Activism: Perion Network Ltd (PERI) – Extraordinary Shareholders’ Meeting by iolite
In iolite’s H1/16 report (download here) I wrote: the financially most painful investment decision in my life to date has been an investment in Perion Network (NASDAQ:PERI). This is an investment in what was once Israel’s largest IT start-up, after it had fallen on hard times and looked cheap in the aftermath. Unfortunately, there are serious issues with current management: a lack of credibility, a track record of horrendous capital allocation, and an overhead structure that no longer fits the size of the business. Many of these issues only revealed themselves over time and only became obvious earlier this year. It took me too long to spot them and to act accordingly.
At this year's Sohn Investment Conference, Dan Sundheim, the founder and CIO of D1 Capital Partners, spoke with John Collison, the co-founder of Stripe. Q1 2021 hedge fund letters, conferences and more D1 manages $20 billion. Of this, $10 billion is invested in fast-growing private businesses such as Stripe. Stripe is currently valued at around Read More
As it turns out, I am not alone in my assessment. Major shareholder Ronen Shilo just called for an extraordinary shareholders’ meeting with an open letter to the Board:
- This deterioration results from lack of proper management and leadership. Perion’s executive management lacks vision and strategy. The Shareholder has requested several times that the Board replace the management, primarily the CEO, Mr. Joseph Mandelbaum. However, despite promising otherwise, the Board has not implemented these changes.
- Faulty “staggered” Board structure under Articles is a primary reason for the Board’s complacency in not effecting management changes. Under the “staggered” Board structure, Perion’s directors are entrenched for three-year terms and do not face annual elections. Consequently, certain directors feel too comfortable with the status quo to lead these changes.
- “Staggered” Board structure prevents shareholders from replacing complacent directors annually with new nominees who will better protect shareholders’ interests. Instead, certain directors, together with management, continue to direct Perion without proper reflection of shareholders’ interests.
I couldn’t agree more. The meeting is the opportunity for shareholders to speak up, to re-gain control, and to make change happen! If you are a fellow PERI shareholder – looking forward to seeing you in Israel on Sep 26!