Ancora Issues Open Letter to Pitney Bowes' Board Regarding the Need to Replace Mary J. Guilfoile as Chair and Marc Lautenbach as CEO
Ancora Holdings Group, LLC (together with its affiliates, "Ancora" or "we"), a meaningful holder of debt issued by Pitney Bowes, Inc. ("Pitney Bowes" or the "Company"), today issued an open letter to the Company's Board of Directors (the "Board") for the benefit of all fellow stakeholders.
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Members of the Board,
Ancora presently holds a meaningful amount of Pitney Bowes' debt. We invested in the Company's debt earlier this year because its SendTech and Presort segments have tremendous cash-generation and earnings potential that can be realized for years to come. Given that the Board and Chief Executive Officer Marc Lautenbach were sternly rebuked by shareholders and all three independent proxy advisory firms this past spring, we assumed that you would finally recognize the need to focus on these two profitable segments rather than pursuing reckless growth within the mismanaged Global Ecommerce ("GEC") segment. We are writing to you today because you appear either unable or unwilling to pursue this logical path.
It is truly confounding that the following has occurred since the 2023 Annual Meeting of Shareholders:
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The Board elected Mary J. Guilfoile, who appears to be beholden to the ineffective management team, as Chair. Ms. Guilfoile seems to be a blind supporter of the GEC-centric strategy that has driven massive losses and the destruction of approximately 50% of the Company's market capitalization since 2018. As far as we can tell, her appointment as a director in 2018 stemmed from her relationship with former Pitney Bowes Chair Michael Roth (who overlapped with her at The Interpublic Group of Companies). We question whether her long career as a professional director ? one who appears to have only purchased stock one time ? is predicated upon her personal ties and willingness to support incumbent regimes. We see no evidence to indicate that Ms. Guilfoile will put investors' interests first and oversee necessary actions that would reduce her grip over the Board.
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The Board has failed to announce a succession plan for Mr. Lautenbach, who has been an utter failure throughout the vast majority of his tenure as Chief Executive Officer. We believe his proclivity for burning shareholders' capital and presiding over value destruction is only exceeded by his tendency to mislead the market about GEC. Indeed, we have lost count of the number of times that Mr. Lautenbach and other members of his management team have stated that GEC is on the cusp of profitability. To the contrary, GEC EBIT losses are now at their most pronounced level (approximately -$130 million on a LTM basis). While we suspect someone as seemingly egotistical and detached from reality as Mr. Lautenbach may say anything to cling to his role for as long as possible, we urge the Board to recognize that his near-term departure represents addition by subtraction. Your holding company-style structure mitigates the potential for his exit being truly disruptive for customers, employees, partners and other stakeholders. Moreover, it is our understanding that he has offended and/or lost the trust of the vast majority of the investment community.
- The Board has allowed Pitney Bowes to continue to incur unacceptable losses as a result of GEC, including in the most recent quarter. This flies in the face of what the investment community signaled it wanted during this year's proxy contest. The Company needs to stop chasing unprofitable volume and elusive scale within GEC, while starting to cut what amounts to excessive corporate overhead. The fact that this has not occurred yet calls into question whether legacy directors, like Ms. Guilfoile, are being obstructionist.
Fortunately, there are clear steps that the Board can take to help put the Company on much stronger footing in the coming months:
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The Board should acknowledge its error and install an experienced, independent individual such as Katie May as Chair. She possesses corporate governance experience, industry expertise and transaction acumen. We expect that she would have the respect and support of the Company's customers, employees, partners and investors.
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The Board should announce a succession plan for Mr. Lautenbach. As long as one of his failed deputies is not elevated, we have no strong view on his replacement. There seems to be multiple Board members and several outside candidates who could step into the role on at least an interim basis.
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The Board should announce a plan to run a strategic review for GEC. We believe there are strategic buyers that would be interested in acquiring all or part of the segment. A timely divestiture would be applauded by the market, especially long-term shareholders and debtholders who have seen their investment put at significant risk as management has gone all-in on GEC.
- The Board should announce a corporate cost cutting plan, including targeting up to $100 million in reductions to unallocated corporate overhead. This could be accompanied by a commitment to prioritizing SendTech and Presort through responsible capital investments and/or tuck-in acquisitions in the coming years. From our view, it is absolutely essential the Board focuses on de-levering, seeing as the Company's current capital structure is unsustainable.
We understand that Ancora is among a number of investors ? albeit the first debtholder ? that have felt compelled to publicly challenge the status quo at Pitney Bowes. Rather than continue to delay, the Board should seize the opportunity to put an end to the rancor and become champions of the Company's neglected investors.
Sincerely,
Frederick D. DiSanto |
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James Chadwick |
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Chairman and Chief Executive Officer |
President |
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Ancora Holdings Group LLC |
Ancora Alternatives LLC |
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About Ancora
Founded in 2003, Ancora Holdings Group, LLC offers integrated investment advisory, wealth management and retirement plan services to individuals and institutions across the United States. The firm's comprehensive service offering is complemented by a dedicated team that has the breadth of expertise and operational structure of a global institution, with the responsiveness and flexibility of a boutique firm. For more information about Ancora, please visit https://ancora.net.
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