DEFA14A: LivePerson Reaches Cooperation Agreement with Vector Capital, Announces Board Refreshment

LivePerson and Vector Capital Management, its largest shareholder, have entered into a cooperation agreement to refresh the board of directors and enhance shareholder value.

Summary

• LivePerson has entered into a cooperation agreement with Vector Capital Management, its largest shareholder, owning approximately 12% of the company's outstanding common stock.
• The agreement includes the nomination of Dan Fletcher, CFO of Planful (a Vector portfolio company), to LivePerson's Board at the 2024 Annual Meeting.
• Following the meeting, an additional director will be appointed in cooperation with Vector.
• One current director will either not be re-nominated or will resign by December 31, 2024.
• A new Chair of the Board will be selected from among the then-incumbent directors by December 31, 2024.
• Vector has agreed to vote in favor of the Board's recommendations, subject to certain exceptions.
• Customary standstill and non-disparagement provisions are included in the agreement, which terminates on December 31, 2025.
• Yael Zheng has resigned from the Board, effective as of the date of the 2024 Annual Meeting; her resignation was not due to any disagreement with the company.

Sentiment

Score: 7

Explanation: The document reflects a positive collaboration between LivePerson and Vector Capital, with clear steps outlined for board refreshment and corporate governance improvements. The agreement aims to enhance shareholder value, suggesting a favorable outlook.

Positives

• The agreement with Vector Capital aims to enhance shareholder value through board refreshment.
• The addition of Dan Fletcher and another mutually agreed upon director is expected to bring relevant experience and expertise to the Board.
• Vector Capital's voting commitment provides stability and alignment with the Board's recommendations.
• The selection of a new Board Chair signals a commitment to strong corporate governance.
• The collaborative approach with a major shareholder could lead to improved strategic decision-making.

Negatives

• The agreement requires one current director to either not be re-nominated or resign by December 31, 2024, which could disrupt board dynamics.
• The standstill provisions limit Vector Capital's ability to influence the company's direction beyond the agreed-upon terms.
• The termination date of December 31, 2025, introduces uncertainty regarding the long-term relationship between LivePerson and Vector Capital.

Risks

• Failure to successfully integrate the new directors could hinder the Board's effectiveness.
• Disagreements between LivePerson and Vector Capital could arise despite the cooperation agreement.
• The standstill provisions could prevent Vector Capital from taking necessary actions if the company's performance deteriorates.
• Delays in appointing the second new director or selecting a new Board Chair could trigger termination of the agreement.
• The loss of a current director could negatively impact the Board's collective knowledge and experience.

Future Outlook

The company aims to enhance the Board with new directors who bring skills, expertise and industry experience to support the execution of the company's strategy, with the goal of producing long-term value for all shareholders.

Management Comments

• Jill Layfield, Chair of the Board, stated that the company remains focused on enhancing the Board with new directors who bring skills, expertise and industry experience to support the execution of the company's strategy, with the goal of producing long-term value for all shareholders.
• Alex Slusky, Managing Director and Chief Investment Officer of Vector, added that they appreciate the collaborative relationship with the company and that the Boards nomination of Mr. Fletcher reinforces their confidence in the company's corporate governance and management.

Industry Context

Activist investors are increasingly engaging with companies to influence board composition and strategic direction, this agreement reflects a collaborative approach to board refreshment, potentially mitigating a more disruptive activist campaign.

Comparison to Industry Standards

• Cooperation agreements are a common tool used by companies to manage relationships with activist investors, similar to agreements seen with companies like Darden Restaurants and Starboard Value.
• The standstill provisions are standard in these types of agreements, limiting Vector Capital's ability to take certain actions that could disrupt the company's operations, similar to restrictions in agreements between companies and activist funds like Elliott Management.
• The board refreshment process is in line with industry trends, as companies are increasingly focused on adding directors with relevant experience and expertise to support their strategic goals, similar to the board changes at companies like Intel and General Electric.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders are expected to benefit from the enhanced Board and improved corporate governance.
• Employees may experience changes in leadership and strategic direction.
• Customers may see improvements in products and services as a result of the Board's influence.
• Suppliers and creditors may be affected by any strategic shifts resulting from the agreement.

Next Steps

• Nomination of Dan Fletcher to LivePerson's Board at the 2024 Annual Meeting.
• Appointment of an additional director in cooperation with Vector after the 2024 Annual Meeting.
• Selection of a new Chair of the Board by December 31, 2024.
• Filing of a proxy statement and GOLD universal proxy card with the SEC in connection with the 2024 Annual Meeting.

Key Dates

Keywords

LivePerson, Vector Capital, Cooperation Agreement, Board Refreshment, Director Nomination, Corporate Governance, Shareholder Value, Standstill Agreement, Voting Commitment