🔒WEX bows to hedge fund demands, agrees to remove CEO from board chair role

Bowing to pressure from activist investor Impactive Capital, WEX Inc. (Nasdaq: WEX) has agreed to separate the roles of CEO and board chair and add three board nominees put forward by the New York-based hedge fund. Shareholders, originally scheduled to cast their ballots on Tuesday, will now vote for an updated slate of 11 board members in a postponed annual meeting on Thursday, May 14. Impactive, a 4.9% shareholder in WEX, had been seeking to remove CEO Melissa Smith from the board and replace two other directors with three of its own candidates, including Lauren Taylor Wolfe, the hedge fund’s co-founder and managing partner. Impactive had criticized “chronic underperformance” and corporate governance shortcomings at WEX. WEX, a Portland-based company with more than 5,700 employees in 16 countries, provides financial technology services to businesses in fleet mobility and fueling, corporate payments, travel industry payments and benefits, including health savings and flexible spending accounts. In an agreement announced Monday, WEX said it has established a “refreshed slate” for election to the board that includes all three of Impactive’s candidates. WEX also said that Smith will continue to serve on its board, though no longer as chair. In addition, Nancy Altobello, a board member since 2021 who chairs the company’s nominating and governance committee, is no longer up for reelection.

“We are confident these additions will benefit the company as we work closely with Melissa, the management team and the board to help WEX realize its full potential.” Taylor Wolfe said. “We look forward to supporting the newly composed slate of director nominees at the upcoming annual meeting.” WEX shares were trading 5% lower Tuesday morning at $146.28, giving the stock a market value of around $5.12 billion. Over the past year, shares have fluctuated between a low of $120.03 and a high of $186.86.

'Commitment to constructive dialogue'

WEX touted its compromise with Impactive as a “cooperation agreement,” subject to customary standstill and non-disparagement provisions and voting commitments.

“We are pleased to have reached a resolution with Impactive, which will allow the board and management team to remain focused on executing our strategy, strengthening the business and positioning WEX for continued long-term growth,” Melissa Smith said. "This outcome reflects our commitment to constructive dialogue and effective governance.” While agreeing to other board changes, WEX is sticking by its nomination of former L.L.Bean CEO Stephen Smith, who chairs WEX's compensation committee. Questioning Stephen Smith’s lack of experience in banking and fintech, Impactive Capital had criticized the retail executive for “overseeing rising CEO compensation despite misses to target” and allowing internal compensation targets that were lower than targets provided to investors. A spokesman for WEX did not immediately respond to a request for comment.