© Reuters. FILE PHOTO: A Salesforce logo is seen in its exhibition space, at the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris, France, June 16, 2022. REUTERS /Benoit Tessier/File photo
By Svea Herbst-Bayliss
(Reuters) – Activist investor Elliott Management Corp has nominated a list of directors to the board of cloud-based software provider Salesforce (NYSE:) Inc, a source familiar with the matter said on Wednesday.
The source declined to name Elliott’s directorial candidates or say how many there were.
Elliott said he has been in substantive dialogue with Salesforce ahead of its earnings release, and “today’s announcements represent progress toward regaining investor confidence.”
“Acceleration of margin targets, commitment to responsible capital return priorities, creation of a business transformation committee, and dissolution of the M&A committee are necessary steps,” Elliot said in a statement without making any comments. reference to board nominations.
The steps are consistent with our recommendations, the activist investor said, adding that they will help restore value to Salesforce.
The software provider forecast its first-quarter revenue above analyst estimates and doubled its share buyback to $20 billion, signaling strong cash flow.
Elliott also took aim at Salesforce’s leadership, stating that it required a sustainable plan and a board that would provide accountability through proper oversight.
“To fully regain investor trust and support, Salesforce leadership must now deliver on its promises.”
The hedge fund said it intends to continue working with Salesforce as they assess the “level of commitment necessary to achieve the best outcome for the company.”
Elliott became the latest activist investor to take a position in Salesforce when he revealed his multi-million dollar stake in January.
Other hedge funds with holdings include Jeff Ubben’s Inclusive Capital Partners, Jeff Smith’s Starboard Value, ValueAct Capital and Third Point.
Some activists have pushed for the company to increase growth and margins, buy back more shares and raised concerns about recent acquisitions.
Salesforce could not be reached for comment.
News of the nominations was first reported by CNBC.
To address some of its issues, the company has been working for months to update its board, and earlier this year it added three new directors. These include ValueAct Capital CEO and Chief Investment Officer Mason Morfit, Mastercard (NYSE:) CFO Sachin Mehra, and former Carnival (NYSE:) Corp CEO Arnold Donald.
Morfit helped boost Microsoft’s market value when he served on the board from 2014 to 2017.
Elliott’s nominated slate signals the pressure such an investor can put on his target, the analysts said, noting that many are using the tool more often.
Salesforce, valued at $164 billion, said in January it planned to cut a tenth of its jobs and close some offices after rapid hiring from the pandemic left it with a bloated workforce.
Tech companies have laid off more than 150,000 workers by 2022. Other tech giants include Meta Platforms Inc (NASDAQ:), Google parent Alphabet (NASDAQ:) Inc and microsoft corporation (NASDAQ:) have also announced job cuts in recent months.