It looks as if EMC and activist investor Elliott Management have worked out their differences at least in the short term. EMC added two Elliott-friendly directors to its board, bringing the total to 13.
The new directors are José Almeida, chairman and CEO of Covidien, and Donald Carty, retired chairman and CEO of AMR.
Elliott Management worked with [company]EMC[/company] to find these directors, according to a statement. In connection with this news, Elliott, which had been pushing for EMC to break up its “federation” of companies, has agreed to a “limited standstill” agreement. As part of that it will vote for EMC’s proposed slate of directors at the next annual shareholder meeting, scheduled for April 30, 2015.
Earlier this year, Elliott Management, which has a $1 billion stake in EMC, started pressing for the storage leader to sell off its stake in VMware. Its argument was that both companies would be more valuable to shareholders separate than together — a premise that EMC CEO Joe Tucci roundly disputed.
Elliott Management’s Jesse Cohn said in EMC’s release, “Both Joe and Don are strong and experienced executives, and we believe they will bring invaluable perspectives to the Board’s ongoing review of EMC’s strategic direction.”
In a research note, Wells Fargo analyst Maynard Um said this move does not necessarily preclude a VMware spinoff later this year but “stays the potential for a disruptive proxy battle … and adds valuable expertise to the board.” And, it could lead to shareholder-friendly measures down the road if EMC makes more concessions.