Leading Proxy Advisory Firm Glass Lewis Concludes that Replacing a Cognyte Director with Value Base’s Nominee Is “Not Warranted at this Time”
August 29 2024 - 9:52AM
Business Wire
Recommends Cognyte Shareholders Vote “AGAINST”
Value Base Nominee Tal Yaacobi and “FOR” the Proposal to Approve
the Amendments to Cognyte’s CEO Compensation Plan
Cognyte Software Ltd. (NASDAQ: CGNT) (the “Company” or
“Cognyte”), a global leader in investigative analytics software,
today announced that a second independent proxy advisory firm,
Glass, Lewis & Co., LLC (“Glass Lewis”), has recommended
“AGAINST” the director candidate proposed by one of the Company’s
shareholders, Value Base Fund (“Value Base”).
In its report, Glass Lewis commented on Cognyte’s recent
progress, noting that “[t]he Company’s financial performance has
improved and exhibited positive momentum in recent periods as a
result of initiatives spearheaded by the incumbent leadership.”
Specifically, Glass Lewis found that:
- “[T]he Company’s forward EBITDA multiples have improved in
recent periods and are now largely in line with that of its peers,
which perhaps reflects the market’s acknowledgement of the
Company’s improving operational efficiency and anticipated
profitability.”
- “[T]he Company's leadership appears to have demonstrated a
reasonable grasp of relevant industry and market conditions, which
could help to maintain investor trust and bolster its perception in
the market.”
- “The Company has a recent track record of raising and meeting
its financial guidance.”
- “The Company has undergone significant board refreshment since
the spin-off from Verint in 2021.”
Given our acknowledged progress, we are disappointed that Glass
Lewis did not recommend voting for Cognyte’s Chairman, Earl Shanks.
However, we are pleased that Glass Lewis concluded that electing
Value Base’s nominee, Tal Yaacobi, in place of either Mr. Shanks,
or Cognyte’s CEO, Elad Sharon, is “not warranted at this time.” In
reaching that conclusion, Glass Lewis expressed concerns with Mr.
Yaacobi and his lack of substantive ideas for improving Cognyte’s
business. In particular, Glass Lewis cautioned that:
- “Mr. Yaacobi does not appear to us to have extensive
professional expertise in the areas such as cyber security,
investigative analytics and software sales, which are key to the
Company’s business operations.”
- “Mr. Yaacobi has limited public company board experience.”
- “Mr. Yaacobi has not had any responsibility in designing and
overseeing executive compensation programs at other companies…
[which is] notable given that a key aspect of the Dissident’s
critique lies with the Company’s CEO compensation plan.”
- “The Dissident’s arguments are brief and lack specificity,
covering only the Company's results without offering detailed
context, without proposing alternative strategies that could have
led to better results, and without publicly disclosing any specific
tactics or measures that the Company could implement to address
their stated concerns.”
Glass Lewis is the second leading independent proxy advisory
firm to find that the replacement of Cognyte’s incumbent directors
with Value Base’s candidate is not warranted, with Institutional
Shareholder Services (“ISS”) separately concluding that Value Base
“failed to provide a compelling rationale in support of [its]
proposed candidate.” ISS also commented on the strength of
Cognyte’s nominees, stating:
- "As an incumbent director, Earl Shanks brings to the board
experience and knowledge regarding the company’s business and is
expected to contribute to his role as a chairman and as member of
the nomination and governance committees. In addition, Earl has
significant public company experience as director and as
officer."
- "As an incumbent director and CEO, Elad [Sharon] brings to the
board experience and knowledge regarding the company’s business and
significant experience in the intelligence and security industry.
Particularly, Elad [has] serve[d] as the CEO of the company since
2021 and prior to that he served in range of management positions,
in Verint Systems Inc."
Glass Lewis also recommended “FOR” Cognyte’s proposal to approve
the amended employment terms of CEO Elad Sharon.
Glass Lewis highlighted the fact that Cognyte has “improved its
disclosures regarding CEO compensation,” noting that “the board
discloses its benchmarking process and peer group, as well as its
performance STI/LTI metrics and weightings, in much greater
detail.”
Glass Lewis acknowledged the conservative nature of the proposed
amended employment terms, noting that “the proposed basic pay
increase does not appear unreasonable,” and that “the CEO’s base
salary would remain well below the mean of the Company’s peer
group.”
ISS had also previously recommended that shareholders support
Cognyte’s CEO compensation proposal. In its report, ISS highlighted
the appropriate alignment in short- and long-term incentives in the
Company’s compensation program:
- "The annual cash bonus plan clearly discloses the weights of
the performance metrics, as well as the maximum cap level. Namely,
the short-term incentives are linked to improved performance and
the annual bonus will depend mostly on the officer’s
performance."
- "Fifty (50) percent of the full-value awards would be granted
with performance criteria attached, which facilitates improved
alignment between the interests of officers and those of
shareholders."
To help ensure Cognyte’s strong momentum and progress continues,
the Board urges shareholders to vote "FOR" Earl Shanks and Elad
Sharon and "AGAINST" the election of Tal Yaacobi, and "FOR" the
proposal to approve the amendments to Cognyte’s CEO’s compensation
plan.
Shareholders who have any questions or need assistance voting
their shares should contact the Company’s proxy solicitor, Saratoga
Proxy Consulting, at +1 (888) 368-0379 or +1 (212) 257-1311 or by
email at info@saratogaproxy.com.
About Cognyte Software Ltd.
Cognyte Software Ltd. is a global leader in investigative
analytics software that empowers a variety of government and other
organizations with Actionable Intelligence for a Safer World™. Our
open interface software is designed to help customers accelerate
and improve the effectiveness of investigations and
decision-making. Hundreds of customers rely on our solutions to
accelerate and conduct investigations and derive insights, with
which they identify, neutralize and tackle threats to national
security and address different forms of criminal and terror
activities. Learn more at www.cognyte.com.
Cautionary Statement Regarding Forward-Looking
Statements
Any statements contained in this press release that do not
describe historical facts may constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements are identified by use of the words
“anticipates,” “believes,” “estimates,” “expects,” “intends,”
“plans,” “predicts,” “projects,” “should,” “views,” and similar
expressions.
Any forward-looking statements contained herein are based on
current expectations, but are subject to risks and uncertainties
that could cause actual results to differ materially from those
indicated, including, but not limited to, the impact and
contributions of the slate of director nominees Cognyte has
nominated, the projected growth of Cognyte’s business, and
Cognyte’s ability to achieve its financial and business plans,
goals and objectives and drive shareholder value, including with
respect to its ability to successfully implement its strategy, and
other risk factors discussed from time to time in Cognyte’s filings
with the SEC, including those factors discussed under the caption
“Risk Factors” in its most recent annual report on Form 20-F, filed
with the Securities and Exchange Commission (“SEC”) on April 9,
2024, as amended on April 19, 2024 and in subsequent reports filed
with or furnished to the SEC. Cognyte assumes no obligation and
does not intend to update these forward-looking statements, except
as required by law, to reflect events or circumstances occurring
after today’s date.
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version on businesswire.com: https://www.businesswire.com/news/home/20240829483121/en/
Investor Relations Contact: Rob Fink FNK IR on behalf of
Cognyte Software cgnt@fnkir.com
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