Shares of LivePerson Inc. (LPSN), a leading provider of conversational commerce and AI software, surged by 17% on Friday after Starboard Value LP announced its intention to nominate a slate of directors for election at the company’s 2023 annual meeting. Starboard, an activist investment firm, disclosed its involvement with LivePerson in February 2022. Now, the firm is taking a more proactive role in LivePerson’s leadership due to concerns about the company’s future growth.
In a letter to LivePerson’s board, Peter Feld, a Starboard managing member, outlined the reasons behind the nominations. While Starboard tried to convince the board last year that leadership changes were necessary, the board maintained that the company was positioned to improve under its existing management. Feld stated that Starboard agreed to back down on its request for management changes if LivePerson added three new independent directors, which the company subsequently did in 2022.
However, Starboard appears not to be satisfied with these additions, as concerns over LivePerson’s growth trajectory persist. In the letter, Feld explains that during their investigation of LivePerson, they identified what they believed to be long-standing issues with the company’s execution and capital allocation. They also pointed out that these issues contribute to LivePerson’s underperformance relative to its peers and the broader market.
As a result, Starboard has now put forth a slate of new director candidates for election to the LivePerson board, with the belief that this action will be in the best interest of the company and its shareholders. The candidates include Feld himself, as well as other executives with experience in technology and business. They hope to bring a fresh perspective to the company and drive improvements in strategy, execution, and performance.
The move by Starboard to nominate their own directors for LivePerson’s board is indicative of their commitment to facilitating change and growth within the company. With the market for conversational commerce and AI predicted to grow rapidly in the coming years, it is essential that LivePerson can capitalize on this potential.
Starboard is known for its activist engagements with other publicly traded technology companies, including Marvell Technology Group, Box Inc., and Symantec Corp., among others. The firm has historically focused on identifying undervalued companies and working with them to enable new growth strategies, improved execution, and enhanced shareholder value.
The nomination of Starboard’s director candidates also puts pressure on LivePerson’s current leadership team to demonstrate their commitment to improving the company’s performance. If they do not make significant strides in addressing the concerns raised by Starboard, it may increase the likelihood that shareholders will vote in favor of the investment firm’s nominees.
LivePerson is a provider of advanced conversational commerce and AI-powered messaging solutions, enabling businesses to engage with their customers across various digital channels, including mobile apps, social media, and messaging platforms. The company’s flagship product is the LiveEngage platform, which allows companies to manage customer conversations, automate responses using AI-driven chatbots, and derive actionable insights from these interactions.
As the role of artificial intelligence and automation software in defining customer service and engagement strategies continues to grow, LivePerson has an opportunity to leverage its expertise in this space to establish itself as a dominant player. However, doing so requires a clear vision and effective execution from the company’s management team.
Starboard’s involvement and push for leadership changes underscore the importance of strong and adaptive corporate governance at a critical juncture in LivePerson’s growth as a company. Whether or not Starboard’s nominees are ultimately elected to the board, their presence may serve as a catalyst for change within the company, prompting greater focus on strategic alignment, capital allocation, and operational efficiency.
In conclusion, the recent surge in LivePerson’s stock price following Starboard’s announcement highlights the increasing relevance of activist investors in shaping the future of publicly traded companies. By nominating directors for election to LivePerson’s board, Starboard has demonstrated its commitment to facilitating growth and improvement within the company, while also putting pressure on LivePerson’s current leadership team to address their identified concerns. In the rapidly evolving market for conversational commerce and AI, strong and responsive leadership will be essential for LivePerson to capitalize on its potential and deliver value to its shareholders.
