters stands in Redwood City, California, U.S., on Monday, Sept. 26, 2016. Box Inc., trying to expand revenue amid slower billings growth, will unveil new software developed with IBM to help companies set up and manage document-heavy workflows like recruiting, budgeting, sales and customer management. Photographer: David Paul Morris/Bloomberg , Bloomberg

(Bloomberg) -- Activist investor Starboard Value LP, saying it’s “increasingly frustrated with the poor financial results” of software maker Box Inc., plans to nominate directors to the board.

Starboard, one of Box’s largest shareholders with a 7.7% stake, said it urged management over the past two years to improve growth and profitability and had criticized “questionable capital allocation decisions and subpar shareholder returns.”

Despite a commitment by Box to address the concerns, “execution has fallen well short of expectations,” Starboard said in a letter to shareholders posted Monday.

The private-equity firm cited annual billings growth that fell below 10% last year, continued losses and a share price that’s lower than the day the company began trading more than six years ago. Starboard also cited two recent financing transactions it deemed unnecessary and an effort to “buy the vote” of shareholders.

As a result, Starboard plans to nominate directors to the board at the next shareholder meeting.

In its latest quarterly results, Box reported narrower losses of $4.9 million compared with $30.4 million a year earlier. Chief Executive Officer Aaron Levie said the company is seeing demand for its bundled suite of software products.

Box shares were little changed in New York Monday. They’ve gained 18% this year.