BOSTON, March 16 (Reuters) - Hedge fund Indaba Capital has nominated two directors to Benefitfocus Inc’s board five weeks after publicly calling on the benefit management software company to sell itself following years of poor returns and high turnover in the executive suite. San Francisco-based Indaba, which owns a roughly 9.5% stake in Benefitfocus, criticized the Charleston, South Carolina, company’s sluggish stock price during booming markets and warned that shareholders will lose confidence if nothing changes. “We believe the current Board has fostered an anti-shareholder culture that has been defined by excessive related party transactions, insufficient boardroom diversity and independence, and unjustifiable corporate waste,” Indaba wrote to shareholders in a letter seen by Reuters. While Benefitfocus took some steps to overhaul corporate governance earlier this year by naming a new director and promising to appoint an independent chairman at the annual meeting, Indaba contends these steps fall short of what investors deserve. The hedge fund objected to these specific moves, although it had asked for new, diverse, independent board members and for the company to unwind financial transactions with an entity controlled by a current director. The two sides had engaged privately since the end of last year but Indaba went public with its concerns and requests in February, a step that helped push up the share by roughly 10% to $17.24. The stock price has since lost some ground and closed trading at $15.10 on Monday. A representative for Benefitfocus, which is worth roughly $490 million, was not immediately available for comment. The company previously said that it wants to generate value for shareholders, is open to constructive suggestions and routinely reviews strategic priorities and opportunities. Indaba nominated Ronald Mitchell, managing partner of Low Post Ventures, and Nicholas Pianim, a managing director at venture capital firm DAG Ventures, as directors, arguing the two men, who have expertise in technology, software and enterprise solutions, would bring new perspectives and independence to the boardroom. The men, who are both African American, would also help achieve racial diversity on the board, Indaba said. The hedge fund, which oversees roughly $1.5 billion, was founded in 2010 by former Farallon Capital Management partner Derek Schrier and has traditionally kept a lower profile making both stock and credit bets. In addition to being one of Benefitfocus’ largest stock owners, it holds approximately 22.9% of Benefitfocus’ outstanding issue of the 1.25% convertible senior notes. (Reporting by Svea Herbst-Bayliss; Editing by Cynthia Osterman)