The two management-backed candidates for iRobot Corp.’s board survived a spirited challenge from a Los Angeles hedge fund in an election that culminated at the company’s annual shareholder meeting Wednesday.
Shareholders elected incumbent directors Mohamad Ali and Michael Bell to the board, although the winning margin remains unclear as the voting totals were not available.
The two veteran tech executives were originally appointed to the board in the past year after investment firm Red Mountain Capital Partners became the Bedford-based robot company’s third largest shareholder and began agitating for big changes.
The campaign became a pivotal test for iRobot chief executive Colin Angle and the company he cofounded — considered a prominent leader in the region’s growing robotics cluster, with 500-plus local employees and a market value of more than $1 billion.
“iRobot winning this battle means they can continue to invest in R&D,” said Philip Solis, a research director at ABI Research. “This is a robotics company. It’s absolutely critical that they put a lot of effort into R&D or else what are they left with? Perhaps minor enhancements in products they have today, and the investment is not going to be good in the long-term.”
Red Mountain first bought shares in the maker of room-cleaning robots last year because founder Will Mesdag saw an opportunity to improve its stock performance: at the time, iRobot’s total shareholder return from its IPO in 2005 was 36 percent, compared to more than 150 percent for the Nasdaq Composite index over the same period.
Red Mountain now owns 6.5 percent of iRobot’s shares and lobbied to have two of its representatives, Mesdag and former Clorox chief operating officer Larry Peiros, put on iRobot’s board. The stated goal, of course, was to push management to take measures that would improve iRobot’s stock price.
Despite the election loss, Red Mountain’s activism still may have paid off to some extent, as iRobot’s stock is up nearly 15 percent since the hedge fund firm’s first public announcement, more than a year ago, vastly outperforming the Nasdaq composite. On Wednesday, the stock barely moved during the day, dropping 0.5 percent to $38.37 a share.
Red Mountain had initially suggested that the iRobot board simply add two new seats to include its representatives. But board members were unwilling to add Mesdag.
That led to the all-out war this spring, as both sides fiercely courted iRobot’s investors to win their favor.
Red Mountain’s slate won the backing of two influential proxy advisory firms, Institutional Shareholder Services and Glass, Lewis & Co. But those two firms’ endorsements were not enough.
In the end, investors went with the choices backed by Angle and lead independent director Deborah Ellinger: Ali, the chief executive of Boston-based Carbonite, and Bell, the CEO of California’s Silver Spring Networks.
Much of the fight focused on whether iRobot should operate more like a sophisticated tech company that pursues promising research without necessarily expecting an immediate payoff, or more like a consumer products company, given the fact that its primary products are floor-cleaning vacuums. Mesdag had argued for the latter, saying iRobot was spending too much on noncore activities, such as video-conferencing robots and venture capital pursuits.
Officials at iRobot declined to comment about the voting. Instead, the company issued a statement after the vote: “We wish to thank our shareholders for their support and the valuable insights they have offered our board and management team throughout the process. Today’s outcome reaffirms our belief that we have the right team and strategy in place to drive growth, innovation and value for all our stakeholders.”
An iRobot spokesman said the company wasn’t prepared to disclose the vote count on Wednesday.
Mesdag, who declined to comment on Wednesday, had also pressed for the sale of iRobot’s military robot business. That did happen, with a spin-off announced in February, although iRobot said it began exploring the sale of that business in 2014, before Red Mountain’s arrival.
Mesdag had also wanted the elimination of the staggered voting process that iRobot currently uses to elect board members, and to eventually replace it with a system that would put all board seats up for a vote at the same time, annually. But the company said it didn’t reach the 75 percent threshold of votes required to make that change.
Wednesday’s shareholder meeting at iRobot’s headquarters was anticlimactic given the fierce campaigning that preceded it. The entire event lasted less than 15 minutes and consisted of just formalities, with Angle reading from a brief script. Mesdag and Peiros attended the meeting but didn’t speak, and no one testified in favor of either slate of candidates.
Peter Mager, a Waltham resident who owns a small number of iRobot shares, voted for the management-backed candidates but still walked away from the meeting disappointed by Angle’s brevity.
“I thought they would have at least given a presentation . . . and said something about the vision of where they are headed,” said Mager, who has been using iRobot’s floor-scrubbing Scooba robots for years.
Mager said he’s been impressed with the innovation that iRobot cofounders Rodney Brooks and Helen Greiner have shown since leaving iRobot and starting their own robotics ventures.
But lately, Mager said, it’s hard to say the same about the company they left behind.
“It seems that they’re stuck in a rut,” Mager said of iRobot. “They were much more innovative early on.”
Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.