San Francisco-based activist-investment firm Voce Capital Management LLC is urging stockholders to vote against the three OnDeck Capital directors facing re-election -- a challenge that sent OnDeck shares rising as much as 11.2 percent Friday (April 17).
In a 12-page letter to investors, Voce Chief Investment Officer J. Daniel Plants wrote that OnDeck has seen its stock price plummet some 93 percent since the company went public more than five years ago.
“OnDeck’s lack of strategic focus, runaway costs and weak corporate governance have contributed to chronic underperformance,” wrote Plants, whose firm's more than 1.3 million OnDeck shares make it one of the company’s largest stockholders.
“We believe OnDeck’s core value proposition is strong, but significant work needs to be done to reestablish credibility with investors,” the note added. “We fully appreciate the challenges that the unprecedented COVID-19 pandemic poses to OnDeck, and many other companies that we own ... Yet OnDeck’s slow response to current events has only magnified the issues that now confront it.”
The letter asks voters to reject Noah Breslow, 44, chairman and CEO, and a director since 2012; Jane Thompson, 68, chairman of corporate governance and nominating committee, and a director since 2014; and Ronald Verni, 71, chairman of compensation committee, and a director since 2012.
“All three of these individuals ... share a common track record of terrible returns for stockholders as represented by the total shareholder return (TSR) analysis earlier,” the letter said.
Plants wrote that as far back as last summer, Voce urged management to tighten its focus and enhance profitability. However, the letter did not say whom shareholders should vote for in the election, which is set to take place at OnDeck's May 7 annual stockholders' meeting.
As for OnDeck, the company voiced support for the trio, saying in a statement that "we believe that the three OnDeck directors who are up for election at the annual meeting ... are highly qualified directors who bring leadership and important expertise to our board, and we recommend shareholders vote for all three directors at the upcoming annual meeting."
Voce's challenge sent OnDeck shares up as high as $1.39 Friday, although they later fell back a bit to close at $1.35, up 8 percent on the day.