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(Reuters) -Activist investor Elliott Management Corp has nominated a slate of directors to the board of cloud-based software provider Salesforce (NYSE:CRM) Inc, a source familiar with the matter said on Wednesday, hours before the company reports quarterly earnings.
The move lays the groundwork for what could become one of the year’s biggest boardroom challenges as Elliott, one of the world’s largest activist investors, takes on a Silicon Valley darling whose stock has lost roughly half its value since its November 2021 peak on concerns about a slowdown in sales.
The source declined to name Elliott’s director candidates or say how many there were.
The hedge fund and Salesforce have been holding intensive constructive discussions and could still reach a compromise, sources familiar with the talks said on Wednesday.
Elliott declined to comment. Salesforce could not be reached for comment. News of the nominations was first reported by CNBC.
Elliott became the latest activist investor to establish a position in Salesforce when it unveiled its multi-billion dollar stake in January. Other hedge funds with stakes include Jeff Ubben’s Inclusive Capital Partners, Jeff Smith’s Starboard Value, ValueAct Capital and Third Point.
The slate nominated by Elliott signals the pressure such an investor can bring to bear on its target, analysts said, noting that many are using this tool more frequently.
Elliott has not publicly disclosed what changes it is seeking at Salesforce. Some activists have pushed for the company to increase growth and margins, buy back more shares, and raised concerns about recent acquisitions.
Shares of Salesforce rose 1.3% to $165.81.
After the stock market close on Wednesday, the company is expected to report a 9% increase in revenue to $7.99 billion for the fourth quarter, Refinitiv data showed.
Salesforce, valued at $164 billion, said in January it planned to cut a tenth of its jobs and close some offices after rapid pandemic hiring left it with a bloated workforce.
Tech companies have shed more than 150,000 workers in 2022. Other technology giants like Meta Platforms Inc (NASDAQ:META), Google parent Alphabet (NASDAQ:GOOGL) Inc and Microsoft Corp (NASDAQ:MSFT) have announced job cuts in recent months.
To address some of its issues, Salesforce had been working for months to refresh its board and earlier this year added three new directors. These include ValueAct Capital’s Chief Executive and Chief Investment Officer Mason Morfit, Mastercard (NYSE:MA) finance chief Sachin Mehra, and former Carnival (NYSE:CCL) Corp CEO Arnold Donald.
Morfit helped to boost Microsoft’s market value when he served on the board from 2014 to 2017.
