Special Situations Fund Engine Capital Seeks Board Changes at Lyft

Engine Capital, a special situations fund that invested in Lyft in 2024 and has about a 1% stake in the company, said Tuesday (April 29) that it aims to elect two candidates to the rideshare company’s board of directors and address Lyft’s “governance and capital allocation shortcomings.”

In a Tuesday press release, Engine Capital said it believes Lyft should implement a $750 million accelerated share repurchase program, eliminate the dual class share structure and de-stagger the board.

Engine Capital said in the release and in a presentation that it favors these changes because Lyft’s capital structure is “completely unoptimized,” its co-founders who own 2.3% of the company have 30% voting power, and its staggered board structure in which directors are elected in phases prevents full board turnover in a single election.

“Engine’s multiple attempts to work constructively with Lyft to strengthen the Board were met by entrenched directors who rejected Engine’s highly qualified candidates without even meeting with them,” the special situations fund said in the release.

Reached by PYMNTS, Lyft said in an emailed statement that the company’s board and management team “are focused on customer obsession and executing for drivers and riders” and that this resulted in record gross bookings, adjusted EBITDA and free cash flow in 2024.

“Last year, we surpassed every target we provided at investor day; earlier this year, we announced an inaugural share buyback program; and a couple weeks ago, announced plans to acquire European-based FREENOW,” the statement said. “We are now, more than ever, operating from a position of strength, and are confident in our future.”

In a proxy statement filed with the Securities and Exchange Commission (SEC) on Thursday (April 24), the company said its board unanimously recommends a vote “for” each of Lyft’s director nominees and “strongly urges” stockholders not to sign or return any blue proxy card or voting instruction card sent to them by Engine Capital.

In a letter included in the proxy statement, Lyft CEO David Risher wrote that Lyft is proud of the progress it made in 2024 and is excited about 2025 and beyond.

“We’re already undertaking many of the actions suggested by Engine — and, because we constantly dive deep to understand the needs of our customers and shareholders, we were executing these moves long before they were suggested,” Risher wrote.

Risher cited four examples: Lyft’s $500 million share repurchase program announced in February, the company’s acquisition of FREENOW to expand in Europe, its 56% reduction in stock-based compensation since 2022, and its addition of directors with expertise in capital allocation.