By Svea Herbst-Bayliss
NEW YORK (Reuters) - Two more top shareholders in Pitney Bowes Inc (NYSE:PBI) are criticizing how management is running the shipping and mailing company, echoing activist investment firm Hestia Capital's calls to oust the chief executive and replace board members.
Swiss asset manager BWM AG, which has been invested for five years and owns 1.5% of Pitney Bowes, told Reuters it has serious concerns about the company's strategy and execution.
In September BWM AG wrote a letter to the board highlighting poor execution in the ecommerce segment, excessive debt, overly high corporate costs and the chief executive officer's multi-million dollar pay. Phone calls with the chief financial officer and CEO followed.
"This once proud blue chip has become a junk rated small cap with significant default risk," portfolio managers Pascal Pruess and Georg von Wyss wrote in the letter reviewed by Reuters. "You, the Directors, are responsible."
Pitney Bowes, founded over 100 years ago and worth roughly $3.6 billion in 2007, now has a market capitalization of $748 million. Its stock price has fallen 36% since January and has lost 61% in the last five years.
BWM AG's prescription to repair the damage: CEO Marc Lautenbach "needs to be replaced." The fund managers also want the board to consider strategic options, preferably a sale, for the ecommerce unit.
A similar call came from DOMO Capital, which owns roughly 1% of the company on behalf of clients and wants big changes on the board and in the executive suite.
"The poor management of global ecommerce is on Marc Lautenbach and the poor allocation of capital is on Michael Roth as the chairman of the board," DOMO's portfolio manager Justin Dopierala, told Reuters.
Lautenbach has been Pitney Bowes' CEO for a decade and Roth has served on the board since 1995.
A spokesperson for Pitney Bowes declined to comment but repeated an earlier statement that the company is looking "forward to having the discussion about the best path forward with all our shareholders during the 2023 proxy season."
Investors can nominate directors for election to Pitney Bowes' board early next year and Hestia Capital has already laid the foundations for a proxy fight.
On Monday, Hestia, which owns 7.2% of Pitney Bowes, said it intends to take control of the nine-person board and replace the CEO and chair. It plans to propose former ShippingEasy.com chief Katie May and former Stamps (NASDAQ:STMP).com CEO Ken McBride as director candidates, two sources told Reuters.
Hestia criticized operational underperformance, poor capital allocation and declining creditworthiness. Several other shareholders share Hestia's concerns but are not yet publicizing their complaints, two sources told Reuters.
The coming proxy season will be different, lawyers and bankers said, noting that smaller shareholders may be more likely to win one or two seats on boards because new proxy-voting rules require all director candidates to be listed on the same ballot as the incumbents, possibly giving the dissidents a better shot a having their candidates elected.