CarMax Inc ( KMX ). shares rose Wednesday after activist investor Starboard Value LP pushed for board changes and operational improvements.

The hedge fund urged the used-car retailer to tighten costs and improve execution as it prepares for leadership changes.

Activist Pressure Builds

Starboard argued that the company’s operating model holds stronger potential than recent performance suggests.

The investor group also nominated two directors for election at the next shareholder meeting.

Starboard submitted a letter to incoming CEO Keith Barr and the company’s board outlining its concerns.

The firm said operational missteps have masked the strength of CarMax’s omnichannel retail strategy.

The hedge fund believes improvements in digital operations, pricing strategy, and vehicle reconditioning could unlock stronger results.

It also called for a significantly larger reduction in selling and administrative expenses.

Starboard nominated two candidates for board seats during the 2026 annual shareholder meeting.

The nominees include William C. Cobb and Jeffrey C. Smith, the firm’s chief executive and investment officer.

Board Response

CarMax ( KMX ) confirmed that it received the nomination notice from the activist investor. The company said its board continues constructive discussions with Starboard.

“CarMax has been taking the necessary steps to ensure that this business delivers on its potential and is responsive to shareholders,” said Tom Folliard, executive chair of the board. “Our engagement with Starboard to date has been productive, and we remain focused on continued constructive conversations.”

The board emphasized that it supports Barr as the company’s next chief executive. Barr will officially assume the leadership role on March 16.

Directors said recent steps already aim to improve operations and strengthen shareholder returns.

The company accelerated succession planning last year and installed interim leadership before Barr’s appointment.

CarMax ( KMX ) added that shareholders do not need to take action at this stage. The board will issue its formal recommendation on Starboard’s nominees later.

KMX Price Action: CarMax ( KMX ) shares were up 1.58% at $44.79 at the time of publication on Wednesday, according to Benzinga Pro data.

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