An investment company, Impactive Capital Master Fund LP, and its affiliates are making a bold move to dislodge three directors at WEX, a prominent payments provider for fleets. Last year, Impactive urged shareholders to vote against three candidates, including the current CEO and chairwoman, Melissa Smith, but they were ultimately re-elected.
This year, Impactive is taking a different approach by putting forth its own slate of candidates for the upcoming annual meeting on May 5. The company has been a significant stockholder in WEX for the past five years and is now targeting three incumbents, including Melissa Smith.
In a proxy filing with the Securities & Exchange Commission, Impactive expressed its dissatisfaction with the current state of affairs at WEX. The company described WEX’s Mobility segment as a global leader in fleet payment solutions, transaction processing, and information management.
Impactive stated that it has attempted to maintain an open and collaborative relationship with WEX and its board of directors over the years. However, recent challenges facing the company and the board’s apparent unwillingness to hold management accountable have strained the relationship.
Impactive first invested in WEX in 2021 and has since sought to bring more shareholder perspectives to the board. Despite repeated attempts, the company claims to have been rebuffed and refused by WEX.
The Impactive proxy outlines its plan to have three directors elected to the board at the upcoming annual meeting. While the company is not opposing six other directors, it has urged shareholders not to vote for Nancy Altobello, Stephen Smith, and Melissa Smith.
One of the key points of contention between Impactive and WEX is the company’s performance compared to its competitors. Impactive cited a five-year total return of 20.1% for WEX, compared to 37.6% for Corpay and 56% for the S&P 400. WEX’s stock price has seen fluctuations over the years, with Impactive’s shareholding in the company dropping to 4.9%.
In response to Impactive’s proxy filing, WEX filed its own proxy with the SEC, warning shareholders that replacing the incumbent directors could jeopardize the company’s progress. WEX described Impactive’s desires as “financial engineering” and emphasized the importance of focusing on the fundamentals of the business.
Impactive’s criticisms of WEX management include concerns about CEO compensation and the board’s alleged failure to hold management accountable for underperformance. The company highlighted discrepancies in CEO compensation targets and expressed doubt about the board’s advocacy for shareholder interests.
Overall, the battle between Impactive and WEX underscores the tensions between shareholders and management in the corporate world. As the annual meeting approaches, all eyes will be on the outcome of this high-stakes showdown.
