Investor Alert

Oct. 6, 2021, 3:21 p.m. EDT

Box moves forward after investor fight, but CEO says lesson is that ‘activism can be constructive’

By Jon Swartz

Box Inc. Chief Executive Aaron Levie is steering the cloud-storage company he founded in new directions, and says he has an antagonistic investor to thank.

Levie survived a proxy fight last month from activist investor Starboard Value, which sought to jettison board members including Levie. In an interview as he prepped for Box’s (NYS:BOX) annual customer conference, BoxWorks, Levie called the shareholder vote “a decisive tally” but said he was “conflicted” about the battle he won.

“Activism can be constructive. [Starboard’s] actions transformed the company, but we took a different path going forward,” he said, referencing earlier changes made in consultation with Starboard before the proxy fight. “That said, I’m OK, with a democratic form of capitalism, which is great and healthy. It keeps companies moving forward.”

Moving forward means the transformation of Box from a file-sharing startup to a cloud-content management company with an annual revenue run rate of nearly $900 million in fiscal 2022. On Wednesday at BoxWorks, Box announced new productivity tools such as e-signing software called Box Sign for all U.S. customers and the ability for Box Shield to combat ransomware attacks.

For more: Box signs on to e-signature push for cloud services

The Redwood City, Calif.-based company also unveiled a new Notes experience that makes it easier to work from anywhere, with improved compatibility on Microsoft Corp. (NAS:MSFT) , Salesforce.com Inc.’s (NYS:CRM) Slack Technologies, and Zoom Video Communications Inc. (NAS:ZM) .

“This is the evolution of a platform we have built for 15 years,” Levie said. “This time is a time for a breakout in how content is shared and collected and collaborated on. Content is at the heart of how we work today in this remote-work environment.”

Levie drove that point home with metronomic precision the past several months, as he fended off the proxy fight. Box has pivoted, he said, on three mega-themes: work teams are distributed and hybrid; everything is going to go digital; and cybersecurity and compliance are crucial.

See also: Box shareholders re-elect company directors, rejecting Starboard Value’s push to revamp board

“The next stage of the cloud is to manage and structure data,” said Levie, who called the proxy win a “recognition that our strategy is working.”

Powerful proxy advisory firm Institutional Shareholder Services backed Box in its fight and  recommended  shareholders vote for Box directors Levie and Peter Leav because the current board has made “significant changes” to lead a turnaround.

“ISS recognized that the Box of today is not the Box of 2019,” it said in a statement.

In August, Box raised fiscal 2022 revenue guidance to between $856 million and $860 million, topping analyst estimates of $853.4 million.

Box’s stock has improved 45% over the past year, and 38% so far in 2021, easily outpacing the growth of the S&P 500 index (S&P:SPX) , which increased 27.5% and 15.7% in those periods.

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