Cloud storage provider Dropbox, opens new tab is facing pressure from an activist investor to end founder control of the company, the Wall Street Journal reported on Monday, citing people familiar with the matter.
Half Moon Capital, a small hedge fund, is criticizing the company’s slowing revenue growth and taking issue with its strategy on payment tiers, the report said.
Dropbox and Half Moon did not immediately respond to Reuters’ requests for comment.
Half Moon seeks to remove Dropbox’s dual-class share structure, which gives CEO and co-founder Drew Houston a voting supermajority, the report said.
The proposal says the structure has prevented shareholders from holding management accountable after it made “significant missteps,” according to the report.
Half Moon Capital holds around 40,000 Dropbox shares, a stake recently valued at about $1.1 million, according to the report.
The WSJ report said the proposal would require a majority vote for approval, meaning Houston’s support would be needed for it to pass.
Houston currently has a roughly 77% voting stake because of his Class B shares, which have 10 times the voting rights of Class A shares, the report said.
Half Moon Capital believes the proposal, which is set for a vote at the company’s annual meeting, will pressure management and the board to make other changes, the report added.
The company said in October 2024 that it would reduce its workforce by 20% globally, after its 16% lay offs announcement in 2023. Reuters