SCHEDULE: BILL Holdings Adds Four New Directors, Starboard Ends Proxy Fight

Sentiment:

Cooperation Agreement and Board Changes 16 October 2025 7:41 PM

BILL Holdings, Inc. announced a cooperation agreement with activist investor Starboard Value LP, leading to the appointment of four new directors and the withdrawal of Starboard's proxy nominations.

Summary

BILL Holdings, Inc. (BILL) and Starboard Value LP (Starboard) entered into a cooperation agreement on October 15, 2025.
Starboard, holding approximately 8.6% of BILL's common stock (8,639,900 shares, including 1,614,152 from forward purchase contracts), had previously submitted director nominations.
The agreement results in significant changes to BILL's Board of Directors.
Stephen Fisher resigned as a Class II director, effective October 14, 2025.
The Board size will increase from 12 to 13 directors.
Peter A. Feld (Starboard's Managing Member) and Lee Kirkpatrick (former Twilio CFO) were appointed as Class II directors, effective October 17, 2025, with terms expiring at the 2027 annual meeting.
Beth Johnson (former Citizens Financial Group Vice Chair) and Natalie Derse (Gen Digital CFO) will be nominated for election as Class III directors at the 2025 Annual Meeting, with terms expiring at the 2028 annual meeting. Current directors David Hornik and Katherine (Allie) Kline will also be nominated.
Steve Cakebread and Brian Jacobs will retire from the Board at the conclusion of their service at the 2025 Annual Meeting.
New directors will join key committees: Mr. Feld to Nominating and Corporate Governance, Mr. Kirkpatrick to Audit, Ms. Johnson to Compensation, and Ms. Derse to Audit.
Starboard has withdrawn its director nominations for the 2025 Annual Meeting and agreed to customary standstill and voting commitments.
BILL will reimburse Starboard for up to $575,000 in expenses related to its involvement.
The Company plans to hold an investor day in the first half of calendar year 2026 to outline its path to "Rule of 40" and share long-term financial targets.

Sentiment

Score: 8

Explanation: The agreement with Starboard Value LP, a prominent activist investor, resolves a potential proxy contest and brings in new, experienced directors. The commitment to an investor day and a 'Rule of 40' path signals a strong focus on strategic growth and profitability, which are positive for shareholder value. The board refreshment and clear strategic direction are strong positives, outweighing the minor cost of expense reimbursement.

Positives

Resolution of potential proxy contest with activist investor Starboard, indicating a cooperative path forward.
Appointment of four new directors with diverse and relevant experience in AI, digital transformation, FinTech, compliance, and operational excellence.
Peter Feld's appointment to the Board and NCGC, providing Starboard direct representation and influence.
Commitment to an investor day in H1 2026 to detail long-term financial targets and a path to "Rule of 40," signaling a focus on profitability and growth.
New directors are deemed "Incumbent Board" or "Continuing Director" for existing plans/agreements to avoid triggering "Change in Control" clauses.

Negatives

Reimbursement of Starboard's expenses up to $575,000, which is a cost to the company.
Starboard's ability to share Company Confidential Information with its representatives, albeit under strict confidentiality and use limitations, could be perceived as a slight risk to information control.
The need for a cooperation agreement suggests prior disagreements or pressure from Starboard.

Risks

Macroeconomic factors, including changes in interest rates, political and regulatory developments, trade policy changes, inflation, recession, and volatile market environments.
Fluctuations in foreign exchange rates.
Company's history of operating losses and recent rapid growth.
Risk of loss, errors, and fraudulent activity related to large sums of customer funds transferred daily.
Credit risk associated with BILL Divvy Cards and invoice financing.
Challenges in attracting new customers and converting trial customers to paying customers.
Risks related to developing and deploying AI agents and other AI tools.
Increased competition or new entrants in the marketplace.
Potential impacts of acquisitions, investments, and other strategic transactions.
Dependence on relationships with accounting firms, financial institutions, and software providers.
Global impacts of ongoing geopolitical conflicts.
Actual and expected impacts of these factors on the small and midsize businesses (SMBs) served by the Company.

Future Outlook

BILL Holdings, Inc. aims to become a more efficient, agile organization, driving durable revenue growth and delivering superior, sustainable value creation. The company expects to hold an investor day in the first half of calendar year 2026 to share long-term financial targets and discuss its path to achieving the 'Rule of 40'.

Management Comments

"As we work to continually reinvent our category and lead a new era of intelligent finance for SMBs, we are also focused on becoming a more efficient, agile organization so that we can move faster on high-impact opportunities, drive durable revenue growth and deliver superior, sustainable value creation." Ren Lacerte, CEO and Founder.
"Our new directors are aligned with these objectives and bring outstanding experience and highly relevant skills to help advance these efforts, including in the areas of AI, digital transformation, FinTech, compliance, and operational excellence initiatives, among others." Ren Lacerte, CEO and Founder.
"We look forward to sharing more about the progress we are making during our upcoming first quarter earnings call. We also expect to hold an investor day in the first half of calendar year 2026 to share long-term financial targets and discuss the Company’s path to Rule of 40." Ren Lacerte, CEO and Founder.
"We greatly appreciate the relationship we have built with Ren, BILL’s leadership team, and the Board. BILL is well positioned as a premier financial operations platform for SMBs with leading products and a strong market position." Peter Feld, Starboard.
"We invested in BILL because of the tremendous potential we see to capitalize on the Company’s strengths and create long-term value through a sharper focus on margin expansion and continued growth." Peter Feld, Starboard.
"I am excited to be joining the Board with Natalie, Beth, and Lee. I look forward to working with my fellow directors and BILL management to support execution on the Company’s path towards a best-in-class financial profile and significant shareholder value creation." Peter Feld, Starboard.

Industry Context

The agreement reflects a trend of activist investors engaging with technology companies to drive operational efficiency and shareholder value. BILL's focus on AI, digital transformation, and FinTech aligns with broader industry shifts towards intelligent automation and integrated financial platforms for SMBs. The commitment to achieving the 'Rule of 40' indicates a strategic emphasis on balancing growth and profitability, a common objective for mature growth-stage software companies.

Comparison to Industry Standards

The "Rule of 40" is a common benchmark in the SaaS industry, where a company's revenue growth rate and profit margin (e.g., EBITDA margin) should sum to 40% or more. Companies like Salesforce, Adobe, and Microsoft are often evaluated against this metric, with top performers consistently exceeding it. BILL's explicit commitment to outlining a path to the Rule of 40 suggests a strategic pivot towards demonstrating sustainable, profitable growth, which is a positive signal for investors seeking mature SaaS investments.
The appointment of directors with experience in AI, digital transformation, and FinTech, such as Natalie Derse (CFO of Gen Digital, a cybersecurity company), Beth Johnson (former Vice Chair at Citizens Financial Group), and Lee Kirkpatrick (former CFO of Twilio), aligns with the industry's increasing demand for board expertise in these critical areas. This is comparable to how leading tech companies like Google (Alphabet) or Amazon recruit board members with deep expertise in emerging technologies and financial operations to guide strategic direction.
The resolution of an activist campaign with Starboard Value LP, a prominent activist investor known for its focus on operational improvements and board refreshment (e.g., past engagements with Darden Restaurants, Mellanox Technologies), is a common outcome in the public markets. Such agreements often lead to enhanced corporate governance and a renewed focus on shareholder value, similar to how other companies have navigated activist pressure to implement strategic changes.

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Class II Director	Stephen Fisher	N/A	2025-10-14	Resignation
Class II Director	N/A	Peter A. Feld	2025-10-17	Appointment as part of cooperation agreement
Class II Director	N/A	Lee Kirkpatrick	2025-10-17	Appointment as part of cooperation agreement
Class III Director	N/A	Beth Johnson	Immediately following 2025 Annual Meeting	Nomination and expected election as part of cooperation agreement
Class III Director	N/A	Natalie Derse	Immediately following 2025 Annual Meeting	Nomination and expected election as part of cooperation agreement
Director	Steve Cakebread	N/A	Conclusion of 2025 Annual Meeting	Retirement
Director	Brian Jacobs	N/A	Conclusion of 2025 Annual Meeting	Retirement

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Size Increase	The Board of Directors will increase in size from 12 to 13 members.	Immediately following Stephen Fisher's resignation (October 14, 2025)	Expands board capacity and accommodates new director appointments from the cooperation agreement.
Committee Appointments	Peter A. Feld appointed to the Nominating and Corporate Governance Committee, Lee Kirkpatrick to the Audit Committee, Beth Johnson to the Compensation Committee, and Natalie Derse to the Audit Committee.	Immediately following respective appointment or election to the Board	Enhances committee expertise with new independent and Starboard-nominated directors, potentially improving oversight and strategic direction.
Director Independence/Incumbency Status	New Directors are deemed 'Incumbent Board' or 'Continuing Director' for purposes of existing incentive, compensation, and loan agreements to prevent 'Change in Control' triggers.	No later than in connection with the appointment or election of the New Directors	Mitigates potential financial and contractual repercussions that could arise from significant board changes, ensuring stability.
Standstill Agreement	Starboard Value LP agreed to customary standstill provisions, including refraining from proxy solicitations, forming groups, or making contested director nominations during the Standstill Period.	October 15, 2025	Reduces potential for future activist campaigns for a defined period, allowing management to focus on strategic execution without immediate external pressure.
Voting Agreement	Starboard agreed to vote its shares in favor of Board-nominated directors and other Board recommendations at the 2025 Annual Meeting and any special meetings during the Standstill Period, with exceptions for extraordinary transactions and ISS/Glass Lewis recommendations on certain proposals.	October 15, 2025	Ensures stability in voting outcomes for key proposals and director elections, supporting the Board's agenda.
Director Resignation Policy	The Starboard Director (and any Starboard Representative replacement) must submit an irrevocable resignation letter effective if Starboard fails to maintain the Minimum Ownership Threshold.	October 15, 2025	Links Starboard's board representation directly to its continued significant ownership stake, providing a mechanism for board refreshment if ownership drops.

Stakeholder Impact

Shareholders: Potential for increased shareholder value through enhanced corporate governance, strategic focus on profitability (Rule of 40), and the resolution of a potential proxy contest. Starboard's continued significant ownership and board representation align its interests with other shareholders.
Management: Gains stability and a clear mandate to execute strategic plans without immediate activist pressure, supported by a refreshed board with relevant expertise.
Employees: No direct impact mentioned, but a more stable and strategically focused company could lead to a more secure and growth-oriented environment.
Customers (SMBs): Continued focus on being a leading intelligent financial operations platform for SMBs, potentially leading to improved products and services.
Creditors: New directors deemed "Incumbent Board" or "Continuing Director" to avoid triggering "Change in Control" clauses in loan agreements, ensuring stability in credit arrangements.

Next Steps

BILL Holdings, Inc. will hold its 2025 Annual Meeting of Stockholders no later than December 11, 2025.
Beth Johnson and Natalie Derse will join the Board immediately following their election at the 2025 Annual Meeting.
Steve Cakebread and Brian Jacobs will retire from the Board at the conclusion of their service at the 2025 Annual Meeting.
BILL Holdings, Inc. expects to hold an investor day in the first half of calendar year 2026 to share long-term financial targets and discuss the Company's path to Rule of 40.

Key Dates

Date	Description
2025-09-05	Starboard submitted a letter (Nomination Notice) nominating director candidates for the 2025 Annual Meeting.
2025-10-14	Stephen Fisher retired from the Board of Directors.
2025-10-15	Starboard Value LP and BILL Holdings, Inc. entered into a Cooperation Agreement.
2025-10-15	Date used for calculating 100,885,582 Shares outstanding for beneficial ownership percentages.
2025-10-16	Joint Filing Agreement entered into by Reporting Persons.
2025-10-16	Press release announcing the cooperation agreement and board changes was issued.
2025-10-17	Peter A. Feld and Lee Kirkpatrick joined the Board of Directors.
2025-12-11	Company to use reasonable best efforts to hold the 2025 Annual Meeting no later than this date.
2026-H1	Expected timeframe for BILL to hold an investor day to outline path to Rule of 40 and share long-term financial targets.
2027	Term expiration for Class II directors Peter A. Feld and Lee Kirkpatrick at the annual meeting of stockholders.
2028	Term expiration for Class III directors Beth Johnson and Natalie Derse (if elected) at the annual meeting of stockholders.

Recommendation

buy

The cooperation agreement with Starboard Value LP is a significant positive development, resolving potential shareholder activism and bringing in highly qualified, independent directors with expertise in critical areas like AI, FinTech, and operational excellence. The commitment to an investor day in H1 2026 to outline a path to the 'Rule of 40' signals a strong focus on balancing growth with profitability, a key driver for long-term shareholder value in the SaaS industry. This strategic clarity and enhanced governance, coupled with Starboard's continued significant ownership, suggest a strong potential for improved financial performance and stock appreciation, making it a compelling 'buy' for seasoned investors.

Keywords

BILL Holdings, Starboard Value, Cooperation Agreement, Board of Directors, Corporate Governance, Activist Investor, FinTech, SMBs, Director Appointments, Proxy Contest, Shareholder Value, Rule of 40, Financial Operations Platform, AI, Digital Transformation

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