CMS & Web Experience Management

CMS Leader Box Responds to Starboard Value

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Box, Inc. (NYSE: BOX) today issued the following statement in response to the letter issued by Starboard Value LP (“Starboard”):

Over the last two years, the Box Board of Directors and management team have embraced suggestions from Starboard and other stockholders, taking meaningful action to enhance Box’s corporate governance and improve profitability, while also pursuing a comprehensive review of a wide range of strategic options. Building on these actions and in alignment with feedback from stockholders, including Starboard, the company is intently focused on accelerating top-line growth while continuing to drive increased profitability. The Board has been unified and unwavering in its commitment to acting in the best interests of all stockholders.

Proactive Governance Actions and World Class Board

As part of an agreement reached with Starboard in March 2020, the Box Board was significantly refreshed through the replacement of three long-standing directors with three new independent directors, including two former CEOs and one CFO at leading publicly traded technology companies, who added important skillsets and diverse perspectives. One of the new directors approved by Starboard, Jack Lazar, was recently appointed Chair of the Audit Committee, and another of the new directors approved by Starboard, Bethany Mayer, was appointed Chair of the Compensation Committee. Additionally, the Board recently approved the separation of the Chair of the Board and Chief Executive Officer roles, and appointed Ms. Mayer as Chair of the Board.

These Board refreshments are in addition to the three directors with significant enterprise technology experience – Sue Barsamian, Kim Hammonds, and Peter Leav – who have been added to the Box Board since 2018. In connection with the closing of the recently announced KKR-led transaction, an additional independent director, John Park, Head of Americas Technology Private Equity at KKR, will be added. As a result, Box has a diverse and independent Board with directors who bring extensive technology experience across enterprise and consumer markets, enterprise IT, and global go-to-market strategy, as well as deep financial acumen and proven track records of helping public companies drive disciplined growth, profitability, and stockholder value. Furthermore, seven of the ten directors on the Box Board will have joined the Board within the last three years.

Strong Financial Results

As part of the March 2020 agreement with Starboard, the Box Board also formed an Operating Committee, consisting entirely of independent directors. In the past year, under the oversight of the Operating Committee, the company has made substantial progress across all facets of the business – strategic, operational and financial – as demonstrated by the strong results reported for the full year of fiscal 2021:

  • Revenue growth rate plus free cash flow margin of over 26%, exceeding stated target of 25%, and nearly double the results from fiscal 2020;
  • Revenue of $771 million, an 11% increase year-over-year;
  • RPO of $897 million, up 17% year-over-year;
  • Non-GAAP operating margin of over 15%, a 14 percentage point increase year-over year; and
  • Free cash flow of $120 million, compared to negative $7.2 million in fiscal 2020.

It is clear that Box’s strategy is working. The company has observed growing demand for its more advanced capabilities, such as Box Shield and Box Relay, and drove more Suites adoption due to innovation and product portfolio enhancements. In the fourth quarter of fiscal year 2021, Box had a record 45% attach rate for Suites, as well as a 60% attach rate for Box Shield, in its six-figure deals. This has resulted in over 1,200 customers paying more than $100,000 annually, up 10% year-over-year, and 99 $1 million customers, up 24% year-over-year.

Looking ahead, the company is well-positioned to achieve a revenue growth rate between 12% to 16%, with operating margins of between 23% to 27% by fiscal 2024. Based on the customer momentum underway as well as the company’s product roadmap and the total addressable market opportunity, Box remains confident in its ability to achieve its goals.

Board’s Comprehensive Review of Value-Enhancing Strategic Options

As the management team has executed the company’s strategy, the Box Board has been, and continues to be, focused on ways to support and accelerate that strategy, while driving stockholder value. As part of this effort, the Board formed a Strategic Committee of four independent directors, including the three directors who were appointed in 2020 in conjunction with the agreement with Starboard. This Committee, with the support of financial and legal advisors, undertook a multi-month comprehensive review of a wide range of strategic options to determine the best possible path forward for Box and its stockholders. Undertaking this review had been a key component of Starboard’s feedback.

As a result of this review, in April 2021, the Strategic Committee unanimously recommended, and the Board unanimously approved, an agreement for KKR to lead a $500 million investment in Box in the form of convertible preferred stock and to appoint Mr. Park to the Board. Substantially all of the proceeds are to be used to fund a share repurchase through a “Dutch auction” self-tender for up to $500 million of the company’s common stock. Box’s Board concluded that this transaction and partnership with KKR, along with the repurchase of shares, will best position the company to deliver value to Box stockholders in both the near- and long-term. The transaction provides the ability for stockholders to elect to either monetize their investment or participate in any upside potential with KKR as a committed partner. Further, Mr. Park’s appointment will enable the company to benefit from a stockholder representative and his proven track record of driving growth, and substantial experience advising and supporting software and other technology companies with a focus on the cloud.

Constructive Engagement with Starboard

Over the last several months, the Board has engaged in a regular and ongoing dialogue with Starboard in an effort to find a mutually agreeable path forward. Box continues to engage with Starboard in good faith; however, the company does not believe additional changes to the Board are warranted or in the best interests of all stockholders. The Board as currently constructed, including the three independent directors appointed as part of the March 2020 agreement with Starboard, has overseen significant progress. With an experienced, diverse, and independent Board, and a strategy that is already yielding results, Box is building on its leadership in cloud content management and driving the company’s next phase of growth. Box continues to be open to feedback from Starboard and other stockholders to drive long-term value.

Box will present the Board’s nominations in its proxy statement, which will be filed with the U.S. Securities and Exchange Commission and mailed to all stockholders eligible to vote at the 2021 Annual Meeting. Box stockholders are not required to take any action at this time.


Morgan Stanley & Co. LLC is serving as financial advisor to Box. Wilson Sonsini Goodrich & Rosati, P.C. and Sidley Austin LLP are serving as legal advisors to Box.

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