SGI President and CEO Mark Barrenechea will continue to serve on the company's board of directors after he takes a new post as the chief executive of Open Text, the company said Tuesday. The move comes after one of the company's largest investors expressed concern that "the uncertainty surrounding a successor" was impacting SGI's stock price. Shares of SGI fell 14 percent, from $14 to about $11.50 a share, after Barrenechea's departure was announced on Dec. 14. SGI closed Tuesday at $11.58.
"Having Mark as member of the Board will help ensure that the management transition will be smooth," said Ronald Verdoorn, chairman of the SGI Board of Directors, will step in as interim CEO while the board conducts a search for a permanent CEO.
On Friday, Wasatch Advisors said in an SEC filing that it has increased its position in SGI to nearly 2.1 million shares, raising its stake to about 6.6 percent of the company's stock. In the filing, Wasatch said that if SGI's shares don't recover, it will urge the board to "consider broad strategic alternatives in addition to searching for a replacement CEO."
Wasatch said they "intend to present their views and concerns to the company’s current management team, including the company’s interim CEO. (Wasatch) want to explain to management what they believe are the factors contributing to the shares’ undervaluation and encourage management to take action to address these factors. ... If the discount persists, (Wasatch) believe that, in keeping with sound stewardship principles, the company’s board will be required to consider broad strategic alternatives in addition to searching for a replacement CEO."
Wasatch said it does not have any current plans other than the monitoring and communication program outlined in the SEC filing. Wasatch is the third-largest holder of SGI shares, after Fidelity Investments and Sun Life Financial.
Under Barrenchea’s leadership, the company once known as Rackable Systems, has made progress since acquiring Silicon Graphics in May 2009 and repositioning the company and its brand. In the wake of the acquisition, SGI has focused on the market for technical computing, targeting customers in high-performance computing and supercomputing markets.