Box CEO on his recent proxy battle with activist investors

Box CEO Aaron Levie is ready to move on after the end of an intense standoff with activist investors.

Levie’s company, which he cofounded in 2005, recently won a proxy battle against investor Starboard Value, which had threatened to oust Levie as CEO if the company failed to sell itself.

The ordeal began in September 2019 when Starboard bought a 7.5% stake in Box, urging the company to pursue “potential business combinations” after Box’s shares had fallen 37% since it went public in 2015 and its growth had slowed.

The relationship between Box and Starboard appeared to improve as Box reignited sales and appointed three Starboard-approved board members. But in January, Starboard decided it wanted a major change in Box’s business, regulatory filings show, and in May it kick-started a months-long proxy contest to replace three other Box board members, thus making it possible to force Levie’s removal.

Reminiscent of political barnstorming, Levie would spend time meeting with shareholders, telling them about the company’s improved sales and prospects in order to win their votes during a board election.

“It’s probably a little bit less like Billions, and a little bit more like a political campaign,” Levie said, contrasting Hollywood’s depiction of corporate intrigue with the reality. “It’s really about making sure that the message is fully understood by your shareholders.”

Levie said that Box “never wanted to be in the position of having to kind of try and do this argument in public.” He described the episode as “an awkward experience” because “you’re asking lots of shareholders to make a judgment call with imperfect information.”

“Most shareholders just want to make investments about how well is the company performing and not why are these two sides talking about each other,” Levie said. “It’s very unusual.”

Still, Levie said the proxy battle was a “very interesting process” and that it’s “actually great that capitalism affords shareholders the ability to have a different perspective.”

“I think we may have completely disagreed with the viewpoints, but the idea that capitalism lets you have those viewpoints and have that debate publicly, I think is interesting, on an intellectual level.”

Of course, Levie’s perspective might be different if he had lost. Box stockholders voted in September to reelect the company’s director nominees, thus extinguishing the corporate crisis.

Starboard said that it was “certainly disappointed by the results of this election,” and that “at this juncture, the future of Box is in the board’s hands, and there is a significant amount of work left to be done.”

The investing firm noted that “Box’s stock price has increased by 71%” since it first took a stake in the company in September 2019.

Levie acknowledged that Box was “in a tough spot” in 2019 and that the company “had a decelerating growth rate, and we didn’t have any profit margin.” The company’s combat with Starboard did spur Box to improve sales and cut operating costs, he said.

Box’s overall sales rose 11% year over year to $771 million during fiscal 2021, and it shrunk its losses by 43% to $43 million.

The company is now moving ahead with plans to offer more work-collaboration features across its core content-management software. Box plans to announce on Wednesday during its annual user conference a new note-taking app, a redesigned mobile app, and the ability for customers to electronically sign digital documents, putting the company in competition with DocuSign and Adobe.

Levie described the new features as contributing to “the biggest vision I think we’ve had as a company ever, but one that I think responds to the trends and the challenges that companies are facing today in the enterprise.”

At least for the time being, there’s no pesky activist firm challenging him.

“I mostly just wanted to take a nap,” Levie said of his response upon learning that shareholders had reelected the company’s board.