Activist investor group Ides Capital of New York is working to shake up the board of Westwood’s Boingo Wireless Inc.
Ides has nominated two people for the company’s board of directors as part of an effort to change management compensation, which it claims is misaligned with shareholder interests.
Boingo installs and operates wireless networks for public venues such as airports, stadiums, and shopping centers. The company earns revenue by selling subscriptions to its Wi-Fi network and through partnerships with telecom providers.
Boingo had $140 million in revenue last year, up 17 percent from 2014. However, the company has posted losses over the last three years, including a $22.3 million loss in 2015. Boingo’s share price is down 45 percent since its 2011 initial public offering.
“Ides Capital’s intention has always been to work constructively with Boingo to address what we believe is a significant gap between the company’s intrinsic value and its current share price,” said Dianne McKeever, chief investment officer of Ides Capital, in a statement. “We sought to have meaningful conversations with management and the nominating and governance committee in hopes of working through the company’s nomination process, but are disappointed that the company has been dragging its feet.”
Boingo has created a staggered board structure that limits shareholders’ control of the company’s direction, claims Ides. The activist investor also claims Boingo’s management compensation structure focuses too much on achieving revenue goals with not enough attention paid to profitability.
Boingo dismissed Ides’ claims in a statement.
“We are disappointed that Ides Capital has decided to publicly announce its nomination of directors, especially in light of our ongoing dialogue and repeated requests to interview its nominees in accordance with our nominating process,” the company wrote. “Our board has been steadfast in its commitment to driving value for Boingo stockholders and will continue to take actions to achieve this important objective.”
The company’s stock rose 2.2 percent to close at $7.41 a share on Thursday.
