Engaged Capital, LLC (“Engaged Capital”), an investment firm specializing in small and mid-cap North American equities and beneficial owner of approximately 5.1 percent of the common stock of AeroVironment, Inc. (“AeroVironment” or the “Company”) (NASDAQ:AVAV), today sent a letter to the Company’s Board of Directors (the “Board”), included below and also filed today with an amendment to its Schedule 13-D.
In its letter, Engaged Capital notes the Board’s behavior since receiving its director nomination notice in June reflects a disregard for independent shareholders and obliviousness to the responsibilities of public company directors. The Board’s self-serving actions have led Engaged Capital to conclude that a single Board seat is not adequate to address the concerns of AVAV’s independent shareholders.
Rather than obtaining only one Board seat, Engaged Capital believes it can be more effective holding the Board accountable over the next twelve months by freely communicating with shareholders, analysts, and financial advisors. Accordingly, Engaged Capital has decided to withdraw its nomination of a single candidate for election at this year’s annual meeting. In its letter, Engaged Capital noted its decision to withhold votes for all three director nominees at the Company’s upcoming annual meeting as Engaged Capital does not consider these candidates to be independent.
Glenn Welling, Principal and Chief Investment Officer of Engaged Capital, commented, “We are disappointed AeroVironment’s Board has chosen to continually thwart our efforts to work constructively to correct the Company’s valuation discount. Boards should work collaboratively with their largest shareholders and we have attempted, repeatedly, to convince this Board of the same. However, this Board’s indifference for independent shareholders demonstrates exactly why change is necessary to prevent further leakage of value. We are committed to exercising all of our rights on behalf of shareholders to challenge the status quo and eliminate the impediments that have deprived AVAV shareholders of the full value of this great company.”