Virtusa Outlines Achievements and Mission-Critical Credentials of Current Board, including Nominees Al-Noor Ramji and Joseph G. Doody
Collective Competencies of Strategically Refreshed Board Reinforce Unnecessary Nature of New Mountain Capital’s (“NMC”) Proxy Contest
Reiterates Board’s Unanimous Recommendation that Shareholders Vote "FOR" the Company's Two Independent and Highly Qualified Director Nominees on the WHITE Proxy Card
In its letter, the full text of which is below, the Board provided detail around:
- The deep IT experience, industry pedigree and significant shareholder representation on the Company’s Board;
- The Board’s efforts to implement and oversee the execution of the Company’s Three Pillar Strategic Plan;
- The risks inherent in replacing
Al-Noor Ramji andJoseph G. Doody , directors with mission-critical experience and credentials, at this important juncture; and, - The non-additive nature of NMC’s director candidates to a strategically refreshed Board, its rejection of reasonable settlement offers and its insistence on disproportionate representation.
The Virtusa Board unanimously recommends that shareholders vote on the WHITE proxy card "FOR" the Company’s two independent and highly qualified director nominees,
Virtusa’s definitive proxy materials, letter to shareholders and other materials regarding the 2020 Annual Meeting can be found on the Company's investor relations webpage.
Dear Fellow Shareholder:
At this year’s Annual Meeting you are being asked to make a choice that could significantly impair your Board and management team’s ability to deliver value to you from the investments
Over the last several years, the Virtusa Board of Directors and management team have focused on gaining market share, winning and building strong relationships at high-potential accounts and driving organic growth within our Global 2000 client base, all with the goal of delivering long-term sustainable value for shareholders. Today, we have the requisite scale, deep industry and digital engineering expertise and a large number of blue-chip accounts that provide the bedrock for our Three Pillar Strategic Plan. This plan, our secure strategic position and our enviable client roster are the foundation for ensuring short-term success and long-term category leadership. Importantly, it is our plan to deliver strong and sustainable shareholder value.
As a Board, our focus has always been on ensuring the resilience and strength of
Even amidst the many challenges presented by the global pandemic, the strategic plan and our relentless execution have produced better than expected results against each of the three pillars:
- As we work toward more profitable revenue growth, the key driver is a larger and higher quality pipeline of digital and cloud transformation engagements. Year-over-year, Virtusa’s global pipeline has more than doubled to
$5.2 billion , with digital representing over 70% of the total.
- Our efforts to diversify our revenue have produced key gains in high-growth industry groups such as Healthcare,
Communications and Technology (C&T) and Media and Information. In fiscal 2020, we generated 46% year-over-year growth in Healthcare client revenue and 12% year-over-year growth in C&T industry group revenue.
- As a result of strong execution against our Three Pillar Strategic Plan and related cost savings initiatives, in the fiscal first quarter of 2021 we delivered gross profit and operating margin performance that exceeded our internal forecasts. We expect operating margins to exceed 9% during the second quarter and be in the low double-digit range by the fiscal third quarter of 2021.
We are delivering on the promise of our plan. As we approach the 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”), we seek your continued support to ensure that our progress is not obstructed by removing two highly qualified directors up for re-election and replacing them with New Mountain candidates who would not substitute for the lost skills and experience of our nominees and whose election would amount to disproportionate representation for a single shareholder.
We urge you to support our two directors up for re-election,
- Both have provided decisive and effective leadership and oversight ensuring strong progress in executing our Three Pillar Strategic Plan through very challenging times.
- We believe it is not in the best interest of shareholders to elect NMC’s nominees to our Board. NMC is seeking disproportionate board representation, reneged on its own settlement offer that we have been willing to accept, and has conducted a distracting campaign at a time when the Company has been focused on managing through a global pandemic.
- Our Board has already undergone significant refreshment – five new directors or more than 50% of the Board since 2016 – and currently represents the range of skills and diversity that we need; the NMC nominees do not substitute for the skills and experience of our nominees that would be lost.
The Virtusa Board unanimously recommends that shareholders vote on the WHITE proxy card "FOR" the Company’s two independent and highly qualified director nominees,
REPLACING MESSRS. RAMJI AND DOODY AT THIS CRITICAL JUNCTURE WOULD BE VALUE-DESTRUCTIVE
At a time when expertise and differentiation are of paramount importance to expand Virtusa’s presence in an ever-growing market, Messrs. Ramji and Doody, along with the rest of the Board and management team, possess the necessary skills, credentials, connections, qualifications and vision to continue maximizing value for all of Virtusa’s shareholders and replacing them would be value-destructive.
OUR BOARD HAS BEEN STRATEGICALLY REFRESHED AND NMC’S CANDIDATES DO NOT SUBSTITUTE FOR THE SKILLS AND EXPERIENCE THAT WE WOULD LOSE IF OUR TWO CANDIDATES ARE NOT ELECTED
Our Board has been consistently and strategically refreshed. Since 2016, we have added five new independent directors, comprising more than 50% of the Board, who continue to provide a fresh perspective and are fully aligned with shareholder interests. In June of this year, we appointed
With our settlement offer to accept one of NMC’s candidates, we would have retained both our nominees. NMC’s candidates do not substitute for the skills and experience brought by our two nominees, including deep IT experience and industry pedigree as well as significant shareholder representation. In that regard, we note that
NMC REBUFFED OUR REASONABLE OFFERS FOR A SETTLEMENT ON TERMS NMC PROPOSED, INSISTING ON DISPROPORTIONATE REPRESENTATION
Your Board has worked diligently to avoid the cost and distraction of a proxy contest and to reach a consensual resolution that is in the best interests of all
In that light, our attorneys recently proposed to NMC that we appoint
We were willing to appoint one candidate from NMC’s slate to the Board to avoid a proxy contest and align 10 percent of our Board’s composition with NMC’s approximately 9 percent investment in the Company. Instead, NMC seeks to control 20 percent of the Board with director candidates who do not bring additive experience or ideas not already encapsulated in our existing Three Pillar Strategic Plan. As such, we do not believe NMC has a plan substantially different from
Furthermore, we believe that changing our Board by electing two designees in response to a proxy contest by NMC (who has reneged on its own offer and rejected our settlement offer to support one of their designees) would be ill-advised during a time when, more than ever a Board aligned in purpose and goals is critical in addressing the ever changing macro conditions facing companies globally.
The Virtusa Board remains open to constructive engagement with NMC as it continues to execute on its value-creating Three Pillar Strategic Plan.
We are confident our director candidates and the Board as a whole have the right expertise to continue guiding
We hope we can count on your support and encourage you to vote on the WHITE proxy card and “FOR” Virtusa’s nominees at the upcoming 2020 Annual Meeting.
Sincerely,
The Virtusa Board of Directors
If you have any questions, or need assistance in voting |
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Cautionary Information Regarding Forward-Looking Statements
This communication contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding, management's forecast of financial performance, the impact of the COVID-19 pandemic and related economic conditions on our business and results of operations, the growth of our business and management’s plans, objectives, and strategies, the company’s ability to convert its pipeline into profitable revenue growth, the company’s ability to diversify its portfolio of industries, geographies and accounts, the company’s ability to increase its operating margins, the company’s ability to increase market share as a result of its Three Pillar Strategic Plan, the company’s ability to generate long-term value for its shareholders, the company’s financial performance and the impact of its operational changes, including its completed acquisitions and divestitures, the company’s operating leverage in pursuing growth opportunities, and the company’s upcoming 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”), uncertainties regarding future actions that may be taken by New Mountain in furtherance of its nomination of director candidates for election at the company’s 2020 Annual Meeting. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this communication that are not historical facts, and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “see,” “seeks,” “estimates,” “will,” “should,” “may,” “confident,” “positions,” “look forward to,” and variations of such words or words of similar meaning and the use of future dates. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects and beliefs about the ability of our board of directors and management to execute on our strategy and drive shareholder value, beliefs about the ability of our board of directors and management to make decisions in the best interest of the company and all shareholders, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that these plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, those risks identified in Virtusa’s public filings with the
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