In most recent situations in which activist shareholders have sought board representation, the activist has achieved its objective – either by negotiation and settlement with the issuer or by taking the matter to a vote and winning the support of fellow shareholders.1 However, in two recent cases – Alere’s defense against Coppersmith Capital Management and Walter Energy’s defense against Audley Capital Advisors – the issuer prevailed. While we are loathe to draw sweeping conclusions from only two situations, and note that every situation is different, there are noteworthy observations to be made:
It helps to have fresh, independent, members of the board
- In Alere, all four of the board’s nominees were new independent persons (two affiliated with an existing shareholder) and the issuer agreed pre-annual meeting to expand the board post-annual meeting to include one additional new director affiliated with another shareholder. Nine of the eleven board members (including the issuer’s nominees) were independent.
- In Walter Energy, four of the board members were new in the last two years, and nine of the ten directors were independent.
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