A Brightcove board member has resigned over the Boston tech company’s “disappointing” performance and is calling for the publicly listed firm to sell itself.
"We do not agree with many of the statements made by Mr. Kapoor in his resignation letter."
In a stern letter to Brightcove’s board dated March 17, Chet Kapoor said it was “no longer tenable” for him to serve as a director due to the “complacent, status quo-supporting boardroom environment” that has inhibited his efforts to maximize shareholder value.
Brightcove, which provides an online video platform, hasn’t performed well for the most part on Wall Street since its initial public offering in 2012. The stock price is currently $8 a share, well below its $11 IPO price. While the company had something of a small comeback last fall, with the stock price floating around $13, it has fallen since then.
Kapoor’s letter was published Thursday as part of Brightcove’s announcement of his resignation.
In a statement provided to BostInno, Brightcove said it believes Kapoor left the board "because he had a different vision for the company than the one adopted by the Board as a whole."
"We do not agree with many of the statements made by Mr. Kapoor in his resignation letter, which are not supported by the underlying history," the company continued. "We are proud to have an incredible company and a world-class, committed Board of Directors. Mr. Kapoor’s departure from our Board will not impact our day-to-day operations or our overall strategy. We will stay focused on delighting our customers while creating value for shareholders."
In the letter, Kapoor, who is managing director of investment firm Tenzing Global, said the company’s stock has delivered a “disappointing -58% return to shareholders” and that the board must choose from one of the following options or both: “hold CEO David Mendels accountable for historical missteps” and/or “incentivize him to realize the significant shareholder value Brightcove is capable of generating with rigorous hurdles.”
Kapoor said he told board Chairman Gary Haroian before he resigned that the board needs to address its “bloated cost structure” and form a merger and acquisition committee to “ensure all opportunities to maximize shareholder value are fully explored."
"The technology M&A environment is robust, and interest rates remain close to historic lows, with capital readily available," Kapoor wrote. "From the Company’s historical proxy statements, 14 of the company’s reported Software-as-a-Service industry peers have been acquired by strategic or financial buyers."
In an investor relations presentation Brightcove published Thursday, the company said it has been actively considering “all strategic opportunities,” including whether to sell itself or merge with another company.
Kapoor's letter also references the recent board appointment of C Space Chairman Diane Hessan and criticizes the board for not accepting board nominations from his own firm, calling the process a "smokescreen."
The company, in its investor presentation, said it decided to appoint Hessan because the board, including Kapoor, had unanimously agreed at last year’s stockholder meeting to bring on one new director with digital marketing experience.
Brightcove said that the candidates from Kapoor’s firm, Tenzing, didn’t have experience in digital marketing or video technology software development, another skillset it was looking for.
“Given Ms. Hessan’s decades of experience in digital marketing and understanding the markets in which the Company operates, our Board of Directors determined that she possessed the skill set sought by the Company,” Brightcove said.
