The Stratasys takeover saga continues, this time with an interesting twist to take place at the company’s annual general meeting.
An “AGM” is an annual event for public companies, and the only one in which the shareholders are able to vote on key proposals to make binding decisions. Usually the proposals are created by company management, but often there are submissions from the shareholders, so long as they have sufficient shares to do so.
Most often AGMs are a routine matter and many “just go through the motions” as a paperwork exercise. However, this year’s Stratasys AGM could be a bit different.
The meeting is scheduled for August 8th, about a month from now, and information about the proposals is being sent to shareholders of record. Shareholders can then decide whether to vote their shares for or against the motions proposed.
One of the most typical motions that occurs at AGMs is to establish the composition of the company’s board of directors. These individuals, as a board, have supreme power over the company for the next year as they are the folks that select and hire the CEO. Normally, a CEO is selected with skills to best match the company’s upcoming strategy. However, it means that the CEO is beholden to the board — the board is the boss.
AGM board elections are usually routine, with existing directors re-appointed, and perhaps a few new people to replace those retiring from the board. That is definitely not the case with this year’s Stratasys AGM.
This board member election has two proposals. One of them is presented by company management, and proposes to re-appoint the existing slate of board member candidates. The slate includes Scott Crump, the founder of Stratasys, as well as a former company CEO and other existing board members. Nothing too surprising there.
The other proposal comes from Nano Dimension, a competing company that’s been attempting to take over Stratasys for the last few months.
Nano Dimension has made multiple offers to take over either all Stratasys shares or, in the most recent proposals, a majority of the shares. In each case the proposals have been rejected by Stratasys management, who have recommended shareholders not accept the offer. There is still one outstanding proposal of this type from Nano Dimension which closes in a few weeks. It seems unlikely that offer will succeed as it is not notably different from prior offers.
Hold on, why can Nano Dimension, a Stratasys competitor, make such a proposal at the AGM? It’s because they actually own 14.5% of Stratasys shares, and being a major shareholder, are able to make proposals for the AGM.
Their alternate slate of board member candidates includes not a single member from the existing board. Instead, their proposal lists seven individuals, including Yoav Stern, the current CEO of Nano Dimension.
Here’s the interesting part: the individuals on the Nano Dimension proposed slate of candidates include:
- The current Nano Dimension Chief Executive Officer (CEO)
- The current Nano Dimension Chief Product Officer and Head of Strategic M&A
- The current Nano Dimension Chief Technology Officer (CTO)
- The current Nano Dimension President
- The current Nano Dimension Chief Operating Officer (COO)
- The current Nano Dimension Chief Financial Officer (CFO)
- A former Stratasys board member
There’s something quite suspicious about this slate of candidates, as all but one report to Yoav Stern, CEO of Nano Dimension. This is most definitely not the best way to compose a board of directors, as the optimal configuration is usually a mix of skills, connections, industry experience and independent voices. That’s how good boards make good decisions: diverse opinions.
This crew would hardly be independent, as they all literally report to Stern in their respective Nano Dimension roles. The single independent director candidate proposed would most definitely not be in the majority on this proposed board. It is questionable whether any of the Nano Dimension proposed board members could ever consider voting against a proposal from their CEO.
It would seem that the proposal seeks to put Stern personally in complete control of Stratasys. Presumably that board would immediately elect Stern as CEO and accept the Nano Dimension takeover proposal — or potentially a new offer with lower value — regardless of the wishes of the previous board.
This is the choice facing Stratasys shareholders, who will soon or will already have received this proposal. Their votes will determine what happens next.
If you happen to be a Stratasys shareholder, I recommend very carefully consider your decision.