UPDATE 1-Fleetcor Technologies to eye alternatives, refreshes board
(Adds details on agreement, background on CEO and DE Shaw, stock price)
By Svea Herbst-Bayliss
NEW YORK, March 20 Reuters) - Fleetcor Technologies on Monday said it will consider selling or separating one or more of its businesses and is adding two new board members amid pressure from hedge fund D.E. Shaw Group.
Fleetcor, which provides fuel cards and workforce payments products, added Rahul Gupta, a veteran board member director and expert in the digital services and payments industry, as a new director.
The company and D.E. Shaw will jointly select a second director who will join the board later. The board added technology executive Annabelle Bexiga in January and said it expects one of its "longer tenured directors will retire," later.
Fleetcor, which is valued at $14 billion and is headquartered in Atlanta, has seen its stock price drop 22% over the last 52 weeks as investors have become frustrated with how its businesses are linked together.
Investors have expressed concern about the fuel card business as the industry shifts more to electric vehicles.
On Monday, investors sent the company's stock up more 7% at $201.57 in morning trading.
As part of the agreement, the board will review the company's portfolio and create a new committee to review strategic alternatives including the separation or sale of one or more of its businesses.
The review will complement an ongoing "business simplification plan" and should be finished by the end of 2023, the company said.
Ronald Clarke, who has served as Fleetcor's chief executive since 2000, could see his compensation increase significantly if the stock price climbs high enough.
According to a regulatory filing, Clarke could earn more than $100 million if the stock price hits $400 a share by the end of 2024. If the stock price does not hit at least $350 a share, Clarke would get nothing.
The announcements come after weeks of discussions with D.E. Shaw, which owns an unspecified stake in the company.
D.E. Shaw, oversees more than $60 billion in assets and occasionally pushes for changes at companies. In December, it reached an agreement with Fidelity National Information Services . Two months later the company announced plans to spin off its Merchant Solutions business, which will be named Worldpay.
When D.E. Shaw encourages corporate boards to rethink strategy, the hedge fund prefers to conduct talks out of the limelight and often surfaces publicly only after an agreement has been signed.
Last year, D.E. Shaw settled with parcel delivery firm FedEx to add two directors and will have a say in appointing a third one. It pushed Verisk Analytics to become a pure play insurance data business and in October Verisk announced a deal to sell its energy-consulting arm, Wood Mackenzie.
(Reporting by Svea Herbst-Bayliss, Editing by Louise Heavens and Bill Berkrot)
