AOL Inc. shareholders re-elected the company's eight-member board of directors on Thursday, handing a defeat to activist hedge fund Starboard Value, which had sought to unseat three directors.
Starboard, which holds 5.3 percent of the internet company, had aimed to accelerate changes at the company, which is working to transform itself to an ad-driven media destination as it winds down its old business of selling dial-up Internet access.
AOL officials cautioned the voting results were preliminary and said they would confirm the final tally in a filing with the U.S. Securities and Exchange Commission.
But Chief Executive Tim Armstrong said the preliminary results showed shareholders had faith in his strategy, which he said helped the shares surge roughly 40 percent over the past year, greatly outpacing the 7.5 percent rise of the tech-heavy Nasdaq composite index.
"It was a referendum on our long-term holders and what they feel about our strategy," Armstrong, a former Google Inc official who took the helm of AOL in 2009 as it unwound from its disastrous merger with Time Warner Inc, said of the vote.
Armstrong also invited Starboard Chief Executive Jeffrey Smith to address the crowd of about 100 shareholders, who met at Boston University.
"We all agree that AOL is undervalued. We also all agree that AOL can achieve substantial revenue growth and far more profitability. The challenge is how to get that accomplished," said Smith, whose fund holds a 5.3 percent stake in AOL.
"We hope and expect the newfound energy of the board and management will continue long after this spotlight fades."
Starboard is the company's fifth-largest shareholder, according to Thomson Reuters data. It launched a campaign late last year to shake up the internet company, including improving results in its display advertising operation and at the local-news site Patch.com.
Dissident shareholders have been gaining ground in board elections this year. Dissidents have won at least one seat in 12 contested elections this year, according to data from Institutional Shareholder Services.
Armstrong noted that AOL has also tried to appeal to shareholders directly, buying back 14 percent of its outstanding shares and saying it would hand over all the proceeds of its $1 billion sale of the majority of its patents to Microsoft Corp.
"The best deal we have done in the last year was to buy ourselves," Armstrong, a Boston native, said of the buyback.
Starboard has claimed credit for that move, though AOL officials contend they had begun the patent-sale process before the hedge fund declared its interest in the company.
AOL shares were down 13 cents at $26.97 in early trading on the New York Stock Exchange.
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