One of Green Dot’s largest shareholders wants to kick Steve Streit, the prepaid trailblazer’s founder and long-time CEO, to the curb. But Green Dot doesn’t seem to be having any of it.
Yesterday, the shareholder—Harvest Capital Strategies LLC—called for Streit to be ousted based on allegations that he had made strategic missteps, delivered weak financial results, and repeatedly destroyed Green Dot shareholder value since its IPO five years ago in 2010. Missed revenue targets and the discontinuation of Money Pak were among many examples cited by Harvest—which has a 6.2 percent stake in Green Dot—as rationale for putting Streit out on the street. While management at the investment firm admittedly lauded Streit’s accomplishments at Green Dot between its founding in 1999 and the IPO, they stated in a letter demanding the ouster that “the Green Dot of today requires a proven leader who can deliver consistent performance for shareholders,” and that “Mr. Streit has proven over many years, he is not that person.”
Streit is not the only one whom Harvest wants removed from his place at Green Dot. The investment firm wants two more of eight Green Dot directors, Kenneth Aldrich and Timothy Greenleaf, to be terminated as well. In addition, Harvest created and posted on a new website called www.fixgdot.com a 93-page presentation that details major changes it wants to see implemented within Green Dot and presents an argument that if the prepaid entity does not implement the suggested management changes, it should explore other strategic alternatives. “Numerous financial and strategic acquirers,” the presentation states, “would be interested in Green Dot.”
The presentation also contains a full-on attack on decisions made under Streit’s leadership. For instance, it stipulates that Green Dot’s board of directors changed the list of peer firms on its annual proxy “in a blatant attempt to justify increased compensation to Mr. Streit,” as the board utilizes the prepaid company’s relative performance as a reference point for determining management compensation.
It’s clear from Green Dot’s response to Harvest’s demands that it understands the latter’s position; the prepaid player said it has held numerous telephone calls and meetings with Harvest officials and will carefully review suggestions proffered in the presentation. However, it also doesn’t appear to take great stock in what Harvest has said about Streit and related matters so far. “Green Dot maintains a very active dialogue with our shareholders and welcomes their input as a part of our commitment to continually evaluate options to enhance long-term value and to act in the best interests of all our shareholders,” the company said in a statement issued in response to Harvest’s demands. However, “we are confident in our road map for growth.”
Defending Streit’s record as Green Dot’s CEO, the company said in the statement that it had been able to renew its contract with Walmart, where a high volume of Green Dot cards are sold, and deemed itself better prepared than some of its competitors for soon-to-be-finalized new rules governing prepaid cards. “Under Steve Streit's leadership, Green Dot has established a strong competitive position against existing and numerous new competitors, renewed a long-term contract with its largest customer, made several highly accretive acquisitions and positioned its business in full alignment with key current and pending regulatory changes, which could potentially have severe effects on Green Dot's competitors,” the statement says.
“Additionally, the company authorized a significant share-repurchase program and committed to ongoing share repurchases through 2018. These achievements have positioned Green Dot well for long-term growth."
As of now, it’s possible Green Dot doesn’t need to take any of the actions Harvest would like for it to pursue. Okay, so shares in Green Dot sold for $36 apiece during the IPO. That’s nothing like today: Following the close of the markets yesterday, shares were at $17.36 apiece. However, shares were up by 1.6 percent from trading close the previous trading day. That’s progress.
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