Iron Mountain Inc. (IRM), the document- storage company under pressure from investors to make strategic changes, said Chief Executive Officer and President Bob Brennan stepped down.
Chairman Richard Reese will also take on the CEO role, the company said today in a statement. Reese had served as Iron Mountain’s CEO from 1981 to 2008 and has been chairman since 1995. Brennan, who had been CEO since 2008, also left the board.
“As we move forward with the execution of our business plan, Bob and the board agreed that the time is right to make this transition,” Kent Dauten, the Boston-based company’s lead director, said in the statement. “We are confident that Richard’s deep operational expertise and knowledge of our business will be instrumental to our success.”
New York hedge fund Elliott Management Corp. last month called for a review of Iron Mountain’s strategy, saying the company’s effort to expand its international and digital businesses hasn’t generated enough returns. Iron Mountain provides business storage and maintains documents including records, electronic files, medical data and e-mail.
“Today’s action suggests to us further strategic changes are likely to be announced over the near term,” wrote Evan Mann, an analyst at New York-based debt research firm Gimme Credit LLC, in a note to investors.
Iron Mountain rose $1.65, or 5 percent, to $34.61 at 4:15 p.m. in New York Stock Exchange trading. The shares have gained 32 percent since March 9, the day before Elliott called for a review.
Less than two weeks after the request from Elliott, which nominated four candidates for the board last month, Iron Mountain on March 23 adopted a so-called poison pill provision making it more difficult for investors to take control of the company. On April 4, Elliott released a letter to the board demanding directors “change course.”
The firm asked for a review of the storage company’s strategy, operations and capital and also wants Iron Mountain to consider converting into a real-estate investment trust, which must pass on at least 90 percent of its annual taxable profit to shareholders through dividends.
The hedge fund, which owns less than 5 percent of Iron Mountain, says the changes it is suggesting would cause the stock to more than double to $77, helped by business improvements and tax savings.
“We’re supportive of the management change they made,” said Ken Charles Feinberg, co-portfolio manager at Davis Selected Advisers LP in New York, which has a 21 percent stake in Iron Mountain. “That’s quite a response from a company.”
Brennan came to the company with a digital-technology background and “an agenda to grow that business,” Feinberg said in an interview. “If the returns are poor when you grow a business, it’s the wrong thing to do for shareholders.”
Feinberg said earlier this month that his firm would be “likely” to support Elliott’s nominees.
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