With a proxy fight looming, vending-machine payments provider USA Technologies Inc. announced late Thursday that chief executive Stephen P. Herbert has resigned.
Herbert, a former Pepsi-Cola executive, spent 23 years with Malvern, Pa.-based USAT, including eight as CEO. USAT’s board of directors named one of its members, Donald W. Layden Jr., as interim CEO, effectively immediately. The board intends hire an executive-search team to find a permanent replacement.
A USAT press release announcing the changes makes no mention of plans disclosed Monday by the company’s largest shareholder, New York City-based Hudson Executive Capital LP, to nominate a slate of prospective board members at the company’s next annual stockholder meeting. The hedge fund’s managing director, Douglas L. Braunstein, accused USAT of “value-destructive conduct” and said the company needs new leadership.
Hudson Executive Capital didn’t respond until Friday morning, when it issued a statement indicating it isn’t mollified by the changes. Not long afterward, USAT revealed it will ask shareholders to approve a “short-duration shareholder rights plan” at the company’s next annual meeting.
“The rights will not prevent a takeover, but should encourage anyone seeking to acquire the company to negotiate with the board prior to attempting a takeover,” USAT said in a statement.
News of HEC’s possible proxy fight came less than a week after USAT disclosed it had filed long-overdue financial reports stemming from accounting problems it says are now resolved.
USAT provided few details about why Herbert is leaving. Board chairman Albin Moschner said in Thursday’s release that “with our financial disclosures now up to date, and with a strong foundation in place from which we can grow our business, Steve determined that the time was right for a change in management.”
In his own statement, Herbert said “with our efforts to regain our financial compliance complete, and with a recently bolstered balance sheet, I leave USA Technologies in a strong competitive position. I am confident in the company’s enhanced compliance and governance structure, commitment to customers and attractive long-term prospects for value creation.” A company spokesperson declined further comment.
“It is only after Hudson Executive made its views public that USAT was willing to begin this long-overdue process of replacing its CEO,” HEC, which own 16% of USAT, said. “This action does not absolve the board of its past failures to provide the company with competent management, and the consequent operational and financial deficiencies that have occurred on its watch as a result.” HEC further said it has “no confidence that this board will exercise sound judgment” in selecting a new CEO and called for a shareholder meeting within the next three months.
Layden, an attorney and venture partner with Baird Capital Partners, joined USAT’s board in April as no stranger to the payments industry. His experience includes various senior positions at processor Metavante Technologies Inc., which Fidelity National Information Services Inc. (FIS) acquired a decade ago for nearly $3 billion. He also served on the board of bill-pay provider Online Resources Corp., now part of ACI Worldwide Inc.