Salesforce refreshes board as activist investors circle

Slack said to be worth fraction of price paid, new hires not as productive amid downturn

Salesforce has pushed through boardroom hires in response to moves by activist investors to wrest greater control of the global CRM giant, which was forced to cut 10 percent of its workforce earlier this month.

The new appointments "demonstrates Salesforce's commitment to ongoing refreshment in action," said Robin Washington, lead independent director of the board, in a statement.

Last week, news broke that activist investor Elliott Management had taken a multibillion-dollar stake in Salesforce.

In response, Constellation Research principal analyst and founder Ray Wang took to Twitter to point out that it is "never a good sign when Elliott shows up."

Other activist investors taking a stake in Salesforce include Starboard Value, which confirmed in October it had amassed a shareholding, ValueAct, and Jeff Ubben's Inclusive Capital.

The new board appointments include Arnold Donald, former president and chief executive officer of Carnival Corporation; Sachin Mehra, chief financial officer of Mastercard; and Mason Morfit, chief executive officer and chief investment officer of ValueAct Capital, an activist investor.

In addition, Sanford Robertson and Alan Hassenfeld have notified the company that they do not intend to stand for re-election at Salesforce's 2023 Annual Meeting of Stockholders.

Salesforce CEO and co-founder Marc Benioff said the management team was looking "forward to benefiting" from the new board appointments' "expertise and insights."

ValueAct Capital is a San Francisco-based activist investor with more than $12 billion in assets under management.

In a statement, CEO Morfit said: "Salesforce has always stood out to us for its technical and business model innovations, its values and its culture. We have enjoyed working with Marc and the team and look forward to helping them deliver profitable growth and shareholder returns."

Morfit has experience serving on boards since 2005, and is a former director of Microsoft.

The arrival of activist investors has led to questions about the next move for Salesforce, which has attracted criticism for over-hiring during the pandemic and a approach to M&As some say is unfocused. The company has also spoken of new hires not being as productive as it would like.

Rishi Jaluria, software analyst at RBC Capital Markets, said Salesforce needed to shift away from empire building and focus on its core market. He pointed out that selling off Slack, acquired by Salesforce for $27 billion, would currently fetch around $12 billion, or $9 billion cash if Salesforce retained a 20 percent stake.

Salesforce, which has parted with numerous senior executives in recent months, has seen its share price almost halve from a peak of $307 in 2021. ®