After a 95% dive in the stock: this is how the Phoenix tried to get its hands on REE

An attempt by an Israeli institutional body to appoint a director on its behalf in an Israeli technology company traded on Wall Street is a rare event, and this is what happened recently in the automotive technology company, REE . After its stock fell by 95% since it began trading in the US in 2021, the insurance company requested the phoenix a longtime shareholder in REE, to add Adv. Ziv Eroni to the company’s board of directors.

● The collapse of the Israeli autotech shares that arrived on Wall Street with almost no revenue
● The CEO of REE is not moved by the fall of the stock: “We are here for the long term” | Interview

The REE board of directors objected, the ISS company that advises institutional entities in the USA supported the company’s position, and the shareholders’ meeting did not approve the appointment of Eroni, even though he had the support of institutions from Israel.

Adv. Ziv Ironi, the candidate for the REE board of directors / Photo: Inbal Marmari

Phoenix, we note, owns 10.9% of REE shares but only 2.5% of its voting rights, because the company, as is customary in other Wall Street companies, has two types of shares; The founders of the company – Daniel Barel (the CEO) and Ahashi Sardes, have shares of a type that gives them greater voting rights.

Last September, REE issued a summons to its annual shareholders’ meeting, in which the company sought to approve the re-election of incumbent directors, including chairman Eric Steinberg (former chairman of Psagot Investment House), and to make a certain change in directors’ compensation.

Following this, Phoenix turned to REE and asked to add its proposal for a municipal appointment to the board of directors until the next annual meeting. Accordingly, REE issued a new subpoena in which it included Phoenix’s proposal, with a recommendation by the board of directors to oppose it, and the majority of shareholders did oppose it (and approved the other proposals made by the company).

“We already have a lawyer, the appointment will not add efficiency”

The Phoenix seeks to appoint directors in companies in which it has a relatively significant holding, for example it previously operated in Shufersal and Paz companies. This is a type of institutional activism, meaning that the institutional body seeks to actively influence the company in which it invests. A city attorney (64) serves as an external director in several companies, among them Wilipod and Kadimastem, and is in the “pool” of external directors that institutional bodies from Israel seek to appoint.

Eroni is known as someone who works to improve corporate governance in the companies where he serves, and is sometimes referred to as a “troublemaker” from the point of view of the controlling owners of the companies. In an interview with G magazine three years ago, he said: “I am trying to promote processes in cooperation with the controlling owners, the Israel Securities Authority, Entropy (consulting company for institutional investors), the institutions, which will result in the rivalry between the controlling owners and the investors ceasing. There is practical evidence that corporate governance Improves the company’s profitability, and corporate governance means active incentives.”

The arguments of the REE board of directors against the addition of Ironi were that the board already has experts in corporate governance, including an attorney, so his appointment will not expand the skills or diversity of the board. “The Phoenix has not been able to present a convincing explanation that the approval of the proposal will lead to an improvement in the functioning of the board, or make it more efficient “, reasoned the board of directors of the Autotech company.

Ambitious goals that “the stock will embody over time”

REE has developed a modular platform that includes all the drivetrains required for an electric vehicle. Various vehicles can be installed on the platform, such as distribution trucks, robotic taxis, etc. It began trading on Wall Street after it was merged withSPAC According to a value of 3.1 billion dollars, and today its value is only 148 million dollars. The value of Phoenix’s holding in REE shares currently reaches about 16 million dollars, compared to 267 million dollars in the merger.

REE announced the merger during the peak period of the SPAC phenomenon, when many companies that are still not profitable, and in many cases reporting meager revenues, received respectable valuations. Later, its stock fell, as happened to many of the stocks that were merged into the SPAC. In an interview with Globes about a year ago, CEO Barel promised that REE would be among the largest companies in the field, and “in the end, the value embodies the company’s performance. Sometimes the stock takes more or less time, but it will always happen. As CEO, my job is to concentrate on the company’s performance in accordance with the goals, which are among the most ambitious in the world. We achieve them and that’s what’s important.”

The company recently reported that a number of vehicle fleet companies from the US ordered fleets of electric delivery trucks and electric commercial trucks for short-term deliveries, and that it is in talks with other companies in the shipping, logistics and online trade fields. REE is expected to begin production in the second half of 2023, after which recently completed the establishment of an integration center in England.


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