Jana Partners, the activist hedge fund led by Barry Rosenstein, slightly reduced its stake in URS Corp (NYSE:URS) based on its latest 13D/A filing with the Securities and Exchange Commission (SEC) on Thursday, March 13th.

Barry-Rosenstein Jana Partners

The regulatory filing showed that the activist hedge fund currently owns 6,745,623 shares, or a 9.4% stake, in URS Corp (NYSE:URS), down from 7,183,363 shares or 9.7% stake disclosed last month. Jana Partners sold some of its shares after winning board seats in the company.

Cooperation agreement with Jana Partners

The leadership of URS Corp (NYSE:URS) entered a cooperation agreement with Jana Partners to restructure the composition of its board of directors. The company also agreed to provide more influence to the activist hedge fund regarding the appointment of its next CEO.

URS Corp (NYSE:URS) has been led by Martin Koffel for 25 years, and intends to hire a new CEO by the end of 2014. The company agreed to increase the number of directors from 10 to 14 to accommodate the executives selected by Jana Partners including Diane Creel, former CEO of Ecovation Inc., William Schumann III, former CFO of FMC Technologies, Inc. (NYSE:FTI), David Siegel, CEO of Frontier Airlines and Paul Unruh, former Vice Chairman of Bechtel Group Inc. effective March 27.

After the 2014 shareholders meeting, URS Corp (NYSE:URS) will reduce the number of its board of directors to 12. The company said it will “take appropriate action” to ensure that its change in director policy does not require a JANA nominee to resign by reason of any material change in his or her primary job responsibility or position held at the time of his or her appointment to the board prior to the 2015 annual shareholders meeting.

URS Corp (NYSE:URS) agreed not to make any acquisitions “except for ordinary course of acquisitions” wherein any one transaction is worth less than 10 million and $30 million total during the period covered by the cooperation agreement.

The agreement also stated that one of the nominees of Jana Partners will be appointed to the compensation committee of the board of URS Corp (NYSE:URS), and the company will also establish a value creation committee composed of four members responsible for analyzing its business and finding solutions that will increase shareholder value.

Executive comments

In a statement, Koffel said, “Having led URS for more than 25 years, I had previously communicated to the board that it was important to have my successor in place in 2014, and our goal is to do just that. The board has asked me to remain as chairman and chief executive officer until a successor is named, which I expect to do unless circumstances change.”

On the other hand, Rosenstein said, “We have appreciated our constructive dialogue with Martin Koffel and his team. We share their view that the company is significantly undervalued, particularly given its strong cash flows and the valuable work Martin and his team have done over many years to ensure that URS Corp (NYSE:URS) is well-positioned to meet the needs of its clients. I am confident that the addition of four highly-qualified directors and the formation of the Value Creation Committee will help unlock this value for all shareholders.”