Settlements Get Tougher For Activists by Activist Insight
The length of time taken to settle an activist demand for board seats increases for the first time in three years.
Activist Insight data suggests that the number of days taken to negotiate a board seat has increased for the first time since 2013.
According to the data, companies that awarded an activist a board seat in 2016 as part of a settlement agreement did so after an average of 64 days.
Last year, the average length of negotiations was 54 days. In 2013 and 2014, Activist Insight found that the average duration of talks was 74 days and 67 days respectively.
Recently, companies have been pushing back against activist demands, perhaps emboldened by support from institutional investors, or reflecting the more uncertain economy. Among board seats granted in 2016, several situations involved prolonged fights, including litigation between Epiq Systems and Villere St Denis, and a war of words between Autodesk and Sachem Head Capital Management.
Another novel development was the first FTSE 100 company (UK) to give an activist a board seat. ValueAct Capital Partners had to wait 212 days between the first suggestion that it might seek board representation and a settlement being agreed, with a lengthy debate in the British press about the appropriateness of shareholder representation on the board of such an iconic and strategically important company.
Commenting on the data, Activist Insight spokesman Josh Black said “While activists continue to accumulate positions on boards, there has clearly been some additional resistance over the past year and this is reflected in the data. There is now an additional burden on activists to prove they and their ideas are a force for good, which will be harder for those with less of a track record or poor recent performance.”