Nearly a year after defeating an activist investor’s proxy fight, the parent of midsize wealth manager Avantax is facing another with some big-name nominees for its board.
Engine Capital launched a website called “A Better Path for Blucora,” and the holder of 3.7% of the stock of Avantax’s parent is seeking shareholder votes to install new board members at the firm’s 2022 annual meeting. The campaign is nominating Andy Kalbaugh,
“Unfortunately, our analysis and engagement with leadership have led us to conclude that shareholder-driven change to the board of directors is urgently needed following another year of underperformance in 2021,” Ajdler wrote in the letter to shareholders.
“We have recruited a well-rounded slate with corporate governance experience, tax and wealth management expertise, strategic planning knowhow and transaction acumen,” Ajdler added. “Most importantly, we have assembled a group of individuals that is collegial, open-minded and focused on creating long-term value for all shareholders and stakeholders.”
Avantax carries a long track record in wealth management as a tax professional-focused firm once known as HD Vest that
“We are pleased with the strong momentum of both our wealth management and tax software businesses, which allowed us to recently expand our share repurchase authorization and increase our financial guidance,” according to the statement from Blucora. “We believe Blucora is on the right path.”
Another activist investor called
Ajdler accused Blucora’s current board of showing “an array of gaps” in wealth management experience, understanding the average Avantax advisor and other issues. On the campaign website, Engine calls itself as “a value-oriented special situations fund” that “invests both actively and passively in companies undergoing change.”
In addition to Kalbaugh, who was the lead executive overseeing LPL’s support for a force of advisors that expanded by nearly 6,000 during his tenure, Engine has nominated Elisabeth DeMarse and Chris Moloney. DeMarse has been CEO of financial news and information sites TheStreet and Bankrate, while Moloney once served as the head of strategic partnerships at TaxAct competitor TaxSlayer and a senior vice president with Wells Fargo Advisors.
For its part, Blucora executives said that Engine had withdrawn its earlier nomination of Ajdler to the board after he made “gross misrepresentations” denying that he had conversations with former directors and officers “regarding various material matters.” Engine purchased its first Blucora stock in December and “has sought to engage with us only very recently, mostly to gain a basic understanding of our business,” according to Blucora’s statement.
“Blucora’s management and our board have been actively engaging with our stockholders over the last year, discussing the progress we are making on our transformation as well as important governance, board composition and compensation matters. We have solicited and received input from many of the company’s largest stockholders on these topics and highly value our relationships with them,” the statement reads.
The firm expressed willingness to meet with the board nominees, saying that it has sought to do so repeatedly. Ajdler’s letter earlier in the day anticipated that criticism, accusing Blucora’s board of questioning the nominees’ qualifications based on “frivolous technicalities, leading us to not view interview requests as sincere.” Engine remains open to a compromise, Ajdler wrote.
“We look forward to engaging with you in the weeks and months ahead as we share additional details regarding our slate and its vision,” he said.
