Salesforce avoids proxy fight with Elliott after improved results

By Svea Herbst-Bayliss

(Reuters) - Salesforce Inc and Elliott Management on Monday reached an agreement where the activist investor ends its board room challenge as the software company focuses more on boosting profits and efficiency.

The announcement made by both sides comes less than a month after Elliott nominated a slate of director candidates and Salesforce reported stronger than expected financial results and made promises for more cost cuts.

"Elliott decided not to proceed with director nominations, and Salesforce and Elliott committed to continue the productive working relationship they have developed together," the two said in a joint statement.

Salesforce, valued at $190 billion, has said it would double its share buy backs to $20 billion and move away from buying more companies after disbanding its mergers and acquisitions committee. Recently the company also signaled more layoffs may be coming as it keeps cutting costs to improve profitability.

These steps satisfied Elliott and allowed the activist, which invests over $55 billion in assets and has successfully pushed for change at companies ranging from eBay to Suncor, to avoid an expensive proxy contest, a source familiar with the matter said. Elliott declined to comment beyond the statement.

Salesforce has faced pressure to improve operations for months as investors including ValueAct, Inclusive Capital and Starboard Value separately pushed for changes and engaged with the company.

After Elliott in January emerged as the latest activist in Salesforce's stock, the company refreshed its board with three new directors and handed one seat to ValueAct's chief Mason Morfit.

Salesforce's stock price has surged 48% from December 2022 when activists began pushing their case for change more forcefully with the company. The stock traded largely flat at $190 on Monday.

The end of the boardroom challenge at Salesforce marks the third time this year that prominent activist investors abandoned campaigns. Nelson Peltz' Trian Fund Management withdrew its push for a board seat at Disney after the company reported improved earnings and a new strategy.

Daniel Loeb's Third Point ended its challenge at Bath & Body Works after the company added a third new director. This leaves Carl Icahn's challenge at Illumina as the year's noisiest proxy fight.

(Reporting by Svea Herbst-Bayliss in New York, Juby Babu in Bengaluru; Editing by Sherry Jacob-Phillips, Savio D'Souza and Nick Zieminski)