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The increasingly dramatic proxy fight at prepaid card issuer Green Dot Corp., a fight that could cost its founder, chairman, and chief executive Steven W. Streit his job if management loses, took an interesting turn Monday when Green Dot said it would appoint George Gresham, a director nominee from the opposition, regardless of the May 23 shareholder vote.
Gresham, one of three board nominees of dissident shareholder Harvest Capital Strategies, a San Francisco-based investment firm that owns 9.3% of Green Dot, rejected Green Dot’s March offer to be immediately appointed to the board without the other two Harvest nominees. And as recently as Friday, Green Dot filed proxy materials questioning the qualifications of Harvest’s nominees, including Gresham, to serve on its board, even though Gresham was the chief financial officer of a major Green Dot competitor, NetSpend, a formerly independent prepaid card program manager now owned by payment processor Total System Services Inc. (TSYS).
But on Monday, Pasadena, Calif.-based Green Dot announced that Glass, Lewis & Co., an independent proxy advisory firm, had issued a report on the proxy fight. Green Dot said Glass Lewis “supports Green Dot’s chairman and CEO, Steven W. Streit. Glass Lewis recognized the company’s strong and improving performance and significant stock price increase year-to-date.”
What Glass Lewis actually did was recommend that shareholders vote for Gresham and withhold voting for Harvest Capital’s other two nominees. “We believe dissident nominee Mr. Gresham’s background remains highly unique and relevant to Green Dot, given his experience in GPR [general-purpose reloadable prepaid cards] and payment processing, having served as the CFO of Green Dot’s chief rival, NetSpend, prior to its sale to TSYS,” the report says.
The endorsement of Gresham prompted Green Dot to say that “in order to facilitate the Glass Lewis recommendation for George Gresham, the board has agreed to appoint Mr. George Gresham, subject to his acceptance, irrespective of the outcome at the 2016 annual meeting of stockholders.”
Green Dot also said it will separate the roles of chairman and CEO and change the board’s re-election system so that all members are elected every year rather than on a three-year staggered basis.
The Glass Lewis report is not a flat-out endorsement of Green Dot’s management and board, and in fact says Harvest Capital has made some good points. But Glass Lewis rejected Harvest Capital’s call to oust Streit, who the investment firm has praised for starting and growing Green Dot but says is unfit to lead it as the prepaid market changes.
“Though we find many of Harvest’s suggestions to be reasonable and consistent with the company’s own strategic operating plan, we aren’t supportive of Harvest’s campaign to remove Mr. Streit as CEO and current leader of Green Dot—an action which doesn’t appear to us to be warranted or advisable at this time,” the report says. “For this reason, among others, we refrain from fully supporting the Dissident’s solicitation.”
On Thursday, Harvest Capital said that another independent proxy firm, Institutional Shareholder Services Inc., is recommending that Green Dot shareholders vote for the three nominees on the Harvest-backed “Green” proxy card.
Harvest Capital began buying Green Dot shares a few years ago and has criticized Streit and the board for the company’s subpar financial performance since then—a time when American Express Co. and others have made inroads on Green Dot’s former turf. But Green Dot’s stock has begun to rise in recent months as the company implements a six-point plan to offer new products and improve its bottom line. Harvest did not respond to a Digital Transactions News request for comment.
