The battle for control of Green Dot continues after a drama-filled campaign for three board seats ended Monday with a split verdict.
Steve Streit, the prepaid card issuer's embattled founder and chief executive officer, is expected to be re-elected, based on preliminary voting results from Green Dot's annual meeting.
But Streit lost two of his allies on the company's 10-member board. Michael Moritz and Timothy Greenleaf both resigned just hours before the meeting, where they would have been up for re-election.
Their successors are expected to be George Gresham and Saturnino "Nino" Fanlo, both of whom were backed by Harvest Capital Strategies, an activist shareholder that wants to oust Streit as Green Dot's CEO. Gresham and Fanlo were the top two vote-getters in the proxy contest, according to Harvest.
The upshot is that Streit will keep his job as CEO of the Pasadena, Calif.-based prepaid card company, and will also retain his board seat, but he is expected to have less leeway than he did previously.
"It gives Steve a little bit less control than he had, and Harvest a little bit more say-so than they had before," said Larry Berlin, an analyst at First Analysis.
San Francisco-based Harvest, a hedge fund that owns more than 9% of Green Dot's common stock, indicated Monday that it will continue to push for Streit's dismissal.
"Looking forward, we are confident that the newly reconstituted board will listen to the voice of the
company's unaffiliated shareholders and take the necessary steps to create significant shareholder value," Jeff Osher, managing director of Harvest, said in a press release.
Osher also renewed his call for "an objective assessment of Green Dot's tone at the top," a turn of phrase that alludes to Harvest's ongoing criticism of Streit's management.
Green Dot's board of directors said in a press release Monday: "Over the last several months, we have had the opportunity to meet and speak with many of our stockholders. We thank them for their valuable and constructive input throughout this process. We also look forward to working collaboratively with the new directors to drive long-term shareholder value."
Despite that conciliatory language, the fight for control of Green Dot has often been ugly and personal.
During Harvest's four-month public campaign, the hedge fund accused Streit of repeatedly making misleading statements to shareholders. Green Dot responded by attacking the reputations of Fanlo and another Harvest-backed board candidate, Philip Livingston, who did not win election on Monday.
Streit often gets credit for inventing the prepaid card. He built Green Dot into the nation's top seller of the plastic cards, which are popular with low-income consumers who do not have checking accounts.
Green Dot went public in 2010, and its share price peaked at over $60 in 2011. But the stock price later suffered amid tough new competition from the likes of American Express and JPMorgan Chase. Shares in Green Dot were down 4.3% on Monday to $22.46.
Although the activist campaign to oust Streit from Green Dot's board did not succeed, it has resulted in big changes in the board's composition.
Gresham is a former chief financial officer of NetSpend Holdings, one of Green Dot's top competitors in the prepaid card business. Fanlo is the CFO of Social Finance, which is one of the nation's largest marketplace lenders. They are expected to join three directors that Green Dot named to its board in April, in response to Harvest's campaign.
As a result of the recent changes, five of Green Dot's 10 board members are new.
In addition, Green Dot announced plans last week to end Streit's tenure as chairman and name an independent successor. The new chairman has yet to be announced.