Zendesk (ZEN) Board is Out of Touch with Shareholders, Says Jana

Zendesk (NYSE: ZEN) Board is Out of Touch with Shareholders, Says Jana

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February 28, 2022

Board of Directors

Zendesk, Inc.

989 Market Street

San Francisco, CA 94103

Members of the Board,

At Friday’s extraordinary shareholder meeting, Zendesk’s board received the lowest level of support of any disclosed deal-related shareholder vote (buyer or seller) in the Russell 3000 in the last 20 years (and possibly ever), garnering only 9% support (which would have been even lower excluding the roughly 3% held by management and other insiders).^[1]

This unprecedented rejection of the board’s most consequential strategic decision in recent memory comes as no surprise, as we believe it was obvious the Momentive acquisition was flawed from the start. Despite the collapse in Zendesk’s share price caused by the announcement of the transaction, widespread rebuke from analysts and investors alike, opposition from independent proxy advisory services and insurmountable odds of winning support, the board nevertheless proceeded full steam ahead in its attempt to acquire Momentive - burning through millions of dollars of shareholder capital in the process.

We believe it could not be any clearer that Zendesk’s board is disengaged and totally out of touch with shareholder priorities, lacks the requisite skillset to govern the company on their behest and/or simply does not care enough to consider them.

Thanks to a CNBC report on Friday by David Faber, we have now also learned that Zendesk's board appears to condone unprofessional acts of hostility against dissenting viewpoints.

We believe sending an expletive-laden e-mail lashing out at a highly respected, well credentialed CNBC contributor is unacceptable, especially coming from Zendesk's lead independent director, the most powerful independent shareholder representative on the board. Unfortunately for shareholders, this appears to be part of a pattern of hostility towards other points of view.

We believe Zendesk requires either significant board change, or in the absence of such change, should be sold. With the Momentive chapter finally in the rearview mirror, we look forward to making the case for shareholders to vote the WHITE proxy card at the Zendesk 2022 annual meeting.

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