An activist shareholder has succeeded in his mission to get a special shareholders meeting to be called to consider installing a new board and potentially a new management team at the podcast hosting and analytics company Libsyn. In a filing with the Securities and Exchange Commission Libsyn said an independent inspector had confirmed Carmac Partners, the private investment firm headed by Eric Shahinian, had in fact received support for a special meeting by the holders of more than 25% of the company’s stock. Libsyn didn’t say when the special meeting will be held but the company’s bylaws obligate management to call a special meeting. If Libsyn doesn’t, then Camac is permitted to set the date.

“We again thank our fellow stockholders for their support in this process,” Shahinian said in a statement. “At long last stockholders will have an opportunity to put a stop to the egregious behavior of Libsyn’s board of directors.” 

Tensions between Libsyn and Carmac spilled over into the public last spring after Libsyn signed contract extensions with CEO Chris Spencer and CFO John Busshaus. Neither man received increases in their base salaries, but they’ll be eligible for a pair of bonuses. According to filings with the Securities and Exchange Commission, Spencer will be eligible to receive an $800,000 bonus and Busshaus will be eligible for a $700,000 bonus, which is double each of their base salaries. They’ll be eligible for another bonus when their new contracts expire in 2023, totaling whatever twice their base salary is at that time. Spencer and Busshaus are also each eligible to receive up to 1.25 million shares of stock if the company hits certain milestones.

Carmac, which owns 6.5% of Libsyn and has been a stockholder since 2017, says the top two executives’ salaries amount to roughly 59% of Libsyn’s 2018 income. Even though the stock awards for Spencer and Busshaus were conditioned on the achievement of certain milestones, it alleges several steps have been taken to allow one of those awards to be vested – even if the threshold isn’t met while the board had also extended the time to achieve the thresholds for other awards.

At the special meeting, Camac plans to ask shareholders to remove all of the current board members, including Spencer, and three other directors—J. Gregory Smith, Douglas Polinsky, and Denis Yevstifeyev—and replace them with what it says is a slate of “high-quality, independent directors.” 

The five nominees Shahinian has proposed to be seated on Libsyn’s board include himself, Univision Director of Corporate Financial Planning and Analysis Simeon McMillan, Anbaric Audio CEO Adam Pincus, Magis Capital Partners Chief Investment Officer Michael Cricenti, and Palm Active Partners managing director Brad Tirpak. Also being put to a vote will be several proposals that Carmac says will improve Libsyn’s corporate governance. 

“We believe that our director nominees are the right people to serve as agents of change on behalf of stockholders,” Carmac tells stock owners. “They will bring to the board fresh perspectives and the relevant qualifications and experiences necessary for the board to create long term-value for the stockholders.”

Libsyn Revenues Growing

Pittsburgh-based Libsyn hasn’t commented on the latest developments. Spencer also made no mention of the situation during a recent conference call updating shareholders on the company’s second quarter revenue.

The friction between Libsyn and its shareholders is unusual since it comes at a time when company revenue is growing. During the second quarter, revenue increased 7% year-over-year to $5.7 million and revenues during the first six months of the year were up 16% to $12 million. Management credited the growth in the Libsyn4 and Libsyn Pro hosting business targeted toward large publishers which helped offset decreases in advertising and smaller podcaster hosting revenue. 

“The podcasting industry is showing no signs of slowing down,” said Spencer. The company said the number of shows on the Libsyn platform grew to 64,000 during the second quarter. And its unique monthly audiences grew to 116 million with 5.4 million episodes on the Libsyn platform.

Targeting International Market

Spencer told investors they are putting an increased focus on growing Libsyn’s business beyond the U.S. “We are seeing international podcasting become more prevalent and we are excited by the new possibilities the international market brings to Libsyn,” he said on the conference call. Spencer noted that the company had struck a deal to include Libsyn podcasts on the streaming music service Deezer, which has 14 million active users in 180 countries.

“Deezer is based in France and has a strong presence in the Middle East and Africa which are regions that have had limited representation historically in the billions of episodes we distribute annually,” he said. Spencer said they’re also stepping up efforts to expand Libsyn in the Spanish-language market. He noted a PwC forecast that predicts there will be 31.5 million podcast listeners in Mexico by 2022, up from just 10 million at the beginning of 2019.

“We have seen tremendous growth and believe there is a lot of runway ahead of us not only in our current markets but by expanding to international podcasts,” said Spencer. “The global and niche markets have yet to be explored by Libsyn and we believe they could add significantly to our market share.”