Longtime IT executive Lance Rosenzweig has been tapped by investment fund Hestia Capital to be interim CEO at Pitney Bowes Inc., the iconic shipping and mailing concern targeted by Hestia for a proxy war and a top-level management shakeup.
Rosenzweig was most recently CEO of IT firm Support.com. Prior to that, he was CEO of Startek Inc., another publicly traded company. In a letter to shareholders, Rosenzweig sets a $15-per-share target for Pitney Bowes (NYSE: PBI) in the coming years, well above the $3.76 a share level it rests at currently. He didn’t specify a time frame.
Hestia and Pitney Bowes have been warring for several months. Hestia wants five new members on the nine-member Pitney Bowes board, which the company said it opposes. Hestia, based in Mars, Pennsylvania, also wants to oust current CEO Marc Lautenbach, who they say bears much of the blame for the company’s ongoing issues and sagging share price over the decades.
In a three-page shareholder letter, Rosenzweig said the company needs to “make immediate changes” in its capital structure with $1.7 billion in debt maturing over the next six years putting pressure on the share price and dividend. The company also needs to reduce administrative costs, which currently exceed $200 million a year, especially since the company’s market cap is less than $675 million.
Another main point is to restore Pitney Bowes’ global e-commerce business to profitable growth. In fiscal year 2022, the unit reported $100 million in negative earnings before interest and taxes (EBIT). Todd Everett, who was CEO at Newgistics Inc. when Pitney Bowes acquired it in 2017 to get into the global e-commerce segment, will run the business at the board level, Rosenzweig said.
Hestia, which owns 8.4% of the company, will cross swords with Stamford, Connecticut-based Pitney Bowes at the May 9 annual shareholder meeting.
Lautenbach transformed a business that was in secular decline, stabilizing its core mail business and creating a growing shipping business, Pitney Bowes said. During his tenure, the company has cut $1.7 billion in debt, eliminated several hundred million dollars of expenses and invested $2.8 billion in the firm. Compound revenue growth was 4.9% between 2017 and ’22, compared to an annual revenue loss of 8.6% from 2007-12, per Pitney Bowes data.
Pitney Bowes has acknowledged the transformation process has taken longer than expected. Yet the company said it currently boasts a strong portfolio designed to support profitable mailing and shipping activities.