EMC reached an agreement with Elliott Management by adding two directors to its board. Today, the company announced the appointment of José E. Almeida and Donald J. Carty as board members effectively immediately.
Elliott has been pushing EMC to spin off its federated businesses particularly VMWare. According to the activist hedge fund, EMC and VMWare have grown and competing each other.
The activist hedge fund also believed that EMC’s business structure obscures enormous value and its stock underperforms its peers and the market in all relevant time frames.
Mr. Almeida is the current chairman and CEO of Covidien. He currently serves on the board of State Stree Corporation.
Mr. Carty is a retired chairman and CEO of AMR Corporation and American Airlines. He currently serves as Chairman of Virgin America Airlines and director of Canadian National Railway Company and Talisman Energy.
EMC Chairman and CEO Joe Tucci emphasized that both executives are highly experienced leaders of major global corporations. He believed that they can bring added depth and insights to the board of directors of the company.
Elliott’s comment regarding EMC’s appointments
In a statement, Elliott’s portfolio manager, Jesse Cohn commented that Mr. Almeida and Mr. Carty are both strong and experienced executives. According to him, his firm believed that both executives will contribute invaluable perspectives to the board of EMC in its ongoing review of its strategic direction.
Elliott agreed to certain limited standstill and voting provisions until September 2015 in connection with the decision of EMC board to add two new directors.
The activist hedge fund also agreed to vote in favor of the company’s proposed slate of directors during its 2015 annual meeting of shareholders. The activist hedge fund owns 2.2% of the outstanding shares of EMC.
EMC and Elliott collaborated in selecting new directors
According to EMC, its corporate governance and nominating committee identified Mr. Almeida and Mr. Carty through its outreach process including independent search efforts and consideration of candidates recommended by shareholders.
EMC and Elliott collaborated in the review and selection of candidates. The EMC board selected Mr. Almeida and Mr. Carty after conducting a thorough evaluation on the qualifications of candidates.