Boston: AOL Inc. shareholders re-elected the company’s eight-member board of directors on Thursday, handing a defeat to activist hedge fund Starboard Value, which had sought to unseat three directors.
AOL shares slid 5% to $25.72, their steepest slide on the New York Stock Exchange in more than two months.
Starboard had aimed to shake up AOL, which is working to transform itself to an ad-driven media destination as it winds down its old business of selling dial-up Internet access.
Chief executive Tim Armstrong said the preliminary results showed shareholders had faith in his strategy, which he said helped the shares surge roughly 40% over the past year, greatly outpacing the 7.5% rise of the tech-heavy Nasdaq composite index.
“It was a referendum on our long-term holders and what they feel about our strategy,” Armstrong, a former Google Inc. official who took the helm of AOL in 2009 as it unwound from its disastrous merger with Time Warner Inc., said of the vote.
Company officials cautioned the voting results were preliminary and said they would confirm the final tally in a filing with the US Securities and Exchange Commission.
The company’s hold on the board in part reflected shareholder relief after AOL inked a deal to sell most of its patents to Microsoft Corp. for $1 billion, a sum that it intends to disburse to shareholders after the deal closes.
“I think the patent sale was a big relief for investors and paved the way for a little more patience,” said Clayton Moran, an analyst with the Benchmark Company. Armstrong also invited Starboard CEO Jeffrey Smith to address the crowd, which met at Boston University. “We all agree that AOL is undervalued. We also all agree that AOL can achieve substantial revenue growth and far more profitability. The challenge is how to get that accomplished,” said Smith, whose fund holds a 5.3% stake in AOL.