By Anirban Sen
NEW YORK (Reuters) – Impactive Capital has nominated four directors to the board of Envestnet 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.
Shares of Envestnet, which is currently valued at about $3.4 billion, have shed about 23% of their value in the past year compared to an 18% decline in the S&P 500 Index.
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.”
In addition to Taylor Wolfe, Impactive Capital nominated private equity firm Lane Holdings Inc chair Wendy Lane, former UBS Group AG global wealth management co-president Thomas Naratil and former chief financial officer of collaboration software provider Diligent Corp Michael Stanton to the board of Envestnet.
Impactive Capital, which was founded by Taylor Wolfe and Christian Asmar, oversees $2.7 billion in assets.
(Reporting by Anirban Sen in New York; Editing by Muralikumar Anantharaman)