Activist investor Elliott holds off board-level influence at Salesforce
Benioff gets a pat on the head and an undefined reprieve
Salesforce and Elliott Investment Management have issued a joint statement saying the activist investor, which took a multi-billion-dollar stake in the CRM giant in January, is not nominating directors to the board.
Reacting to Salesforce’s new strategic focus on costs and margins — which has been accompanied by news of around 7,000 job losses — together with better than expected financial results — Elliott has had a change of heart. Salesforce and Elliott have now committed to continuing the productive working relationship they have developed together, the statement adds.
In a statement, Jesse Cohn, managing partner of Elliott, said: “I have great respect for Marc and his team, and I have become deeply impressed by their strong ongoing commitment to profitable growth, responsible capital return and an ambitious shareholder value creation plan.”
Marc Benioff, chair and CEO of Salesforce, said: “I have thoroughly enjoyed getting to know Jesse and the Elliott team over the last few months, and I am grateful for Jesse’s mindful and constructive ideas. I look forward to continuing my relationship with Jesse and the Elliott team.”
Salesforce is understood to have come under pressure to improve margins closer to the industry-leading figures of 40 percent and above enjoyed by Microsoft and Oracle. Salesforce currently records margins of 20.4 percent and has set a target of 25 percent operating margin.
The CRM giant announced layoffs amounting to 10 percent of its circa 73,000 workforce in January, blaming over-hiring during the lockdown years of the COVID-19 pandemic.
Elliott Management revealed it had acquired a stake in Salesforce in January. It has since been joined by four more activist investors, including Third Point Capital, Mason Morfit's ValueAct, Jeff Ubben's Inclusive Capital, and Dan Loeb's Third Point.
Meanwhile, reports emerged this week that Salesforce has shut down a Slack research unit that had found flexible working arrangements helped productivity, increased employee's trust of employers, and reduced employee turnover.
A Slack spokesperson said of the move: "Future Forum served as an authoritative voice and trusted data source on designing a future of work that is flexible, connected, and inclusive when the world needed it most. Slack and Salesforce remain committed to deep research on the future of work, and designing products that make work more productive, simple, and pleasant for our customers."
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Slack’s Future Forum has been part of Salesforce since it acquired the workplace collaboration company in 2021.
Salesforce had been a standard-bearer for the pandemic-inspired work-from-home new normal, offering employees the option to flex their work and attend the office one to three days each week. "This work-from-anywhere model will unlock new growth opportunities that will help us drive greater equality," said chief people office Brent Hyder in 2021.
However, Benioff executed a bit of a U-turn on the idea, calling some workers back into its offices in an effort to improve productivity. ®