Twilio board shakeup prompts renewed activist scrutiny

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107342589 1701701869929 gettyimages 1253775093 cfoto illustra230511 npERP

Twilio has been facing pressure from activist investors for almost a year, urging the software vendor to make changes to its board and consider a potential sale. The company’s founder and longtime CEO Jeff Lawson resigned in January.

Anson Funds, the activist group pushing for change at Twilio, is intensifying its campaign following recent board changes at the company. Twilio settled with activist investor Sachem Head, resulting in giving a board seat to Andy Stafman, a partner at Sachem Head.

Twilio also announced that Byron Deeter, an early investor, would be leaving the board, and would be asking shareholders to vote to declassify the board at the upcoming annual meeting.

Anson portfolio manager Sagar Gupta believes these moves are not enough and that they do not address Twilio’s persistent underperformance. Gupta stated that Twilio repeatedly rejected proposals for governance improvement until facing intense pressure.

Despite Gupta’s campaign, Twilio shares are down 21% for the year. Gupta’s activism at Twilio began in 2023 while he was with Legion Partners before moving to Anson later that year.

Anson and Legion, each owning less than 0.5% of Twilio, have been vocal in pushing for changes at the company, resulting in an expanded share buyback program, the resignation of Lawson, and an operational review.

However, Twilio completed the operational review, decided against selling the Segment business unit, and authorized a smaller share buyback than the activists were seeking. Anson is now scrutinizing strategy, operations, and governance at Twilio, including related-party transactions between Twilio and Deeter’s employer, Bessemer.

In 2018, Twilio acquired SendGrid, which was also backed by Bessemer. Deeter, who was a director at both companies, recused himself from negotiations. Even though Deeter has left, Bessemer still has representation at Twilio through the company’s chairman, Jeff Epstein, who is an operating partner at the venture firm.

Gupta emphasized the relevance of the related-party transactions despite Deeter’s departure and highlighted the continued directorship of another Bessemer partner at Twilio.

Twilio, a software vendor, has been facing pressure from activist investors for almost a year, leading to the resignation of founder and CEO Jeff Lawson in January. The activist group Anson Funds has been pushing for changes in the company’s board structure and operations. After a settlement with another activist investor, Twilio announced board changes and a potential restructuring at their upcoming annual meeting. Anson Funds, led by portfolio manager Sagar Gupta, believes these changes do not go far enough to address the company’s underperformance. Despite Twilio’s decision to keep their business unit Segment, the activist investors are continuing to push for further governance improvements. They have highlighted concerns about related-party transactions between Twilio and one of its board members, Byron Deeter, from Bessemer. Gupta has stated that Anson will be closely monitoring all aspects of Twilio’s strategy, operations, and governance going forward.

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