Citrix Systems Inc. said it reached a settlement with activist investor Elliott Management Corp., agreeing to add the hedge fund’s chief agitator Jesse Cohn to its board and begin a search for a new chief executive officer.
In a flurry of statements Tuesday, Citrix said the standstill agreement also includes adding another mutually agreed upon independent board member. Current CEO Mark Templeton, who separately announced plans to retire, will continue to serve until a successor has been named.
Elliott, which owns about 7.5 percent of Citrix’s common stock, publicly targeted the company in June, calling for changes such as cost overhauls, evaluating selling two of its units, buying back shares and recruiting more talented managers. Under the agreement, Citrix, which sells cloud and work-from-home integration services, will also review strategic options for its GoTo business unit.
A search for Templeton’s replacement has begun and recruitment firm Heidrick & Struggles has been retained, Citrix said.
Cohn, who heads Elliott’s U.S. activist efforts, has replaced director Asiff Hirji “effective immediately,” according to one of the statements. The to-be-recruited board member will supplant another current director.
Citrix director Robert Calderoni will become executive chairman, while current chairman Thomas Bogan will become lead independent director. Cohn is now part of a new four-director operations committee, “which will work closely with the company’s management team on a comprehensive operational review focusing on improving Citrix’s margins, profitability and capital structure,” the company said. He is also part of the CEO search committee, according to a regulatory filing.
Among conditions of the standstill accord, Elliott has agreed to limit its holdings to 9.9 percent of Citrix, abstain from seeking further board changes and not participate in an “extraordinary transaction,” according to the filing.
“We are confident that the initiatives announced today and the addition of new directors to the company’s board will allow Citrix to build upon its position as an innovative industry leader, and to drive significant shareholder value,” Cohn said in a statement. “We look forward to remaining a shareholder and working closely with the company towards our mutual goal of positioning Citrix for success and value creation.”
In his June 11 letter, Cohn criticized Citrix for failing to deliver on cost cuts and a more focused portfolio promised since 2010. He also urged the company to consider a spinoff or sale of its GoTo franchise, which includes online-meeting organizer GoToMeeting. Citrix should also explore the option of selling NetScaler, which helps speed up the delivery of Web- and mobile-based applications, Cohn said in the letter.
Cohn has focused most of New York-based Elliott’s activist shareholder campaigns on enterprise software and hardware companies. Elliott has agitated for changes at technology providers including EMC Corp., NetApp Inc., Juniper Networks Inc., and Riverbed Technology Inc. after taking stakes in the companies.