Anson Funds Comments on Recent Events at Twilio
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Insights
Recent developments at Twilio Inc. highlight the influence of activist investors on corporate governance. The departure of Byron Deeter from the board and the proposal to declassify the board are significant steps that align with best practices in corporate governance. Declassifying the board can lead to more accountability, as directors face election annually rather than on a staggered basis. This change could potentially increase shareholder value by ensuring that the board remains closely aligned with shareholder interests.
However, the fact that these changes occurred under 'intense pressure' suggests a previously resistant board culture. This resistance could be a red flag for investors, indicating potential governance issues that might have affected the company's performance. The ongoing scrutiny by Anson Funds, representing a significant ownership stake, could serve as a catalyst for further changes or could create tension within the boardroom that may distract from operational focus.
The mention of related-party transactions involving Bessemer Venture Partners is another critical point of concern. Such transactions can lead to conflicts of interest and may not always be in the best interest of all shareholders. The oversight of such transactions will be an area to watch, as it speaks to the integrity of the board's decision-making process.
The activist engagement by Anson Funds with Twilio's Board of Directors is a clear demonstration of shareholder activism's potential to drive corporate change. The impact on the stock market could be multifaceted. On one hand, governance improvements and the board's declassification might be perceived as positive steps towards enhancing shareholder value, potentially leading to a favorable market reaction. On the other hand, the history of rejected proposals and the need for intense pressure to induce change could be seen as indicative of deeper issues, possibly causing concern among investors.
Investors will be closely monitoring Twilio's future performance metrics, such as revenue growth, profit margins and market share, to assess whether the governance changes translate into improved operational performance. If the company's strategic direction and capital allocation become more efficient as a result of these changes, there could be long-term benefits to Twilio's valuation. Conversely, if the company fails to address the underlying performance issues, these governance changes may not have the desired effect on the stock price.
From an investor relations perspective, the recent governance changes at Twilio signal a commitment to addressing shareholder concerns and enhancing transparency. The public nature of Anson Funds' accountability measures suggests a new era of openness in Twilio's interactions with its investors. This could contribute to rebuilding trust and potentially attract new investors who prioritize strong corporate governance.
However, the ongoing public scrutiny promised by Anson Funds could also lead to increased volatility in the stock price as the market reacts to each new development. Investors will be seeking reassurance that Twilio's board can balance the demands of activist shareholders with the need to execute on the company's long-term strategy without undue distraction.
Clarifies that Continued Engagement with Twilio Board This Week Led to Critical Governance Changes, Including Departure of Longtime Director Byron Deeter
Intends to Continue to Hold Twilio Board Publicly Accountable Going Forward to Protect the Best Interests of All Stockholders
Sagar Gupta, Portfolio Manager and Head of Active Engagement at Anson Funds, stated:
“Following discussions between Anson Funds and the Company’s representatives that were ongoing through yesterday evening, Twilio’s Board issued a press release last night announcing the departure of long-tenured director Byron Deeter and a proposal to declassify the Board. These changes were based on Anson Funds’ recommendations and came only after our insistence to the Board that further actions were needed to position the Company and its stockholders for success following the announcement of an agreement with a new stockholder on April 1, 2024. While this agreement represented incremental positive change, in our view it was not enough to prevent the continued entrenchment of the Board and ensure an end to Twilio’s persistent underperformance.
During Anson Funds’ engagement with Twilio, the Company repeatedly rejected our proposals for governance improvements, the departure of directors with significant conflicts of interest and little relevance, and stockholder representation on the Board. Only under intense pressure from Anson Funds have Twilio’s directors taken steps to address these issues, highlighting the exceptional level of dysfunction within Twilio’s boardroom.
While we are pleased that our engagement has led to significant change – including the long overdue departure of Founder and Former CEO Jeff Lawson in January – proper alignment and oversight continue to be desperately needed to maximize long-term value. On behalf of all Twilio stockholders, we plan to hold the entire Board accountable in the public realm going forward. This scrutiny will be focused on all matters regarding strategy, operations, corporate governance, and capital allocation, including preventing further related-party transactions involving Bessemer Venture Partners, which in the past have been to the detriment of Twilio stockholders. This issue remains relevant despite Mr. Deeter’s departure given the continued directorship of another Bessemer partner, Board Chair Jeff Epstein.”
About Anson Funds
Anson Funds is a privately held alternative asset manager with
Important Information
Anson Funds Management LP, Anson Advisors Inc., Anson Investments Master Fund LP, AIMF GP LLC, Anson East Master Fund LP, AEMF GP LLC, Anson North Star Tactical Equity Fund LP, ANSF GP LLC, Anson Management GP LLC, Moez Kassam, Tony Moore, Amin Nathoo and Sagar Gupta (collectively, the “Participants”) intend to file a definitive proxy statement and accompanying form of proxy card with the Securities and Exchange Commission (the “SEC”) to be used in connection with the 2024 Annual Meeting of Stockholders of Twilio Inc. (the “Company”). Stockholders of the Company are advised to read the definitive proxy statement and other documents related to the solicitation of proxies with respect to the Company by the Participants as they become available because they will contain important information. They will be made available at no charge on the SEC’s website, https://www.sec.gov/. Information about the Participants and a description of their direct or indirect interests by security holdings or otherwise can be found in Exhibit 1 of the Schedule 14A filed by Anson Funds Management LP with the SEC on April 4, 2024.
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Media Contact
Longacre Square Partners
anson@longacresquare.com
Source: Anson Funds
FAQ
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