Bezeq Is Said to Accept Elliott Demand to Hire New DirectorsBy
Subcommittee and headhunter will begin search for new hires
Hedge fund calling for changes to improve Bezeq’s performance
Bezeq Israeli Telecommunication Corp. plans to bow to demands from hedge fund Elliott Management Corp. that it hire new directors to run the company, according to a person familiar with the matter.
Bezeq’s board of directors will form a subcommittee with members who aren’t linked to majority shareholder Shaul Elovitch to find new directors for the firm, said the person, asking not to be identified because the discussions are private. The committee will also work with an executive search firm to make the hiring process more transparent, the person said.
Elliott, the New York-based fund founded by billionaire Paul Singer, in January increased its stake in Bezeq, Israel’s largest telecommunications firm, and called for changes to its ownership structure to improve its flagging performance. The company has been in disarray since last June, when authorities launched a securities probe into Elovitch -- who subsequently stepped down as chairman -- and other executives. Elovitch’s lawyers have denied any wrongdoing.
Acting Chairman David Granot and fellow director Zeev Vurembrand may be selected to be part of the new subcommittee, but no final decisions have been made, the person said.
Many investors and analysts support Elliott’s argument that Bezeq’s board needs to be overhauled to improve its performance after the company struggled in recent years amid fierce competition. Elliott urged Bezeq’s board to use a recruitment firm to help hire five independent directors.
The company has been considering launching bundling services to better compete with rivals, but managers have been slow to act because of the uncertainty stemming from the investigation, the person said.
“There is no slowdown in our operations, which are at full strength and remain focused on the consumer and the consumer’s needs,” said Guy Hadass, Bezeq’s vice president of corporate communications, declining to comment on board discussions.
Bezeq likely will nominate new directors at the company’s annual shareholder meeting in late April or early May, Granot said last month.