Corporations Giving Board Seats to Activist Investors, Says WSJ

 

In fights with dissidents, corporations are giving corporate board seats to the insurgents as long as management appointees get to keep their seats, says the Wall Street Journal($).

Why are we writing about it?  Because two of the examples are situations we have written about here, Office Depot/Starboard Value and Hess/Elliott Associates.

Activist investor success is prompting the preemptive capitulation and desire for compromise on the part of besieged companies.  Says the WSJ:

“Office Depot’s defensive gambit highlights the growing clout of activist investors amid what have become increasingly competitive board elections. Activists have scored a 44% success rate in U.S. contests for board seats this year, whether through settlements or elections, according to FactSet SharkRepellent’s database. Activists won 49% of the seats they sought in 2012 and 41% in 2011, according to FactSet.”

In the case of Hess:

“Hess embraced a hybrid board after shareholders made clear they liked some of Elliott’s candidates, a person close to the company said.”

Starboard has so far rejected Office Depot’s overtures, but they are talking.  Elliott got results with Hess when the oil company replaced more than half of its board with new directors, including three Elliott nominees.

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