Box Inc DEFA14A, filed Jun 21, 2021
Box Inc (BOX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☐ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☒ | Soliciting Material Pursuant to §240.14a-2 | |
Box, Inc.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. | ||
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | ||
| (1) | Title of each class of securities to which transaction applies: | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: | ||
| ☐ | Fee paid previously with preliminary materials. | ||
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||
| (1) | Amount Previously Paid: | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
(3) (4) |
Filing Party: Date Filed: | ||
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 18, 2021
Box, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-36805 | 20-2714444 |
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
900 Jefferson Ave.
Redwood City, California 94063
(Address of principal executive offices, including zip code)
(877) 729-4269
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Class A Common Stock, $0.0001 par value per share | BOX | New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| ☐ | Emerging growth company |
| ☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
| Item 8.01 | Other Events. |
On June 18, 2021, Box, Inc. (“Box” or the “company”) delivered a response letter (the “Demand Response Letter”) to Starboard Value LP’s outside counsel in response to a letter received from Starboard’s outside counsel on June 10, 2021 in connection with Starboard Value’s demand for inspection of the books and records of the company pursuant to Section 220 of the Delaware General Corporation Law. A copy of the Demand Response Letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Forward-Looking Statements
Certain statements contained herein contain forward-looking statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, statements about the KKR-led investment and achievement of its potential benefits; the announced tender offer, whether, when, and in what amount such tender offer would be consummated, the per share price of such tender offer and the price and time at which we may make any additional share repurchases following completion of the tender offer; our future financial and operating results, including expectations regarding revenues, deferred revenue, billings, remaining performance obligations, gross margins and operating income; our market opportunity, business plan and ability to effectively manage our growth; our ability to maintain an adequate rate of revenue and billings growth and our expectations regarding such growth; our ability to achieve profitability and expand or maintain positive cash flow; our ability to achieve our long-term margin objectives; our ability to grow our unrecognized revenue and remaining performance obligations; our expectations regarding our revenue mix; costs associated with defending intellectual property infringement and other claims and the frequency of such claims; our ability to attract and retain end-customers; our ability to further penetrate our existing customer base; our expectations regarding our retention rate; our ability to displace existing products in established markets; our ability to expand our leadership position as a cloud content management platform; our ability to timely and effectively scale and adapt our existing technology; our investment strategy, including our plans to further invest in our business, including investment in research and development, sales and marketing, our data center infrastructure and our professional services organization, and our ability to effectively manage such investments; our ability to expand internationally; expectations about competition and its effect in our market and our ability to compete; the effects of seasonal trends on our operating results; use of non-GAAP financial measures; our belief regarding the sufficiency of our cash, cash equivalents and our credit facilities to meet our working capital and capital expenditure needs for at least the next 12 months; our expectations concerning relationships with third parties; our ability to attract and retain qualified employees and key personnel; our ability to realize the anticipated benefits of our partnerships with third parties; the effects of new laws, policies, taxes and regulations on our business; management’s plans, beliefs and objectives, including the importance of our brand and culture on our business; our ability to maintain, protect and enhance our brand and intellectual property; and future acquisitions of or investments in complementary companies, products, services or technologies and our ability to successfully integrate such companies or assets. These statements are based on estimates and information available to us at the time of this presentation and are no guarantees of future performance. We assume no obligation and do not intend to update these forward-looking statements or to conform these statements to actual results or to changes in our expectations.
Important Additional Information and Where to Find It
Box intends to file a proxy statement on Schedule 14A, an accompanying proxy card and other relevant documents with the SEC in connection with such solicitation of proxies from Box stockholders for Box’s 2021 annual meeting of stockholders. BOX STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ BOX’S DEFINITIVE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders may obtain a copy of the definitive proxy statement, an accompanying proxy card, any amendments or supplements to the definitive proxy statement and other documents filed by Box with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge in the “SEC Filings” subsection of the “Financial Information” section of Box’s Investor Relations website at www.boxinvestorrelations.com or by contacting Box’s Investor Relations department at ir@box.com, as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC.
Certain Information Regarding Participants to the Solicitation
Box, its directors and certain of its executive officers are participants in the solicitation of proxies from Box stockholders in connection with matters to be considered at Box’s 2021 annual meeting of stockholders. Information regarding the direct and indirect interests, by security holdings or otherwise, of Box’s directors and executive officers, in Box is included in Box’s Proxy Statement on Schedule 14A for its 2020 annual meeting of stockholders, filed with the SEC on May 28, 2020, Box’s Annual Report on Form 10-K for the year ended January 31, 2021, filed with the SEC on March 19, 2021, as amended by Amendment No. 1 on Form 10-K/A, filed with the SEC on May 28, 2021, and in Box’s Current Reports on Form 8-K filed with the SEC from time to time. Changes to the direct or indirect interests of Box’s directors and executive officers are set forth in SEC filings on Initial Statements of Beneficial Ownership on Form 3, Statements of Change in Ownership on Form 4 and Annual Statements of Changes in Beneficial Ownership on Form 5. These documents are available free of charge as described above. Updated information regarding the identities of potential participants and their direct or indirect interests, by security holdings or otherwise, in Box will be set forth in the Proxy Statement for Box’s 2021 annual meeting of stockholders and other relevant documents to be filed with the SEC, if and when they become available.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
|
Exhibit No. |
Description | |
| 99.1 | Demand Response Letter, dated June 18, 2021. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| BOX, INC. | ||
| Date: June 21, 2021 | ||
| By: |
/s/ David Leeb | |
|
David Leeb Chief Legal Officer and Corporate Secretary | ||
Exhibit 99.1
|
DAVID J. BERGER DBERGER@wsgr.com Direct dial: 650.320.4901 |
Wilson Sonsini Goodrich & Rosati 650 Page Mill Road o: 650.493.9300 |
June 18, 2021
By Email
Steve Wolosky, Esquire
Andrew Freedman, Esquire
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
swolosky@olshanlaw.com
afreedman@olshanlaw.com
| Re: | Demand for Inspection of Books and Records of Box, Inc. Pursuant to 8 Del. C. § 220 on behalf of Starboard Value LP, dated May 20, 2021 (“Demand”) |
As counsel to Box, Inc. (“Box” or the “Company”), we write in response to your letter sent on behalf of Starboard Value LP (“Starboard”) dated June 10, 2021 (the “June 10 Letter”). Capitalized terms not defined in this letter are defined in the Demand.
As we explained in our last letter dated June 3, 2021 (the “June 3 Letter”), Starboard’s Demand does not comply with Delaware law. It does not state a factual basis to support the investigation Starboard claims to want to perform. It is also impermissibly overbroad. Despite these failings, as we explained in the June 3 Letter, the Company has been prepared to provide certain books and records to demonstrate that Starboard’s concerns are misguided and to put an end to the baseless allegations Starboard has made against the Company and the Board of Directors (the “Board”). While the June 10 Letter does not cure any of the deficiencies of the Demand, the Company remains willing to produce voluntarily certain books and records.
Substantively, the Company rejected the Demand because it does not establish a credible basis from which to infer wrongdoing by any member of the Board. Starboard is focused on the preferred stock issuance to KKR (“Preferred Stock Issuance”) and Dutch Self-Tender, which it claims were an “entrenchment mechanism” designed to “buy the vote” at the upcoming annual meeting. Starboard has advanced no facts supporting that theory because there are none.
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Steve Wolosky, Esq. Andrew Freedman, Esq. June 18, 2021 Page 2 |
“[T]he mere allegation that directors have taken action to entrench themselves,” unaccompanied by any credible reason to suspect the directors were, or perceived themselves to be, vulnerable to losing their position does not amount to a claim of entrenchment.1 Starboard’s disagreement with the unanimous decision by the Board is no basis to suspect an entrenchment motive.2 All nine of the Company’s directors approved the Preferred Stock Issuance and the Dutch Self-Tender. Only three of the directors will stand for election this year, but beyond the fact they stand for election, Starboard offers no basis for its suspicion that these directors approved these transactions because they believed their seats on the Board are at risk. The other six directors—three of whom were appointed pursuant to the settlement with Starboard last year—did not, and could not, perceive any threat to their positions when they approved the issuance and tender offer. Indeed, all of the directors are highly accomplished, with experience as executives or directors of SaaS and Enterprise software companies, including C-Suite experience at multi-billion dollar companies, and currently serve on a number of other boards, and Starboard offers no factual basis to conclude any of the directors were motivated by entrenchment. Furthermore, the strategic review was led by a four-person Strategy Committee, which included all three of the directors appointed pursuant to the settlement, who unanimously recommended this transaction to the Board. Starboard now reverses course, questioning the judgment of these and other directors simply because it does not like the decision reached by the Board or Strategy Committee.
Starboard’s claim of “vote buying” is equally without merit. The Preferred Stock Issuance was the result of a multi-month comprehensive strategic review process. In fact, Starboard encouraged the Board to sell the Company at the time when its stock was trading around $17–$18 per share. In addition to the other benefits of the Preferred Stock Issuance, the Board recognized that it could provide substantial liquidity to stockholders who wish to sell their shares at a significant premium to the stock price at the time Starboard was encouraging a sale of the entire Company. At the same time, those stockholders who believe in Box’s long-term value have the opportunity to continue to remain as stockholders in the Company and share in future stock appreciation. No stockholder is required to sell their shares, but those who sell their shares leading up to or in the tender offer do so at a significant premium.3 Moreover, Starboard’s criticisms regarding the governance associated with the Preferred Stock Issuance are particularly hollow given that Starboard has participated in and been supportive of similar PIPE transactions on less favorable terms to the issuer in the past. The Board and Strategy Committee also considered alternatives to the Preferred Stock Issuance, including pursuing the Company’s standalone plan without a strategic partner. Simply put, the directors determined that the Preferred Stock Issuance and the Dutch Self Tender, coupled with continuing to execute the Company’s strategic plan, is the path that creates the greatest value for all stockholders. This path was unanimously authorized by every single director on the Board, most of whom are not the subject of a potential proxy contest at the upcoming annual meeting and including directors not running for election who Starboard has previously endorsed.
_____________________
1 Greenwald v. Batterson, 1999 WL 596276, at *5 (Del. Ch. July 26, 1999).
2 See Grobow v. Perot, 526 A.2d 914, 923 & n.13 (Del. Ch. 1987), aff’d, 539 A.2d 180 (Del. 1988).
3 See Box, Inc. Schedule TO, dated May 17, 2021, at 5 (“The transaction provides the ability for stockholders to elect to either monetize their investment or participate in any upside potential with KKR as a committed partner that believes in the growth strategy that the Box Board and management team are executing.”).
Steve Wolosky, Esq. Andrew Freedman, Esq. June 18, 2021 Page 3 |
Starboard offers no basis to question the directors’ business judgment besides the baseless entrenchment theory as noted above. None of the directors was interested in or lacked independence with respect to the decision to approve the Preferred Stock Issuance and Dutch Self-Tender. Starboard has not suggested any suspicion to the contrary. Starboard cannot obtain books and records to investigate the disinterested exercise of the Board’s business judgment merely because Starboard disagrees with it.4
Nor has Starboard meaningfully narrowed its document requests. Instead, the June 10 Letter continues to seek broad requests for “all” documents and electronic communications about nine topics more appropriately found in plenary discovery. Unfocused requests such as these exceed the permissible scope for demands under section 220.5 Starboard’s continued refusal to narrow them in accordance with Delaware law suggests that its intent is not to investigate specific purported purposes, but rather to inflict on the Company the burden of a fishing expedition.6 The Company remains committed to its offers to compromise, but is not willing to facilitate, at its stockholders’ expense, Starboard’s desire to comb through a broad array of electronic communications to find something to complain about.
In particular, there is no legal obligation under Delaware law to produce email communications and the other categories of “Informal Board Materials” and “Senior Management Materials” demanded in the June 10 Letter. “Unlike the production of other books and records, email communications are generally the exception rather than the rule.”7 The burden is on Starboard to show why it needs email and other books and records beyond formal board materials.8 Neither the Demand nor the June 10 Letter even attempts to do so. Starboard’s persistence in demanding them without a factual basis further suggests an ulterior motive.
_____________________
4 Seinfeld v. Verizon Commc’ns, Inc., 909 A.2d 117, 120 (Del. 2006) (“[A] disagreement with the business judgment of Verizon’s board of directors or its compensation committee is not evidence of wrongdoing and did not satisfy Seinfeld's burden under section 220.”).
5 Sec. First Corp. v. U.S. Die Casting & Dev. Co., 687 A.2d 563, 565 (Del. 1997) (requiring that document demands be stated with “rifled precision”).
6 Id. (“The statutory remedy is not an invitation to an indiscriminate fishing expedition. The plaintiff must not only show a credible basis to find probable wrongdoing, but must justify each category of the requested production.”) (emphasis added).
7 In re UnitedHealth Grp., Inc. Sec. 220 Litig., 2018 WL 1110849, at *9 (Del. Ch. Feb. 28, 2018) (internal quotation marks and citations omitted), aff’d sub nom. UnitedHealth Grp. Inc. v. Amalgamated Bank, 196 A.3d 885 (Del. 2018).
8 KT4 P’rs LLC v. Palantir Techs. Inc., 203 A.3d 738, 755 (Del. 2019).
Steve Wolosky, Esq. Andrew Freedman, Esq. June 18, 2021 Page 4 |
Nevertheless, the Company remains willing to produce:
| • | Minutes of any meeting of the Board or Strategic Committee referring or relating to the KKR Transaction, including but not limited to negotiations over the terms of the KKR Transaction and the Dutch-Self-Tender; and |
| • | Final presentation or materials prepared by Morgan Stanley & Co. LLC in connection with the final approval of the Investment Agreement. |
To facilitate a compromise, the Company also offers to produce the following categories of documents requested in the June 10 Letter to the extent such documents were provided to the Company’s Board or any committee thereof:
| • | Documents reflecting terms of the Preferred Stock Issuance, the Investment Agreement and the Dutch Self-Tender, including draft term sheets and agreements (Request No. 2); |
| • | Any materials provided to, or presentations made to, investors or potential investors (including the KKR Investors) in connection with or otherwise relating to the Preferred Stock Issuance, the Investment Agreement, and the Dutch Self-Tender (Request No. 4); |
| • | Any other demand by any other Company stockholder pursuant to Section 220 that relates to the Preferred Stock Issuance, the Investment Agreement, and the Dutch Self-Tender (Request No. 5); and |
| • | All documents produced to any other stockholder in response to a demand pursuant to Section 220 of the DGCL for books and records concerning the Preferred Stock Issuance, the Investment Agreement, and the Dutch Self-Tender (Request No. 6). |
We note that the Company has no books or records responsive to Request Nos. 5 and 6 in the June 10 Letter.
Steve Wolosky, Esq. Andrew Freedman, Esq. June 18, 2021 Page 5 |
The Company’s offer to produce copies of the foregoing books and records is conditioned on Starboard entering into a standard confidentiality agreement governing the use of the information produced. If Starboard’s purported purposes are genuine, these books and records will be more than sufficient for it to carry them out. Given the overbreadth of Starboard’s requests, and Starboard’s prior rejection of our offer to enter into a non-disclosure agreement, we are concerned that Starboard’s true motive with its Demand is as a publicity stunt to further its pending proxy contest. As such, we question Starboard’s desire to reach an amicable resolution. Rather, it appears Starboard is merely attempting to manufacture a pretext to sue the Board.
Please contact me if you have any questions.
| Sincerely, | |
| WILSON SONSINI GOODRICH & ROSATI | |
| Professional Corporation | |
| /s/ David J. Berger | |
| David J. Berger, Esq. |
| cc: | Brad D. Sorrels, Esq. |
Andrew D. Cordo, Esq.