Publications

Be Careful What You Wish For - Considerations When Obtaining Board Representation

Spring 2006
Neil P. Horne | Marc Weingarten
Activist Investing Developments - Spring 2006

Activist investors frequently negotiate, and failing a consensual resolution may wage a proxy contest, for the right to appoint members of the board of directors of companies in which they are acquiring an equity interest. Achieving this representation can enable an investor to keep a close eye on its investment and the strategic direction of the company. The designee will vote on the company's board-level decisions, and thus will participate in shaping its strategic direction and other significant actions. Both the investor and the company may view the investor designee's expertise and business contacts as important contributions to the company's efforts. However, there are also complex legal considerations that arise when investors have board designees, and investors must understand the complications of these considerations before seeking representation.