Green Dot Board Battle Continues ahead of Shareholder Meeting, MoneyPak Relaunches
As Green Dot Corp. continues to fend off criticism of its performance and leadership from activist investor Harvest Capital Strategies, the company has sent a letter to shareholders in support of a trio of incumbent board members ahead of elections at Green Dot’s upcoming annual shareholder meeting, scheduled for May 23. The letter urges shareholders to vote for the re-election of company CEO Steve Streit, Audit Committee Chair Timothy Greenleaf and Michael Moritz to director positions.
In January, Harvest—a hedge fund manager that currently holds about 9.4 percent of Green Dot shares—called for the ouster of Streit and Greenleaf in a letter detailing concerns over Streit’s leadership, including weak financial results and a history of what it describes as poor execution and operational mismanagement, among other complaints. In March, Harvest doubled down on its call for change, rejecting Green Dot’s offer to collaborate with Harvest on adding additional board members and asking the hedge fund to recommend specific candidates. Harvest instead nominated three candidates of its own for the board. Green Dot rejected two of those as unqualified, but offered to immediately appoint the third—former NetSpend CEO George Gresham—to its board. Gresham, however, declined Green Dot’s offer, and Green Dot appointed three new independent directors earlier this month, leaving the company with nine independent directors, along with Streit. Harvest respondent to the appointments with outrage, calling the move a tactic to disenfranchise the trio of Harvest nominees and retrench the board with supporters of Streit and Greenleaf. Harvest again put forth its three candidates—Gresham, along with financial services veteran Saturnino Fanlo and longtime executive Philip Livingston—for election to Green Dot’s board at the company shareholder meeting.
“In our view, there is significant and ample reason to believe that voting for Harvest’s nominees will inject material risk and uncertainty into Green Dot’s future prospects and could deal a significant blow to our business momentum that may greatly limit our ability to achieve our financial goals,” Green Dot says in its letter to shareholders. The letter also highlights Green Dot’s successes in the long-term strategic plan the company undertook in 2012 to evolve from a “mono-line” prepaid card provider to a diversified “fintech leader,” with products and services available via a multitude of retail, online and mobile channels. And, it reiterates the positive financial results Green Dot announced in its most recent earnings report, including double-digit consolidated revenue and EBITDA growth in 2015. Shares of Green Dot stock also have been on the upswing, increasing steadily from $16.45 in early December, to $23.40 in mid-March, after the company announced a partnership with Uber under which the ride-sharing service will begin offering a business version of Green Dot’s Pay Award-winning GoBank mobile checking account for use by Uber drivers.
The letter also provides a status report on the company’s plan to achieve at least $1.75 in non-GAAP EPS in 2017. One major aspect of that initiative is the re-launch Green Dot’s updated MoneyPak reload product, which was discontinued in early 2015 over fraud concerns. The new MoneyPak, which contains enhanced security features, currently is rolling out throughout Green Dot’s retailer network, beginning with Rite Aid and Kroger stores and continuing to additional retailers throughout the year. “With Green Dot’s clear six-step plan on track, we believe investors are just beginning to realize the financial rewards of Green Dot’s winning strategy and superior execution,” the letter said, adding that Harvest Capital has not provided any “significant new ideas” on how to further improve Green Dot’s business.