Green Dot CEO Withstands Proxy Battle, But Shareholders Elect Two New Dissident Board Members

Preliminary voting results in a proxy battle for the board of Pasadena-based Green Dot indicates that two dissident shareholder nominees have been voted onto the Board while founder and CEO Steven Streit has likely fended off the challenge and will re-elected to his company’s board.

A day before the vote Monday longtime board members and Streit allies Timothy R. Greenleaf and Michael J. Moritz, both whom had been targeted for removal by the dissident shareholders led by Harvest Capital Strategies LLC, both resigned, leaving Streit the lone company nominee to board.

After the vote both Green Dot and Harvest said separately they expected Social Finance Inc. Chief Financial Officer Saturnino Fanlo and former NetSpend Chief Financial Officer George W. Gresham, both nominated by Harvest, had won election to the board.

The proxy fight has been bitter since Harvest launched its campaign last January.

Green Dot is a $652-million dollar a year prepaid debit-card company which was recently chosen to provide Walmart customers with reloadable moneycards. Its popularity jumped when it hired comedian Steve Harvey as its spokesman in a series of clever TV spots.

Harvest owns approximately 9.3% of the outstanding common stock of the Company.

“Shareholders have suffered through repeated disappointments due to glaring deficiencies in the CEO suite,” a May 19 Open Letter to Green Dot shareholders from Harvest declared.

Then last week and just days before the actual proxy voting today, Green Dot suffered a major embarrassment when reports swept across the media that Green Dot’s prepaid cards sold to Walmart customers weren’t working and users could not access their money.
Wednesday Green Dot acknowledged the problem, saying that its new transaction processing partner, MasterCard Payment Transaction Services, was experiencing slowdowns in some systems.

Still, the thought of thousands of card users who trusted Green Dot finding themselves cut off from their own money seemed a publicity debacle at just the wrong time, to some observers.

“Harvest can no longer sit idly by while the Board and CEO Steve Streit continue to destroy shareholder value quarter after quarter. As shareholder value burns, Mr. Streit and his Board continue to fiddle,” Harvest has said as it pressed its attack.

Control of the company represents a powerful investment. A study by Master Card and Boston Consulting Group indicates that domestic prepaid card load value will reach $421 billion by 2017.

The company said it will publish further details from the meeting in a regulatory filing next week.