By David Benoit and Chelsey Dulaney
Stock-index provider MSCI Inc. appointed three new directors to
its board in a concession to activist investor ValueAct Capital
Management LP.
The settlement comes three weeks after ValueAct publicly
released a sharply worded letter complaining about aspects of the
company's stewardship and saying that MSCI hadn't even checked the
references the activist had provided as it tried to gain board
representation.
For the staid ValueAct, which manages more than $16 billion, the
letter was a departure from its normal practice. The San Francisco
fund has succeeded in quietly gaining board representation at
companies including Microsoft Corp. and Adobe Systems Inc. without
threatening proxy fights.
Today was the deadline for shareholders of MSCI to nominate
directors to its board.
Among the three new board members of MSCI's board is Robert
Hale, a partner at ValueAct, which owns an 8.3% stake in MSCI. As
part of the settlement, ValueAct has agreed to support the
remaining directors and to cap its stock ownership at 14.9%. MSCI
has a market capitalization of about $6.1 billion.
There has been a surge recently in settlements between activists
and companies that have headed off the possibility of a protracted
fight over corporate governance. That is one reason why ValueAct's
claim that MSCI hadn't reviewed its nominees had raised eyebrows
among some other investors.
ValueAct Chief Executive Jeffrey Ubben said in the letter that
he first requested the board seat at New York-based MSCI in August.
The letter praised MSCI's brand and franchise, best known for
benchmark indexes, but raised questions about other business moves
and raised concerns about its margins.
Hassan Elmasry, of U.K. investor Independent Franchise Partners
LP, had been among the shareholders concerned by MSCI's response to
the hedge fund. On Friday, Mr. Elmasry said in an email that his
fund, the third biggest MSCI holder with 8.6% stake, was "very
pleased" with the three new board members.
The other two are Wayne Edmunds, the former CEO of U.K.
industrial and technology company Invensys PLC, which was sold last
year, and Wendy Lane, the founder of investment firm Lane Holdings
Inc. They will expand the MSCI board to 12 directors from nine when
they join in March.
MSCI shares slipped 1.3% to $53.78 on Friday. The stock is up
14% this year.
In August 2013, Microsoft's granting of a board seat to Mr.
Ubben's partner Mason Morfit was widely viewed as a watershed
moment for activists, and for ValueAct. The firm held less than 1%
of the software maker's stock, and Microsoft had never given a
board seat to a shareholder in such a fashion.
Write to David Benoit at david.benoit@wsj.com and Chelsey
Dulaney at Chelsey.Dulaney@wsj.com
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