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Verisign facing its own activist investor

Kevin Murphy, April 29, 2016, Domain Registries

While new gTLD registries Rightside and Minds + Machines have faced board-room challenges by activist investors in recent months, it seems industry heavyweight Verisign is contended with a similar problem.

John Chevedden, once described as an “economy class” activist due to his relatively small stakes, is attempting to give smaller Verisign shareholders the ability to propose directors for the company’s board.

Rather than attempting to gut the companies he invests in, he tries to make the odd incision into their corporate governance in order to give smaller investors a greater voice in their companies.

He’s filed a proposal, which will be voted on at Verisign’s June 9 annual general meeting, for a new “proxy access” bylaw.

Essentially, the proposal would allow an unlimited number of shareholders who collectively own over 3% of the company’s stock to propose two people for director elections (or 25% of the board, whichever is greater).

But Verisign’s current board is recommending that shareholders vote against the proposal, saying it’s “unnecessary”.

The company says that it plans to introduce its own proxy access bylaw that would be slightly different.

The Verisign alternative would limit the size of the nominating gang to 20 shareholders. That would mean that each individual investor would have to own much larger stakes, in order to pass the 3% threshold and nominate director candidates.

Verisign says Chevedden’s proposal, which does not limit the number of small shareholders involved, would be expensive and unwieldy to manage.

Chevedden reportedly has quite a decent success rate with these kinds of proposals.

Activist investor slams Rightside over “garbage” new gTLDs, looking for blood

A hedge fund manager known for causing trouble at the companies he invests in has savaged Rightside, saying its focus on new gTLDs at the expense of its registrar business is ruining the company.

J Carlo Cannell of Cannell Capital is looking for some serious bloodletting.

He wants Rightside to cut 20% of its staff, close offices, unify its products under the eNom brand and replace two of its directors.

He’s threatening to wage a proxy war to replace the Rightside board if he doesn’t get what he wants.

He wrote a scathing letter to Rightside chair Dave Panos last month, which was published in a Securities and Exchange Commission filing today.

NAME’s registrar has become like a crazy aunt kept in the basement, one that you refuse to adequately clothe or feed, but who steadfastly spins straw into gold used to subsidize a stable of largely substandard new GTLDs such as .democrat, .dance, .army, .navy, and .airforce. Most of these new GTLDs are irrelevant and will never be sold in material volumes. NAME is holding back the growth potential of your registrar by pushing garbage extensions to a user base that quietly knows better.

NAME is Rightside’s Nasdaq ticker symbol.

Cannell revealed he owned a 7% share of Rightside last month — paying reportedly just shy of $11 million for 1,389,953 shares.

He wants Rightside to sell off “or even abandon” some of its weaker gTLDs, which “should not consume all the resources of our Company at the expense of the assets that are currently profitable”, while keeping “gems” such as .news.

His letter doesn’t pull any punches.

Cannell is perhaps best known for his widely publicized tussle with Jim Cramer, TV show host and co-founder of financial news site TheStreet.