Elliott’s decision likely signals a changing of the guard at Salesforce, with new leadership in place that is more focused on value creation than activist politics. This shift likely bodes well for the future of the company, and its shareholders.
Salesforce is a tech company that has been in the news for all the wrong reasons over the past year. Elliott, one of its five activist investors, has pushed several of its own candidates toward the board after a turbulent 2022 for Salesforce – but after a return to financial form for Salesforce, beating growth forecasts and announcing more shareholder returns, it seems this has been enough to convince Elliott that Salesforce has corrected course.
Some investors are expressing consternation at Salesforce’s decision not to pursue its nominations for directors, citing the company’s recent “profitable growth framework” dubbed “New Day.” Others suggest that Elliott has now clearly placed itself in a more significant leadership position within the company, which could be difficult to dislodge should Salesforce stumble.
At the company’s annual shareholders meeting today, Elliott Management Corporation announced their intention to invest an additional $150 million in Salesforce.com Inc. (CRM) over the next two years – bringing the firm’s total investment in the company to $500 million. This infusion of new capital will be used to support Salesforce’s ambitious shareholder value creation plan, which includes continued growth in both revenue and profits. In addition, Elliott Management plans to exercise its participation rights in order to vote its shares for reclassification from common stock D-1 (with a current market cap of just over $25 billion) to preferred stock G-5 with a face value of around $10 billion – giving investors a 33% ownership stake in the company overall.
Elliott’s investment highlights not only the faith that management has put into Salesforce’s future prospects but also the importance that companies are placing on returning capital with an eye toward long-term sustainability and growth. By investing heavily now while also exercising their voting rights, Elliott is signaling that they believe not only in Salesforce
