Activist investor Elliott Management, which recently took a multi-billion dollar position in Salesforce (CRM), is looking for a major overhaul of the company's board, a person familiar with the matter tells Yahoo Finance.

The source said that Elliott may put forth numerous candidates to join the Salesforce board ahead of the nominating window opening on Feb. 12, adding that Elliott is focused on nominating high quality candidates with diversity in mind.

Elliott could be eyeing the removal of long-tenured board members that have worked closely with Salesforce Co-Founder Marc Benioff to build and grow the company — these include Craig Conway (director since 2005), Alan Hassenfeld (director since 2003) and Sanford Robertson (director since 2003).

Salesforce declined to comment to Yahoo Finance on this story.

Earlier on Thursday, Bloomberg reported that Salesforce was looking to nominate several new members to its board amid the pressure from Elliott, notably former Carnival Corp. CEO Arnold Donald.

"Salesforce is one of the preeminent software companies in the world, and having followed the company for nearly two decades, we have developed a deep respect for Marc Benioff and what he has built," Jesse Cohn, Elliott's big-name portfolio manager, said in a statement to Yahoo Finance. "We look forward to working constructively with Salesforce to realize the value befitting a company of its stature."

Elliott joins fellow noted activist investor and Starboard CEO Jeff Smith as having built a position in Salesforce, with Starboard's position being disclosed in October. Activist Jeff Ubben at Inclusive Capital is also reportedly in Salesforce shares.

A source familiar with Starboard's thinking told Yahoo Finance that Salesforce has significantly more room to Strengthen margins — if it wants to get serious about doing so. One way could be to divest recent acquisitions such as Slack, pros have told Yahoo Finance.

Salesforce finds itself on defense with investors arguably for the first time as a public company.

The cloud-based software company is in the process of laying off some 8,000 people amid a drive to bolster lagging profit margins the activists are up in arms about following high-profile deals for Slack, Tableau, and Mulesoft. The company is also executing select real estate exits and office space reductions.

"I’ve been thinking a lot about how we came to this moment," Salesforce co-founder and CEO Marc Benioff said in a letter to employees on the layoffs. "As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that."

The company estimates it will incur $1.4 billion to $2.1 billion in charges related to the actions.

Salesforce has committed to a 25% operating margin by calendar year 2025. If hit, it would mark a notable increase from 2022's goal of 20.4%.

Analysts have generally welcomed the trio of activists to Salesforce in a bid to work the stock higher. But the mood on the Street is that any asset sales would be unwise.

"We also feel that it makes little sense for Salesforce to jump to a divestiture strategy at this stage, and that doing so poses several risks, namely: potential for managerial distraction; overpaying is human, selling for scrap is…not what we advise; future growth could be irreparably compromised," said Sarah Hindlian-Bowler, Macquarie’s head of technology research – Americas.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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New York CNN  — 

Software giant Salesforce (CRM), one of the 30 stocks in the venerable Dow Jones Industrial Average, had a miserable 2022. Now the company is under attack from a big hedge fund that wants to shake things up at the company that owns Slack.

Elliott Management, a firm that has taken activist stakes in Pinterest (PINS), PayPal (PYPL), Twitter (before Elon Musk acquired it) and former CNN owner AT&T (T) over the past few years, is now targeting Salesforce. Shares of Salesforce rose more than 4% on the news in early trading Monday.

A source close to the situation said that Elliott Management took a multi-billion dollar stake in Salesforce. Elliott would not divulge the size of its position in Salesforce to CNN Business, but the company did confirm its investment.

“Salesforce is one of the preeminent software companies in the world, and having followed the company for nearly two decades we have developed a deep respect for [Salesforce CEO] Marc Benioff and what he has built,” said Elliott managing partner Jesse Cohn in a statement to CNN Business.

“We look forward to working constructively with Salesforce to realize the value befitting a company of its stature,” Cohn added.

Salesforce was not immediately available for comment.

Shares of Salesforce plunged nearly 50% last year due to slowing growth and management turmoil. Co-CEO Bret Taylor stepped down, leaving Salesforce chairman and co-founder Benioff as sole CEO.

The company also recently announced plans to lay off around 10% of its staff due to the weakness in the tech sector.

Salesforce, like many other tech firms that are now cutting jobs, hired aggressively during the early stages of the Covid-19 pandemic, as the work from home boom led to a surge in demand for cloud software that made it easier for companies to manage their businesses remotely.

Benioff was even named CEO of the Year by CNN Business for 2020.

However, Salesforce spent a LOT of money over the past few years on acquisitions, scooping up workforce productivity tool Slack as well as software firms Tableau and MuleSoft for nearly $50 billion. Investors are now wondering if the deals were worth it.

Salesforce also has to contend with tough competition from the likes of Oracle (ORCL), German software giant SAP (SAP) and Microsoft (MSFT), which has a top Slack rival in Teams.

By any measure, Salesforce CEO Marc Benioff has been a successful executive. He helped build Salesforce from the ground up, starting in an apartment in San Francisco in 1999 and eventually erecting Salesforce Tower, the tallest building in the city. He took the idea of running software in the cloud and grew it into the de facto way to deliver software at a time when most companies offered software in boxes or on-prem seat licenses.

That he helped transform the way software is bought and sold is undeniable. But he’s now under intense scrutiny: Not one but two activist investors have recently taken large positions in Salesforce, meaning his decisions could be challenged on everything from acquisitions to how budgets are allocated.

For starters, Starboard Value announced in October that it was taking a sizable (but undisclosed) stake in Salesforce. Then this week, Elliott Management announced it was taking a multibillion-dollar position in the CRM leader.

Both firms usually have strong opinions about what they believe needs fixing at a company — and they typically get what they want. In this case, they likely want a more profitable, less costly Salesforce. That could involve cutting executive salaries, reducing overhead costs, laying off additional people and selling unprofitable pieces of the organization, among other things. The activist investors will probably also seek board seats.

Salesforce has already started making cuts, announcing it was laying off 10% of the workforce earlier this month. It plans to slash real estate costs, too, while reducing overall operating costs and increasing efficiency, but it might not be enough in the eyes of the new investors.

When you look at the moves Salesforce has made over the last five years, there is certainly room for criticism around the massive sums spent on acquisitions and how successfully acquired assets have been integrated and allocated. It’s possible that Elliott and Starboard were watching from afar, waiting for the company to weaken enough to question some of those decisions.

With Salesforce’s stock price down 29% over the last year and growth slowing, perhaps these firms saw the moment and made their moves. What will it mean for Salesforce and Benioff going forward? Let’s explore further.

When activist investors come calling, they typically make a list of desired changes and push for board seats to ensure those changes are put in place.

But this does not necessarily have to take an immediate hostile tone. A CEO who has been through an activist fight told me the goal at the beginning is to find common ground rather than assume a combative position with the activists.

“It’s not exactly about defense. That’s what the industry calls it, but it’s much more about understanding what your shareholders are pushing for and why are they pushing for these things. And are they right? And do you align on the time frame in which they want a certain set of things versus maybe the vision the company has over the long run?” said the executive, who requested anonymity to speak candidly to TechCrunch on background.

It’s very much a political exercise, and Benioff will have to read the pulse of other large investors and see how this all aligns. “I think that the really important blocking and tackling of this type of process is you have to be extremely close to your top 20 to 30 to 50 shareholders, and you have to understand what’s top of mind for them,” the CEO said.

All of this information will factor into Benioff’s strategy. If there are a lot of shareholders in agreement with the activists, then he’ll have to lean into their agenda more, but if the activists’ viewpoints differ from other shareholders, then he’ll have room to push back.

“So this is a very interesting kind of dance because it’s really a kind of shareholder democracy to some extent,” the executive said.

All that said, Salesforce is likely going to have to make some concessions.

Company: Salesforce (CRM)

Activist: ValueAct Capital

What's Happening

Behind the Scenes

I've been looking for a driver who is qualified, reader. I'm Diamond Naga Siu, and I'm a little rusty at driving after taking public transportation for so long. Driving at night is especially nerve-racking, because I keep getting blinded by the lights.

It's happening much more frequently, and I thought my eyesight was for sure getting worse (it is). But the real culprit is more complex: light hues, misaligned headlights, and other vehicle quirks. My colleague Madison Hall illuminates the problem here.

Before we drive off into the night, let's jump into today's tech.

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1. Salesforce performance pressure is on. Employees told Insider that the cloud company is about to drop new performance metrics for engineers. It's also trying to lower the headcount. Some salespeople had to choose between a "Prompt Exit Package" severance option or a 30-day performance improvement plan.

This is all part of a sprint to cut 10% of the workforce after going on a two-year hiring spree. Plus, multiple investors are believed to be pressuring Salesforce to cut additional costs to become more profitable.

More on the heightened tension at Salesforce here.

In other news:

2. Tech layoffs tell one story. Company headcount tells another. These six charts show how tech giants like Meta and Google have still grown, despite layoffs. Check them out here.

3. A woman doesn't want to prosecute her husband who is accused of purposely driving their family off a cliff. He is suspected of driving off a 250-foot cliff with his wife and two children inside a Tesla. The California doctor faces three attempted murder charges. More on the situation.

4. Microsoft really wants you to use Bing and ChatGPT. The company is throwing it back to the 90s. It's pushing people to set Bing as their default search engine. And it's trying to trade access to its augmented search engine for market share. Here's a breakdown of its desperation.

Story continues

5. Hundreds of influencers revealed their rates for sponsored posts. New data revealed that the average rate for TikTok fell from $3,108 in 2021 to $2,947 a year later. Meanwhile, the costs of Instagram sponsored posts are rising. Get more insights on sponsored post rates.

6. The danger of putting computer chips in your brain. Elon Musk's neurotech startup has been working toward putting chips in people's brains since 2016. Other startups have been keen to do so, too. But experts warn there are real dangers and unique ethical pitfalls. Dive into them here.

7. Leaked Amazon all-hands recording reveals CEO pep talk. On Tuesday, Andy Jassy urged employees to band together to get through this challenging time. He encouraged them to "redefine" the company and laid out how they can be successful. Get the full meeting breakdown.

8. Walmart forces employees to relocate or bounce. The retailer is cracking down on remote work. It closed tech hubs in California, Texas, and Oregon, and gave impacted employees two options: relocate or take severance. More on the employment ultimatum.

Odds and ends:

9. Beep Beep: Road trip with this couple in an EV. Axios reporter Joann Muller joined her husband on a 1,500-mile road trip in a Kia EV6. They didn't use heat — and stopped 12 times due to "range anxiety." Come along for the ride here.

10. Stop doing these things at Chinese takeout restaurants. Su-Jit Lin grew up working in her parents' American Chinese restaurant. She witnessed her parents facing racism and aggression while running their business. Here are nine things she wishes customers knew.

What we're watching today:

Curated by Diamond Naga Siu in San Diego. (Feedback or tips? Email dsiu@insider.com or tweet @diamondnagasiu) Edited by Dave Smith (tweet @redletterdave) in Toronto and Nathan Rennolds (tweet @ncrennolds) in London.

Read the original article on Business Insider

When Salesforce announced it was laying off 10% of its workforce last month, you might have assumed that meant that everyone who was affected was informed at that time. With social media flush with people talking about Salesforce layoffs today, the company says these are part of that original announcement, but some folks are learning about their fate today.

The overall number of approximately 7,000 people announced at the beginning of January remains unchanged, according to the company. “These are part of the reductions we announced in January,” a company spokesperson told TechCrunch.

Some of today’s announcements are hitting in Europe, with the Irish Independent reporting that 200 of 2,100 Irish employees were laid off today, fitting in with that 10% target.

CEO Marc Benioff reportedly telegraphed that the sales group could be targeted, telling employees in a company meeting last month that remote workers weren’t as productive as folks in the office, and that half the sales team accounted for 96% of the revenue, suggesting that the other half accounted for just 4%. It seems likely that department could take a big hit.

Regardless, more people learned they are out of work today, joining the sad parade of tech employees being laid off in recent months. At the time of the announcement, Benioff said that the company had hired too many people during the pandemic. “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” Benioff said.

Salesforce has been under pressure to cut costs from activist investors. Just last week Elliott Management announced it had taken a multibillion-dollar investment in Salesforce. That was after Starboard Value took a significant stake in October. Two other activists, ValueAct and Inclusive Capital, are also operating inside the company. Having four activists at the same time is probably contributing to the pressure to increase profitability and reduce spending, which often translates into workers being let go.

On Friday, the company announced it was bringing on three new members to its board of directors, which was likely a nod to the activists, who like to have board representation as part of their strategy. These layoffs are also probably another step in appeasing the demands of the activist investors.

Salesforce, San Francisco’s largest private employer, laid off thousands of employees early Thursday morning as the tech giant moves forward in its plan to cut its workforce by 10%.

The corporate software company blamed the layoff rounds, originally announced on Jan. 4, on overhiring during the pandemic. In a two-hour meeting the following day, CEO Marc Benioff complained that just half of the company’s salespeople were responsible for 96% of sales, according to a CNBC report.