Wall Street Journal (09/04/13) Joann Lublin
Executive-search firms are increasingly working with activist investors to fill board seats, helping activists attract experienced business leaders for their slates. Such efforts can raise tensions as businesses wrestle with activists amid a wave of threatened proxy fights. Companies often aren’t aware that activists have retained search firms—sometimes the same ones previously used by companies for certain executive assignments.
“Activists use search firms for between 10% and 20% of these situations,” says Steve Wolosky, a partner at law firm Olshan Frome Wolosky LLP. “Five years ago, it was less than 5%.” Executive recruiters often conceal their involvement with activists because they fear alienating corporate clients. It can take extra effort to woo top-notch prospective directors for activists. Many decline because “they’re scared of being on an activist slate,” notes Steven Seiden, president of Seiden Krieger Associates, a small New York search firm. He contacts three times as many candidates for an activist slate as he does for a standard board search. For some search firms, it is worth the effort as recruiters compete harder for increasingly scarce board assignments.