- In the runup to Benefitfocus's (NASDAQ:BNFT -2.1%) annual meeting on June 30, activist investor Indaba Capital Management applies more pressure on the company's management after news that BNFT's new CEO was sued by his former employer.
- However, Indaba said it won't proceed with its efforts to put its candidate on Benefitfocus's board given that the company is only putting one director up for election, "but we will continue to hold the Board accountable in other ways."
- In a letter to the board, Indaba — which owns ~9.9% of BNFT's common shares and 22.9% of its 1.25% convertible senior notes — called the lawsuit against CEO Matthew Levin "troubling."
- "The hiring decision seems to reflect a lack of diligence and thoughtfulness on the part of the company’s directors," Indaba Managing Partner Derek Schrier and Partner Alex Lerner said in the letter.
- Benefitfocus has said it believes the complaints in the lawsuit are "without merit."
- In the letter, Indaba also questioned why Stephen Swad served as CEO for only five months and what plans the company has if the court temporarily blocks Levin's hiring.
- "We will also seek boardroom change in the future if the incumbents do not adequately address the current Chief Executive Officer debacle, enact sufficient governance changes and substantially improve performance," Schrier and Lerner wrote.
- SA contributor Steve Auger expects Benefitfocus's difficulties to continue as it's laying off 17% of U.S. staff.