Health-care-technology provider Cerner (CERN) - Get Report jumped more than 10% Tuesday after the company reached an agreement with activist hedge fund Starboard Value LP to appoint four mutually approved directors to its board and boosted its buyback program by $1.2 billion.
"We are committed to delivering significant operating margin improvement and returning capital to our shareholders while maintaining an unwavering focus on delivering value to our clients," CEO Brent Shafer said in announcing the moves, which sent Cerner stock 10.3% higher to close at $62.97 on the Nasdaq Stock Market.
Cerner said it appointed four new directors effective immediately: John Greisch, former president and CEO of Hill-Rom Holdings; Halsey Wise, former chairman and CEO of MedAssets; Melinda Mount, former president of AliphCom, also known as Jawbone; and George Riedel, former chairman and CEO of Cloudmark.
Current Cerner board member William Zollars has also been appointed to the newly created position of lead independent director, the company said. Separately, Cerner announced that Denis Cortese, emeritus president and CEO at the Mayo Clinic, will retire. Cortese was elected to Cerner's board in May 2011.
The appointments are part of a larger deal with Starboard that includes "a board refreshment plan, operational improvement initiatives, commitments for operating margin targets, a new finance and strategy committee of the board and an expanded capital return program to drive the next phase of profitable growth and value creation," the company said.
As for the buyback, Cerner said its total authorized amount available for repurchase is about $1.5 billion.
Starboard Managing Director Peter Feld lauded the moves. "We are pleased to have reached this agreement with Cerner which includes a meaningful refreshment of the board, as well as important steps towards implementing operational improvement initiatives that will drive profitable growth," he said in a statement. "We believe the operating-margin targets and the significantly expanded capital-return program demonstrate a strong commitment to driving improved results and shareholder-value creation."
The agreement marks the second truce in as many days between Starboard and a publicly traded company. On Monday, Starboard dropped its planned proxy battle with Dollar Tree (DLTR) - Get Report after the discount-retail chain said it would work with the activist firm to implement some of the Starboard's revenue-boosting recommendations.
(This article has been updated.)