By David Benoit 

Bank of New York Mellon Corp., the nation's oldest bank, gave Nelson Peltz's investment firm a seat on its board, joining a raft of companies that have recently opened the door to activists and headed off bruising public fights.

The 230-year-old bank on Tuesday added Trian Fund Management LP co-founder Ed Garden to its now-14-member board five months after the firm took a 2.6% stake in the company and began privately pushing for cost cuts and other measures.

That Bank of New York decided to give the $10 billion investment firm a seat on its board highlights the clout of activist investors. These investors typically take stakes in companies and then agitate for changes such as asset sales or stock buybacks to bolster share prices.

"We have had valuable discussions with Ed and Trian over the past several months about our progress," BNY Mellon Chief Executive Gerald Hassell said in a prepared statement.

Dow Chemical Co. in November settled with Daniel Loeb, adding two independent nominees the activist had proposed to the board. In September, Walgreen Co. gave Jana Partners LLC two board seats. Smaller activist investors are also notching wins. Barington Capital Group LP on Monday reached a pact to add its chief executive and an independent nominee to the board of software company Ebix Inc.

Activists are getting increasing support from other shareholders and often winning board seats if their slate is put to a vote.

Activist investors this year have scored at least a partial victory, either by a vote or by a settlement, in 72% of all shareholder votes, far exceeding last year's record 63%, according to FactSet SharkWatch.

Company directors "may reach a conclusion and say, 'Wow, we are going to spend a lot of time fighting and get to a result that is nowhere near as satisfactory,' " said Bruce Goldfarb of Okapi Partners LLC, which advises on proxy fights. "Why get into this kind of nasty dragged-out name-calling situation?"

But the decision is fraught with risks. By opening their companies to an activist investor, directors could be setting themselves up for years of acrimony within the boardroom.

For that reason, some companies remain disinclined to welcome any activist investor into the boardroom, some advisers said. Companies fear that activists could push changes designed to produce short-term gains for shareholders.

Even institutional investors that have supported activists in the past have warned that some common proposals, particularly stock buybacks, are sometimes a bad idea.

Today's activist campaigns include pitches for improving a company's operations and moves to add board members with deep industry experience. That has increased the pressure on companies to engage with activists or risk alienating other shareholders who are receptive to their ideas.

And proxy fights could quickly turn ugly for companies. Shareholders ejected Darden Restaurants Inc.'s entire 12-person board after Starboard Value LP and Barington criticized the company's decision to sell the Red Lobster chain and went so far as to suggest Olive Garden change how it prepares pasta. The CEO of auction house Sotheby's recently resigned, six months after the company gave Mr. Loeb three board seats following a public battle. The departing CEO, William Ruprecht, said Sotheby's was "well-positioned for the next chapter."

Many companies see those outcomes and look to reach an agreement before a fight, some advisers said. Trian also seeks to avoid such brawls and has gained a reputation for negotiating its way into the boardroom. While it won't hesitate to publicly criticize a company or publish long white papers detailing its plans, it hasn't waged a full-fledged proxy fight since 2006 with H.J. Heinz Co.

The firm now has negotiated for at least one board seat on seven of the 11 companies in which it has a stake.

Founded by Alexander Hamilton in 1784, BNY Mellon this year had faced pressure from investors who criticized it as slow to change and in need of a retrenchment.

A 2007 purchase of Mellon Financial Corp. didn't produce the benefits shareholders had expected.

"Despite actions taken by management, our bias is to see more aggressive actions and targets away from the status quo," CLSA analyst Mike Mayo wrote in April following the bank's annual meeting.

BNY Mellon's stock is up 15% this year, beating the KBW Bank Index's 4.7% gain. But over five years, the bank trails the index. On Tuesday, BNY Mellon's stock rose 1.8%, to $40.28.

As a custody bank, BNY Mellon safeguards $28.3 trillion in assets for money managers, companies and other clients, performing administrative functions on behalf of other banks and corporations. It is also an investment manager, with $1.6 trillion of assets under management.

Mr. Mayo has repeatedly suggested BNY Mellon spin off its asset-management arm, but the bank has rejected that idea.

Trian, founded in 2005 by Mr. Peltz, Mr. Garden and Peter May, disclosed its stake in the bank in June. The firm presented its cost-cutting ideas to the bank's leaders in private conversations beginning in July. Trian had made similar proposals to BNY Mellon rival State Street Corp. in 2011. State Street ultimately cut costs.

In October, BNY Mellon laid out a plan to cut $500 million in expenses through 2017, targeting investment services, operations and technology. Trian has expressed support for those plans, according to people familiar with the conversations.

"We have taken and are continuing to take very aggressive actions to improve our earnings and margins, no matter what the environment that we're operating in," Mr. Hassell told investors in October.

Trian never threatened to launch a proxy fight for board seats, even in the private discussions, the people said. Still, this week's deal came just days ahead of a deadline for Trian to launch such a fight.

A less confrontational approach isn't always successful.

DuPont Co. has rebuffed Trian's requests for a board seat for more than a year. In response, the activist firm in September publicly called for a breakup of the chemical company. DuPont has rejected the idea, saying it is already taking some steps to shrink and that its returns are strong.

On Monday, Mr. Peltz resigned his director post at Legg Mason Inc. to free himself up for other board work, a move that signals the possibility of a DuPont proxy fight, according to a person familiar with the matter. The window to launch such a campaign for next spring's annual meeting opens later this month.

Trian has also expressed interest in joining the board of PepsiCo Inc., where it has been agitating the company to split its beverages and snacks businesses.

Saabira Chaudhuri contributed to this article.

Write to David Benoit at david.benoit@wsj.com and Saabira Chaudhuri at saabira.chaudhuri@wsj.com

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