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IN-DEPTH: Activists and their targets see value in coming to terms
This article first appeared on Diligent Market Intelligence's Activism newswire. To register for a demonstration and trial of the product, click here. Settlements at U.S. targets saw a 15% increase in 2024 as both activists and the boards they pursue become more skilful in weighing up the outcome and risks of a potential proxy fight. According to Diligent Market Intelligence (DMI) data, 60 such agreements were reached with primary and partial focus activists last year compared to 52 in 2023 and flat on the volume of deals inked in 2022. Primary- and partial-focus activists also managed to secure more seats via settlement with 88 gained in 2024, compared to the 83 secured via this method in the prior year. “For the most part, the number one factor is that the company side and the activist side have both become more sophisticated in understanding the outlook and whether something is worth fighting or not,” said Ele Klein, partner at law firm Schulte Roth & Zabel. 2024's biggest settlements Elliott Management recorded some of the biggest wins in the period, with 11 seats won out of 14 sought across five settlements. The activist had greatest success at Southwest Airlines, one of the so-called ‘Big Four’ U.S. carriers, inking an agreement that saw it take five seats on the board some four months after the campaign was made public. The Elliott effect was still being felt after the turn of the year, with Southwest announcing two C-suite resignations in January and the laying-off of around 1,700 staff the following month. In other settlements, Elliott came away with seats on the board of both Match Group and at Phillips 66 where the dissident returned in early March this year to nominate a slate of directors as well as a non-binding proposal to introduce annual director elections. In other 2024 deals, Elliott secured a single seat on the boards of Etsy and Sensata Technologies. Starboard Value also made ground via the method last year securing seven seats after hammering out deals with three U.S.-based targets. Jeff Smith's settlement success began in January when it gained two board seats and other concessions at restaurant operator Bloomin’ Brands. Another two seats followed in May in an agreement with benefits services provider Alight while the year was rounded off with a deal made with Healthcare Realty Trust that saw three new directors named. Although Elliott was the only activist to secure five seats in a single settlement in the period, Glenview Capital Management came close coming away with four seats on the board of CVS Health in a November agreement that also provided the investor with access to key confidential documents. Saddle Point also recorded a three-seat win in a March agreement at Advance Auto Parts while Fund 1 Investments also saw three directors added at Citi Trends in a February agreement. In some of the two-seat wins of 2024, Carl Icahn took a pair of board seats at JetBlue Airways less than a week after disclosing a holding of almost 10%. Icahn’s other settlement success saw two of his candidates granted seats at American Electric Power, though not without the Federal Energy Regulatory Commission raising questions about the growing role played by activist shareholders at U.S. utilities. The fastest route While the three-day turnaround of Icahn's settlement at JetBlue was notable, deals are generally being arrived at quicker. “There are more settlements and they are settling faster,” Damien Fisher, senior managing director at Evercore, told DMI. Indeed, DMI data show that formal settlements inked in 2024 took an average 26.7 days to hammer out from the day the demand for board seats became public, compared to 27.5 for the previous year. “Sometimes these settlements are just because they’re reading the tea leaves, reading the room,” said Peter da Silva Vint, managing partner at Jasper Street Partners. “I think that the activists become more emboldened and so sometimes the quickest route is to just settle for a number of seats,” he added. And as all eyes are fixed on the season ahead, the universal proxy card is also expected to continue to play a key role on settlement dynamics and the pace of such agreements as each director faces heightened scrutiny. "A lot of companies have taken it upon themselves to engage with shareholders early on in the process and come to constructive resolutions with early-stage settlements, Ryan Nebel, vice chair of Olshan’s shareholder activism practice, told the opening panel of DMI's recent Stewardship Series in New York.
Breaking down silos: How legal operations can drive enterprise-wide collaboration
As the custodians of corporate records, general counsels and their legal operations teams have an unparalleled view of both risk and growth opportunities across an organization. Yet, their full potential is often hindered by fragmented processes, siloed data and outdated workflows. During a recent Diligent webinar, industry experts explored how digitized collaboration can bridge the gaps between legal, tax, finance, HR, and risk. The discussion underscored a crucial takeaway: by streamlining data and fostering seamless stakeholder collaboration, legal operations can evolve from a reactive compliance function to a proactive business enabler. The core challenge: Data fragmentation and compliance burdens Legal teams oversee vast amounts of corporate records data — director appointments, compliance deadlines, tax structures, financial agreements and more. However, critical information is often spread across multiple systems, including PowerPoint, Excel, Google Drive, and SharePoint. This decentralized approach creates risks, inefficiencies and redundancies. Key issues include: Data invisibility: Teams struggle to access real-time, accurate entity information. Manual workflows: Compliance and reporting remain time-intensive and error-prone. Siloed decision-making: Legal, tax, and finance teams lack a single source of truth, leading to inefficiencies. The solution? Digital collaboration tools purpose-built for managing corporate records that consolidate data, automate workflow and enhance real-time decision-making. Bridging the gap: A strategic approach to legal collaboration 1. Tax and legal: A shared responsibility for risk and compliance The intersection of legal entity management and tax compliance is critical. Changes in ownership structures directly impact tax planning, effective tax rates and global reporting obligations, such as the OECD’s Global Minimum Tax. Legal operations can enhance tax collaboration by providing real-time access to entity data and ownership structures, implementing scenario modeling for tax restructuring, and integrating with tax reporting software to improve accuracy. Technology spotlight: Group Structure Visualization tools enable tax teams to model potential restructuring scenarios instantly — without requiring legal teams to manually compile data. 2. Finance and legal: Strengthening financial integrity From share capital management to loan compliance, finance teams rely on accurate corporate data to ensure financial stability. Yet, without seamless access to legal entity records, they often resort to cumbersome spreadsheets. Legal operations can support finance teams by automating entity data reporting, providing direct access to entity management systems via secure, read-only user roles, and integrating financial systems like Workday via APIs. Technology spotlight: Legal teams can schedule batch reports for finance teams, ensuring they receive updated entity structures and compliance obligations before quarterly reporting cycles. 3. HR and legal: Managing director compliance Director appointments come with legal, tax and HR implications, including regulatory filings, employment obligations and signing authorities. Yet, many organizations struggle with outdated or incomplete records. Legal operations can improve HR collaboration by using AI-powered entity management tools to quickly retrieve director records, automating compliance reminders, and integrating with HR systems like Workday and Active Directory. Technology spotlight: A helpful AI assistant that allows HR and legal teams to instantly search entity records using natural language queries, eliminating manual lookups. 4. Risk and legal: Proactively managing compliance Risk and audit teams rely on legal data to mitigate compliance exposure and ensure regulatory adherence. Yet, fragmented data storage and manual tracking can increase organizational risk. Legal operations can enhance risk collaboration by centralizing compliance calendars, implementing secure file-sharing tools, and enhancing UBO (Ultimate Beneficial Ownership) tracking for transparency and governance. Technology spotlight: Real-time compliance dashboards provide a global view of regulatory obligations, allowing teams to anticipate and address potential risks before they escalate. The road to greater cross-team synergy True digital collaboration is no longer a luxury — it’s a necessity. Organizations that leverage technology to break down silos between legal, tax, finance, HR, and risk will reduce compliance risks, enhance operational efficiency and drive strategic value. Here’s how to get how to get started on the journey towards this objective: Assess your digital collaboration maturity – Identify gaps in current workflows. Enable cross-functional access – Provide stakeholders with real-time legal data. Automate where possible – Reduce manual work through AI-powered tools. Champion the business case – Demonstrate how legal operations can enhance enterprise-wide efficiency. By embracing technology-driven collaboration, legal operations teams can shift from compliance gatekeepers to strategic business partners, unlocking new opportunities for growth and risk mitigation. Unlock seamless collaboration with Diligent Entities Ready to break down silos and transform collaboration across legal, tax, finance, HR, and risk? Diligent Entities provides a centralized, real-time entity management solution that streamlines compliance, enhances governance, and fosters seamless cross-functional teamwork. Request a demo today to see how it can elevate your organization’s efficiency and strategic impact.
