Alta Fox Releases Presentation on Daktronics Delivered at Bloomberg Activism Forum 2024
Alta Fox Capital Management, Daktronics' largest shareholder with 11.7% ownership, has released a presentation highlighting governance issues and proposing reforms at the company. The investor criticizes the current leadership under CEO and Chairman Reece Kurtenbach for poor performance, citing 195% underperformance versus the S&P 500 during his tenure.
Alta Fox outlines a path to reach ~$40 per share through governance reforms including board refreshment, splitting CEO/Chairman roles, and improving investor communications. The firm plans to nominate independent director candidates for the 2025 annual meeting and proposes hiring a qualified CFO with public company experience.
The presentation criticizes Daktronics' family business mentality, noting that three of five named executive officers are Kurtenbach family members, and highlights concerns about ineffective corporate governance practices including staggered board terms and a poison pill.
Alta Fox Capital Management, il più grande azionista di Daktronics con una partecipazione del 11,7%, ha pubblicato una presentazione evidenziando problemi di governance e proponendo riforme all'interno dell'azienda. L'investitore critica l'attuale leadership sotto il CEO e Presidente Reece Kurtenbach per la scarsa performance, citando un underperformance del 195% rispetto all'S&P 500 durante il suo mandato.
Alta Fox delinea un percorso per raggiungere ~40 dollari per azione attraverso riforme di governance, tra cui il rinnovamento del consiglio, la separazione dei ruoli di CEO e Presidente, e il miglioramento della comunicazione con gli investitori. La società intende nominare candidati indipendenti per il consiglio di amministrazione per l'assemblea annuale del 2025 e propone di assumere un CFO qualificato con esperienza in aziende quotate.
La presentazione critica la mentalità familiare di Daktronics, sottolineando che tre dei cinque funzionari esecutivi nominati sono membri della famiglia Kurtenbach, e mette in evidenza preoccupazioni riguardo a pratiche di governance aziendale inefficaci, tra cui i mandati di consiglio scaglionati e una 'poison pill'.
Alta Fox Capital Management, el mayor accionista de Daktronics con una participación del 11,7%, ha publicado una presentación destacando problemas de gobernanza y proponiendo reformas en la empresa. El inversionista critica el liderazgo actual bajo el CEO y Presidente Reece Kurtenbach por un rendimiento deficiente, citando un bajo rendimiento del 195% en comparación con el S&P 500 durante su mandato.
Alta Fox delineó un camino para alcanzar ~$40 por acción a través de reformas de gobernanza, incluidas la renovación del consejo, la separación de los roles de CEO y Presidente, y la mejora de la comunicación con los inversores. La firma planea nominar candidatos independientes para el consejo de administración en la reunión anual de 2025 y propone contratar a un CFO calificado con experiencia en empresas públicas.
La presentación critica la mentalidad de negocio familiar de Daktronics, señalando que tres de los cinco funcionarios ejecutivos nombrados son miembros de la familia Kurtenbach, y resalta preocupaciones sobre prácticas de gobernanza corporativa ineficaces, incluidos los mandatos escalonados del consejo y una 'poison pill'.
알타 폭스 캐피탈 매니지먼트는 다크트로닉스의 최대 주주로 11.7%의 지분을 보유하고 있으며, 기업의 지배구조 문제를 강조하고 개혁을 제안하는 발표자료를 공개했습니다. 투자자는 리스 커텐바흐 CEO 겸 회장 하의 현재 리더십이 성과가 저조하다고 비판하며, 그의 재임 기간 동안 S&P 500 대비 195%의 저조한 성과를 언급했습니다.
알타 폭스는 이사회 갱신, CEO와 회장 역할 분리, 투자자 소통 개선 등 지배구조 개혁을 통해 ~주당 40달러에 도달할 수 있는 경로를 제시합니다. 이 회사는 2025년 연례 회의에서 독립 이사 후보를 지명할 계획이며, 상장기업 경험이 있는 자격 있는 CFO를 채용할 것을 제안합니다.
발표는 다크트로닉스의 가족기업 정신을 비판하며, 명명된 임원 다섯 명 중 세 명이 커텐바흐 가족 구성원임을 지적하고, 이사회 임기 스캐줄 및 '독소 조항' 등 비효율적인 기업 거버넌스 관행에 대한 우려를 강조합니다.
Alta Fox Capital Management, le plus grand actionnaire de Daktronics avec une participation de 11,7 %, a publié une présentation mettant en lumière des problèmes de gouvernance et proposant des réformes au sein de l'entreprise. L'investisseur critique la direction actuelle sous le PDG et président Reece Kurtenbach pour ses mauvaises performances, citant une sous-performance de 195 % par rapport à l'indice S&P 500 pendant son mandat.
Alta Fox propose un chemin pour atteindre ~40 $ par action grâce à des réformes de gouvernance incluant le renouvellement du conseil d'administration, la séparation des rôles de PDG et de président, ainsi que l'amélioration des communications avec les investisseurs. La société prévoit de nommer des candidats indépendants au conseil d'administration pour l'assemblée annuelle de 2025 et propose d'engager un CFO qualifié ayant une expérience dans des entreprises cotées en bourse.
La présentation critique la mentalité d'entreprise familiale de Daktronics, notant que trois des cinq dirigeants nommés sont membres de la famille Kurtenbach, et met en avant des préoccupations concernant des pratiques de gouvernance d'entreprise inefficaces, notamment des mandats de conseil d'administration échelonnés et une 'poison pill'.
Alta Fox Capital Management, der größte Aktionär von Daktronics mit einem Eigentum von 11,7%, hat eine Präsentation veröffentlicht, die Governance-Probleme hervorhebt und Reformen im Unternehmen vorschlägt. Der Investor kritisiert die aktuelle Führung unter CEO und Vorsitzenden Reece Kurtenbach wegen schlechter Leistungen und nennt eine Underperformance von 195% gegenüber dem S&P 500 während seiner Amtszeit.
Alta Fox skizziert einen Weg, um ~40 $ pro Aktie durch Governance-Reformen zu erreichen, einschließlich der Neubestellung des Vorstands, der Trennung der CEO- und Vorsitzendenrollen sowie der Verbesserung der Kommunikation mit den Investoren. Die Firma plant, unabhängige Direktorenkandidaten für die Hauptversammlung 2025 zu nominieren und schlägt vor, einen qualifizierten CFO mit Erfahrung in börsennotierten Unternehmen einzustellen.
Die Präsentation kritisiert die Familiengeschäftsmentalität von Daktronics und weist darauf hin, dass drei der fünf benannten Führungskräfte Mitglieder der Familie Kurtenbach sind, und hebt Bedenken hinsichtlich ineffektiver Corporate-Governance-Praktiken hervor, einschließlich gestaffelter Vorstandsmandate und einer Giftpille.
- Largest shareholder proposing clear path to ~$40 per share value (~100% upside)
- Company holds strong market position in expanding sports and live events market
- Alta Fox provided critical financing during company's financial challenges
- 195% underperformance versus S&P 500 under current leadership
- Poor corporate governance with combined CEO/Chairman role and staggered board
- Nepotism concerns with 3 of 5 executive officers from same family
- History of communication missteps and inadequate investor relations
- Previous going-concern warning and material weaknesses in December 2022
Insights
This activist investor presentation from Alta Fox reveals significant corporate governance concerns at Daktronics that have likely contributed to shareholder value destruction. The fund's 11.7% ownership stake and detailed critique of management highlights several key issues: poor capital allocation, nepotistic leadership with 3 of 5 executives from one family and subpar investor communications.
The proposed path to
Most concerning is the 195% underperformance versus the S&P 500 under current leadership, suggesting significant room for improvement through better governance and professional management. The lack of clear guidance and capital allocation framework indicates fundamental issues that need addressing.
The governance issues at Daktronics represent textbook examples of poor corporate oversight: combined Chairman/CEO role, staggered board structure, poison pill provisions and minimal board equity ownership. These antiquated governance mechanisms typically serve to entrench management at shareholders' expense.
The presence of multiple family members in executive positions without apparent merit-based selection is particularly problematic for a public company. Alta Fox's push for board refreshment, separation of Chairman/CEO roles and implementation of modern governance practices aligns with best practices for public companies.
The board's resistance to engaging with their largest shareholder, despite Alta Fox's demonstrated commitment through rescue financing, suggests an entrenched mentality that often leads to sustained underperformance. The proposed governance reforms could significantly reduce the company's current "governance discount."
Exposes How Poor Governance and a Private Family Business Mentality Have Driven Massive Underperformance for Shareholders
Outlines a Clear Path to
Plans to Nominate Highly Qualified, Independent Director Candidates for Election to the Company’s Board
Visit www.FixDaktronics.com to View the Presentation
The ‘Governance Discount’ at Daktronics
In the presentation, Alta Fox highlights its belief that Daktronics is a high-quality, secular growth business that remains severely undervalued today due to ineffective corporate governance. Despite the Company’s position as an undisputed market leader with revenues fueled by the expanding sports and live events market, Daktronics’ second-generation leadership under Chief Executive Officer and Chairman Reece Kurtenbach has driven a culture of complacency and nepotism that has resulted in significant long-term underperformance.
During Mr. Kurtenbach’s tenure as Chairman of the Board of Directors (the “Board”), shareholders have endured irresponsible financial stewardship, a significant trading discount to the Company’s peer set and
Alta Fox, which currently holds ~5x the number of shares held by the entire Daktronics Board combined, believes shareholders cannot trust the current Board to act in their best interests, as evidenced by the Board’s embrace of worst-in-class governance practices such as staggered director classes, a combined Chairman and Chief Executive Officer role, and a poison pill. The Board has allowed key management roles to be filled by relatives, with three of the Company’s five named executive officers coming from the Kurtenbach family.2
A History of Constructive Collaboration Met with Resistance
Alta Fox has consistently sought to collaborate with Daktronics to help the Company reach its full potential, only to be met with resistance at every turn. Long before Daktronics publicly disclosed its going-concern warning in December 2022, Alta Fox traveled to
Despite Alta Fox's efforts to be constructive, Daktronics has continued to ignore our recommendations, including advice to engage a top-tier third-party investor relations firm to improve its narrative to the market – a story that remains confused and underwhelming. Examples of communication missteps abound:
- Instead of providing specific guidance, Daktronics has a history of using vague language around a generic plan to “increase profit margins,” positioning the Board and management to avoid accountability for failing to hit targets.
- Management cites margin and return on invested capital targets during earnings calls that fall below the Company’s current performance levels, indicating that leadership lacks an understanding of its own metrics.
- In the Q2 FY25 earnings release, Daktronics failed to include a working link to the earnings call, leaving some investors scrambling for access. During the call itself, management referenced page numbers in its prepared remarks, despite the investor deck lacking any slide numbers.
These recurring issues reflect a deeper problem: a Board with minimal equity ownership and little accountability, perpetuating a culture of complacency and neglect. While such a culture might be tolerable in a privately held family business, Daktronics is a public company with fiduciary responsibilities to its shareholders that demand higher standards. In our view, these are responsibilities that the Kurtenbach family and its preferred Board are failing to uphold. Alta Fox has consistently identified these inefficiencies and proposed solutions to address them. Despite these constructive efforts, Daktronics’ leadership continues to resist meaningful change, prioritizing entrenchment over shareholders’ long-term best interests.
Alta Fox’s Recommended Path to
Shareholders deserve better – and Alta Fox is committed to delivering positive change, even if it means nominating director candidates for election to the Board in 2025 and thereafter. By modernizing its governance and embracing public company governance norms, the Company can reignite consistent growth and sustained profitability and ultimately produce superior shareholder value. Alta Fox has outlined a highly credible path for Daktronics to achieve
- Collaborating with Shareholders on a Meaningful Board Refresh – Daktronics would benefit from working with shareholders to add new, highly qualified directors to the Board to address deep-rooted issues related to its governance, investor communication and engagement, and value creation efforts. Individuals added to the Board in recent years have failed to fix these issues. Alta Fox plans to nominate highly qualified, independent director candidates for election at the 2025 annual shareholder meeting, unless Daktronics embraces our recent recommendations.
- Instituting Modern Governance Practices – The Company’s Board should immediately de-stagger, split the roles of Chairman and Chief Executive Officer, remove the poison pill and align management’s compensation with share price outperformance.
- Recruiting a Highly Qualified Chief Financial Officer – In light of the Company’s prior material weaknesses and going concern notice, the Board should prioritize the hiring of a Chief Financial Officer who possesses public company experience and a track record of success.
- Restoring Accountability for Management and Setting a Merit-Based Culture – The Board should establish a clear capital allocation framework that is aimed toward maximizing shareholder value and ensure management initiates short- and long-term guidance. By taking these steps, the Board can hold management accountable based on its ability to allocate capital and hit targets. This will also position Daktronics to be operated like a publicly traded company, rather than a private family business brimming with complacency, nepotism and a lack of sustained focus on creating shareholder value.
- Improving Investor Engagement – Daktronics should consistently participate in well-attended investor conferences and create a clear investor narrative aided by sufficient sell-side coverage. Of course, this will require hiring a Chief Financial Officer with credibility and public market experience.
About Alta Fox
Founded in 2018 by Connor Haley, Alta Fox is a
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information herein contains “forward-looking statements.” Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “intends,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “potential,” “targets,” “forecasts,” “seeks,” “could,” “should” or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements relate to future events or future performance and involve known and unknown risks, uncertainties, and other factors that may cause actual results, levels of activity, performance or achievements or those of the industry to be materially different from those expressed or implied by any forward-looking statements. Daktronics, Inc., a
Certain statements and information included herein have been sourced from third parties. Alta Fox does not make any representations regarding the accuracy, completeness or timeliness of such third party statements or information. Except as may be expressly set forth herein, permission to cite such statements or information has neither been sought nor obtained from such third parties. Any such statements or information should not be viewed as an indication of support from such third parties for the views expressed herein.
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1 Source: Bloomberg. Comparison is inclusive of all dividends. Underperformance versus other indices, such as Russell 2000 (IWM), is also significant.
2 Chief Executive Officer and Chairman Reece Kurtenbach is the son of Daktronics’ founder, while his brother is Vice President of Manufacturing, and his sister serves as the effective Head of Human Resources and Corporate Secretary.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241210414208/en/
For Shareholders:
Alta Fox Investor Relations
ir@altafoxcapital.com
or
Okapi Partners
Bruce Goldfarb / Chuck Garske, 212-297-0720
info@okapipartners.com
For Media:
Longacre Square Partners
Kate Sylvester / Bela Kirpalani, 646-386-0091
altafox@longacresquare.com
Source: Alta Fox Capital Management, LLC
FAQ
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