Jeffrey Smith (Starboard Value Lp) has sent a letter to Quantum Corp (NYSE:QTM)’s stockholders in search of support for additional representation in the company’s Board of Directors, as the company continues to fail to meet internal and external expectations for both revenue growth and profitability improvement. The fund nominated six “highly qualified director candidates” for election to the Board at Quantum Corp (NYSE:QTM)’s upcoming 2014 Annual Meeting of Stockholders. Three of these nominees (Philip Black, Louis DiNardo, and Jeffrey C. Smith), are already serving as Board members.
In the introduction, Mr. Smith said:
“While we were pleased that we were able to work with the Company in 2013 to reconstitute the Board of Directors with mutually agreeable director candidates, we believe that additional representation is now necessary to ensure that there is proper oversight and accountability at Quantum Corp (NYSE:QTM), as well as to ensure that the actions required to maximize stockholder value are given full and proper consideration in the boardroom (…) All [six] of our director candidates are highly qualified with valuable and relevant skill-sets and are ready to serve stockholders to help make QTM a stronger, more profitable, and, ultimately, more valuable company.”
As stated in the letter, Starboard Value has a solid track record when it comes to creating stockholder value at public companies. In this case, the proposed changes (mainly, the election of Directors and the ratification of appointment of PricewaterhouseCoopers LLP as Quantum Corp (NYSE:QTM)’s independent registered public accounting firm to audit its financial statements) result from the company’s poor performance (see tables below).
Source: SEC Filing
Quantum Corp (NYSE:QTM) is a $293 million market cap company that provides storage, archive and data protection solutions for capturing, sharing, and preserving digital assets over the entire data lifecycle. Starboard Value holds an a aggregate of 44,342,278 shares of Common Stock, including 18,548,875 shares of Common Stock issuable upon the conversion of the Company’s 4.50% convertible senior notes due November 2017 held by Starboard. This position accounts for approximately 16.5% of the company’s outstanding shares of Common Stock. This makes the fund one of the largest shareholders in the company.
The full text of the letter is available below:
Disclosure: Javier Hasse holds no position in any stocks mentioned