Marathon Partners has been an activist at Shutterfly (NASDAQ:SFLY) since July 2014, but it has owned SFLY for over seven years. It's been fairly quiet though. Even when Shutterfly was trying to sell itself. In a letter sent to the SFLY board in late Feb., it looks like Marathon is waging a proxy battle, nominating four board member. Shares are flat since Marathon revealed its stake and owns roughly 5.5% of the company
The full letter is here, but here's the highlights.
Marathon is upset about the company's compensation (presumably too excessive) and it doesn't like the capital allocation and M&A strategies.
On the compensation, Marathon takes issues with:
lack of incentives encouraging long-term stock ownership by executives
xcessive awards based upon revenue and EBITDA growth as opposed to metrics that more directly increase stockholder value, such as free cash flow per share and earnings per share
This is the fund's real callout of SFLY, noting that it has been trying to work behind closed doors with the company. But board representation has become the best (and last) resort for Marathon to change how the company does compensation.