The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Sun, 04 Jul 2021 16:07:43 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.2 Novel Defensive Tactics Against Activist Shareholders https://corpgov.law.harvard.edu/2017/10/18/novel-defensive-tactics-against-activist-shareholders/ https://corpgov.law.harvard.edu/2017/10/18/novel-defensive-tactics-against-activist-shareholders/#respond Wed, 18 Oct 2017 13:03:28 +0000 https://corpgov.law.harvard.edu/?p=101908?d=20171018091441EDT Posted by Rodd Schreiber, Richard Grossman, and Robert Saunders, Skadden, Arps, Slate, Meagher & Flom LLP, on Wednesday, October 18, 2017
Editor's Note: Rodd Schreiber, Richard Grossman, and Robert Saunders are partners at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on a Skadden publication by Mr. Schreiber, Mr. Grossman, Mr. Saunders, David Clark, and Rachel Cohn, and is part of the Delaware law series; links to other posts in the series are available here. Related research from the Program on Corporate Governance includes The Long-Term Effects of Hedge Fund Activism by Lucian Bebchuk, Alon Brav, and Wei Jiang (discussed on the Forum here); The Myth that Insulating Boards Serves Long-Term Value by Lucian Bebchuk (discussed on the Forum here); and Who Bleeds When the Wolves Bite? A Flesh-and-Blood Perspective on Hedge Fund Activism and Our Strange Corporate Governance System by Leo E. Strine, Jr. (discussed on the Forum here).

In the past year, more than 50 publicly traded companies, including 19 on the Standard & Poor’s 500 index, have amended their bylaws to address the potential for a so-called “placeholder slate” of directors. The bylaw amendments began to appear in response to a tactic used last year to end-run typical advance notice bylaws for director nominations. However, neither the bylaw amendments nor the placeholder-slate tactic have been tested in court, leaving their ultimate fate undetermined even as the adoption of these amendments appears to be growing.

In the summer of 2016, activist hedge fund Corvex Management LP announced its intent to oust all 10 members of the board of The Williams Companies, Inc. The move was part of a two-year battle for influence over Williams, during which Corvex’s founder, Keith Meister, and five other Williams directors resigned over strategic disputes with management, culminating in a failed $33 billion merger that would have created the nation’s largest natural gas transporter.

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