Staffing and recruiting company GEE Group averted a proxy contest with Red Oak Partners Monday by appointing two new members to its board and pledging to weigh strategic alternatives but saw another activist disclose a stake the next day.
Goldenwise Capital Group subsequently announced in a regulatory filing that it had been engaging with management since May 2023. The first-time activist owns 5.2%, according to the filing, having steadily added to its holding over the past three months.
It said it saw opportunities to unlock value at GEE including changes to the board’s structure and composition, share repurchases, and a sales process.
GEE named Red Oak’s Chief Investment Officer David Sandberg and Randall Waterfield, chairman and CEO at diversified financial services holding company Waterfield Holdings, to the board, the staffing specialist said in a Monday press release announcing a deal with Red Oak.
Under the cooperation agreement GEE is to nominate Sandberg at this year’s annual meeting and Waterfield at the next, as the company has a staggered board, now comprising nine members.
The deal also includes a commitment by GEE to hire an adviser to help it evaluate strategic opportunities to maximize shareholder value. Sandberg will serve on GEE’s corporate governance committee and Waterfield on the audit committee, with both taking positions on the company’s mergers and acquisitions panel.
Red Oak, an 8.7% shareholder, initially nominated Sandberg and Director of Research Anthony Snow to GEE’s board. The latest deal bars the activist from running a contest and raising its stake above 19.9%. Red Oak also shelved plans to push for the elimination of GEE’s classified board and the separation of the company’s CEO and chair roles.
GEE also added Jyrl James as a replacement for staffing industry veteran Carl Camden, who resigned from the board for health reasons, the company said in a separate press release.
GEE shares surged more than 10% in early morning trading Tuesday, trimming year-to-date losses to 2% and placing the company’s market value at $55 million.
Also on Monday, GEE a reported a 7% year-over-year decline in revenues for the three months ended June 30. The company recorded a $7.9 million net income in the most recent quarter, up from $2.6 million a year before, though the rise is mainly the result of deferred tax benefits.
Before the opening bell Tuesday, GEE announced that it had adopted an insider stock trading plan to facilitate its $20 million share buyback program.