Balancing Activist Concessions With Shareholder Sentiment

Law360, New York (March 29, 2017, 12:09 PM EDT) -- Arthur H. Kohn

Ethan A. Klingsberg Quick settlements with activist hedge funds to recompose boards and adjust strategic plans have resulted in hundreds of new directors and changes to stand-alone plans in the S&P 500 over the last two years. The arguably outsized influence of these activists, which often own less than 5 percent of their targets' public floats, led one of the leading hosts of index funds, State Street, to issue publicly a position paper last fall in opposition to this "quick settlement" trend.[1] Underlying State Street's concern is the view that incumbent directors frequently settle to avoid the painful...

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