The Dow Chemical Company (NYSE:DOW) said Friday that four new independent directors will be added to its board, including two that Daniel Loeb had proposed. In return, Loeb’s Third Point has agreed to a one-year standstill agreement.

Dow Adds Board Seats, Douses Looming Proxy War With Loeb

Dow Chemical: Another win for Loeb

Activist investor Dan Loeb has established himself with his past dealings with major companies such as Yahoo! Inc. (NASDAQ:YHOO), Sothebys (NYSE:BID), and Sony Corporation (NYSE:SNE) (TYO:6758). Loeb’s hedge fund Third Point has been successful in reviving companies that are stuck and not producing results for shareholders.

Loeb was able to get Dow Chemical’s management to begin selling off lagging businesses and start the buyback program in May 2014. He also continues to press executives at Dow to spin off its petrochemical business, though management has stood its ground so far.

Since early this year, the activist investor has urged Dow Chemical to shake up its business, including potentially breaking itself up. Just last week, his hedge fund unveiled a website with a video saying that the chemical company has fallen behind due to poor strategic decision-making by its board and management team.

On its website, Third Point also indicated that it has created an advisory board of executives with substantive, relevant restructuring experience who are providing guidance on how The Dow Chemical Company (NYSE:DOW) can enhance value. Third Point highlighted that R. Steve Miller, the current chairman of American International Group Inc (NYSE:AIG), has a long restructuring career spanning almost three decades. Loeb’s firm also points out that he is joined by Raymond J. “Ray” Milchovich, who, as chairman, CEO, and president, led Foster Wheeler AG for over a decade starting in 2001, wherein he spearheaded the restructuring of Foster Wheeler’s oil and natural gas, refining, chemical, and pharmaceutical facility construction.

Proxy war averted

It was felt that by announcing the names of two seasoned executives working within his campaign, Loeb was hinting heavily that he was ready for a proxy contest for board representation. Notably, the window for nominating alternative board directors opens at the end of this month, ahead of Dow Chemical’s annual shareholder meeting early next year.

In today’s statement, Dow Chemical indicated that it will add Raymond Milchovich and Robert Miller, Third Point’s suggested nominees, to the board, along with two other independent nominees, Richard Davis and Mark Loughridge. Davis is the chairman and chief executive of U.S. Bancorp (NYSE:USB), and Loughridge is a former chief financial officer of International Business Machines Corp. (NYSE:IBM).

As part of the settlement, Miller, Milchovich and Loughridge will join The Dow Chemical Company (NYSE:DOW)’s board on Jan. 1. However, Davis, who will replace an existing director, will stand for election along with the rest of the board at the company’s annual meeting in May. As a result of the settlement, the chemical major’s board will expand to 13 members, though the company has pledged to prune its board to 12 directors by 2016.