Impactive Capital nominates four directors to Envestnet's board

Reuters

Published Jan 04, 2023 07:07AM ET

Updated Jan 04, 2023 10:36AM ET

By Anirban Sen

NEW YORK (Reuters) -Impactive Capital has nominated four directors to the board of Envestnet (NYSE:ENV) Inc, a U.S. vendor of software that helps manage investments, in a push to improve its financial performance, the hedge fund told Reuters on Wednesday.

Impactive Capital, which holds a 7.5% stake in Envestnet, nominated two men and two women, including its co-founder Lauren Taylor Wolfe, to Envestnet's board.

"Given the disappointing returns, margin underperformance, and questionable governance over which the current board has presided, we have concluded that change is required for all directors up for election at this year’s annual meeting," Taylor Wolfe said in a statement.

Envestnet did not immediately respond to a request for comment.

Impactive Capital said it unveiled the challenge to Envestnet after its attempt to negotiate just one spot on the company's board for Wolfe was unsuccessful. The fund remains open to discussions with Envestnet so that a proxy contest can be avoided, according to people familiar with the matter.

Envestnet shares, which have shed about 23% of their value in the past year compared to an 18% decline in the S&P 500 Index, rose 2.2% in early trade on Wednesday on the news. The company currently has a market capitalization of about $3.4 billion.

In its statement, Impactive Capital cited poor profit margins and bad capital allocation among the reasons for Envestnet's underperformance.

It also said Envestnet's management and board directors were overpaid and that the company should improve its corporate governance by putting all of its directors up for election every year.

Impactive Capital cited an 11% return in Envestnet's stock since the fund unveiled its push for changes at the company on Nov. 15, double the cumulative return during the trailing five-year period, as evidence of "shareholders' profound dissatisfaction with the company's current direction and their desire for change."