Ancora Holdings Group, a key stockholder of Everbridge, the critical event management provider, has issued another letter to Everbridge’s shareholders. This time Ancora officials said they would withhold support for four board members at the Everbridge annual meeting of stockholders. The meeting is May 19.

Fredrick DiSanto is chairman and CEO of Ancora. James Chadwick is president of Ancora Alternatives. They penned the letter and didn’t mince words.

Ancora’s Fredrick D. DiSanto

“In our view, these [board members] are part of the culture of failure and operational mediocrity that pervades across Everbridge today,” they said. “The board has multiple directors whom we deem ‘stale’ based on their more than decade-long tenures.”

They plan to withhold support for chairman Jamie Ellertson and members Bruns Grayson, Richard D’Amore and Kent Mathy.

History of the Board

Grayson has been a member of the Everbridge board of directors since 2011. He also is a managing partner at ABS Ventures, a venture capital firm. D’Amore has been on the board since April 2015. D’Amore is a general partner of North Bridge Venture Partners, an early-stage venture capital and growth equity firm. And Mathy has been a member of the board since August 2012.

DiSanto and Chadwick said these members were unwilling to advance Everbridge stockholders’ best interests or embrace and act on stockholder feedback. Their criticism of the board includes:

Conflict of Interest

In the letter, DiSanto and Chadwick criticized Ellertson’s role with the company.

“It is extremely notable that Mr. Ellertson has never purchased shares, and instead has reduced his stake by over 95% since [Everbridge’s] IPO. This weak alignment with stockholders is extremely troubling,” they said. “How can these directors be expected to act in the best long-term interest of stockholders when they themselves are cashing out?”

Collectively, the board member shareholdings represent less than 1% of the company’s outstanding shares. These “insiders” have been net sellers of Everbridge’s shares over time. They have sold 3.34 million shares and purchased only 10,700 shares on the open market, DiSanto and Chadwick said.

Ellertson became an investor and Everbridge board member in 2010. In 2011, Ellertson merged CloudFloor Corp., a company he founded and majority-owned, with Everbridge becoming CEO and chairman. According to Everbridge, Ellertson has successfully guided the company through its transition from a single-product business to global SaaS provider of CEM.

Ellertson sold down his stake in Everbridge. He turned his focus to the creation and operation of a venture capital firm called Akmazo Capital Management Company.

DiSanto and Chadwick said this parallel interest would seem “innocuous.” However, it appears Ellertson proceeded to recruit multiple senior executives from Everbridge, they said. The recruitment drained top talent from the company. This included former CTO Imad Mouline and former SVP of engineering Yuan Cheng.

“We believe this is a glaring conflict of interest,” they said. “It represents a possible breach of Mr. Ellertson’s, and quite frankly the entire board’s, fiduciary duty to stockholders.”

Everbridge Response

Everbridge published its response in Yahoo Finance to the most recent Ancora letter.

“Ancora’s statements targeting Mr. Ellertson are misleading, contradictory and untrue,” company spokespersons said. “Contrary to Ancora’s claims, at no time has Mr. Ellertson or his firm, Akmazo, recruited or hired an active employee of Everbridge. Finally, Akmazo’s investments have been in businesses unrelated to Everbridge. Any potential conflicts are subject to review according to Everbridge’s robust conflicts of interest policy.”

They added that Ancora’s sole substantive objective has been an immediate sale of the company.

“We believe Ancora’s attempts to disrupt the leadership of Everbridge both through its public campaign to oppose our directors, which it chose to announce well after the company had nominated its candidates for election at the upcoming annual meeting, and its demands to abandon our CEO search midstream are intended to make a near-term sale a foregone conclusion,” spokespersons said.

Share Price

Channel Futures reached out to Everbridge, but officials did not return a request for comment by publication time. Everbridge’s vice president of corporate communications told Yahoo Finance that the board and management team undertook a comprehensive review. Officials said that going forward the company is taking action to improve its strategic direction, go-to-market execution and efficiency.

This is the second shareholder letter Ancora has publicly issued in recent months. The first outlined Everbridge’s dramatic undervaluation at its current share price, among other topics. The company’s shares have fallen 69% in the past year. DiSanto and Chadwick said that a well-capitalized acquirer could deliver more than $70 per share of Everbridge for shareholders.

“Everbridge is a high-quality business that remains dramatically undervalued,” they said. “We believe the board must take swift action to close the valuation gap through a potential sale of the company.”

Timeline