Marathon Partners: By all accounts a win at Shutterfly

Marathon Partners got the win at Shutterfly today, getting two board seats. It was in the hunt for three, but Mario Cibelli (Marathon founder) and Thomas Hughes will be joining the board for Marathon. 

Marathon, a long-time shareholder that got fed up and went active in May of 2014, owns 5.4% of Shutterfly. Compensation has been the biggest sticking point, a point that goes back for years. As part of the shareholder vote, it looks like we'll finally see some compensation practice overhaul, with a rejection fo the executive pay plan. 

Seemingly big fixes needed at Shutterfly include: 

  • Seeming lack of conviction by the compensation committee to follow through with shareholder driven compensation reform;
  • Apparent need for a compensation overhaul that would align management with shareholders, similar to the 2012 Cimpress plan that includes more at-risk comp and long-term incentives; and
  • The fact that the Company's free cash flow definition excludes the ongoing, real cost to shareholders of stock compensation, which we believe should be treated as a cash expense, as exemplified by the recent opinion in the Ancestry.com appraisal rights case