NEW YORK (The Deal) -- Three years of protest votes by shareholders against Rovi's (ROVI) executive pay packages mean activist investor Glenn Welling picked a relatively soft target for his short-slate proxy fight at the digital entertainment technology provider.
Welling's Engaged Capital is seeking to install three directors, including himself, on the Santa Clara, Calif.-based company's board at an annual meeting set for May 13. In a letter to Rovi's directors, Welling argues that shareholder returns have been negative overall since the company was formed by the combination of Macrovision and Gemstar-TV Guide International in May 2008. He also raised concerns about the "long tenured" board -- five independent directors have been around since the merger while most have had much longer tenures -- and that new cost management and return on investment expertise is needed.
The company operates an interactive TV-guide technology for multiple devices, an intellectual property licensing operation and an analytics business.
In a small way, Welling's campaign has already succeeded -- last Monday, Rovi expanded its board to seven members and added a little new blood in the form of a new director, Steven Lucas, an analytics and technology expert.
Will that be enough to appease the company's investor base? Not likely.
A review of non-binding shareholder votes on the company's executive pay packages, including compensation paid to Rovi CEO Tom Carson over the past three years suggests that there may be a number of disgruntled investors who could back Welling in his campaign.