February 26, 2019

SeaChange CEO resigns amid dispute with largest shareholder

Photo/Grant Welker
SeaChange's Acton headquarters, which have been put on the market.
Former SeaChange CEO Ed Terino

Edward Terino, CEO of Acton video platform company SeaChange International, is resigning following a dispute with the board of directors regarding a cooperation agreement with a shareholder seeking seats on the company's board of directors.

According to filings with the U.S. Securities and Exchange Commission, Terino resigned on Sunday.

In his resignation letter, which is publicly available via the SEC, Terino singles out a proposed cooperation agreement with New Jersey investment firm TAR Holdings and Karen Singer, which Terino said is not in the best interest of all shareholders.

A cooperation agreement is not yet finalized, but in a filing last month, Singer criticized the company's poor operational and financial results, citing poor management and the company's bylaws not allowing for director turnover.

Terino said the agreement has not been vetted with other major shareholders, including giving those who own at least 5 percent of the company's shares as of the end of 2018.

Further, Terino said the agreement gives Singer and the firm a percentage of board seats greater than their ownership percentage of 15 percent. Calling Singer's pitch an activist campaign, Terino said that would be to the disadvantage of other long-term shareholders.

The proposed agreement, Terino said, would result in incremental cost to the company, which has experienced several restructurings and cost reductions over the last two years to stay afloat.

"As I have expressed at numerous board meetings and individual discussions with SeaChange directors and advisors, I am deeply concerned about the lack of a plan to increase shareholder value from Karen Singer and TAR Holdings LLC.," Terino said. "Further, based several of Karen Singer's and TAR Holdings LLC's other activist campaigns, they have not demonstrated a consistent record of increasing shareholder value, and in some cases, have benefited financially to the detriment of other shareholders."

In a company statement Tuesday, the board of directors rejected Terino's characterizations made in his resignation letter.

"The board believes its actions have always been and are consistently in the best interest of the company and all shareholders, including its engagement with existing shareholders and a potential customary cooperation agreement with the company's largest shareholder," the company said.

In the meantime, SeaChange has created an interim Office of the CEO, including Chief Commercial Officer Yossi Aloni, Chief Financial Officer Peter Faubert, Chief Technology Officer Marek Kielczewski and General Counsel David McEvoy.

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