The Industry Veteran CEO: Friend or Foe?
Director nominees with CEO experience have long featured in Board slates put forward by activist investors. Those candidates were typically from outside the target company’s industry, and the applicability of their experience was often questioned. However, there is an emerging trend of activist investors utilizing CEOs with direct industry experience at competitor companies, and even […]
Jonathan Doorley is Partner and Greg Roumeliotis is a Director at Brunswick Group LLP. This post is based on their Brunswick memorandum.
Director nominees with CEO experience have long featured in Board slates put forward by activist investors. Those candidates were typically from outside the target company’s industry, and the applicability of their experience was often questioned. However, there is an emerging trend of activist investors utilizing CEOs with direct industry experience at competitor companies, and even attempting to bring back retired CEO predecessors as Directors. As the stigma of joining a dissident slate continues to dissipate, the quality of Director candidates is increasing, and they are more likely to have highly relevant industry expertise and even personal ties to the incumbent management team and Board. Companies are now sometimes fighting not just against outsiders, but against former colleagues, mentors or industry peers. This dynamic presents a new set of considerations for companies preparing for and responding to activist attacks.
