Activist Hedge Funds and Board Representation: A Comparative Analysis of the European and American Fiduciary Duties in the Context of Activist-Nominated Directors

Abstract

Recently, a new breed of representative director has featured European and American corporate boards: activist-nominated directors. Activistnominated directors are sponsored by hedge funds in course of an activist campaign targeting a listed corporation in a bid to amplify hedge funds’ direct influence in board deliberations. Constituency directors are deeply rooted in (Continental) European corporate governance and activist-nominated directors may find that the decision-making processes and deliberations of multi-stakeholder (two-tier) boards are markedly different from majority-independent (unitary) boards, commonly featured at British and American firms. This dynamic in the (Continental) European corporate governance may significantly curtail activist directors’ influence in gaining support for their demands that are at odds with the interests of other (board-represented) stakeholder interests at (Continental) European firms. activist-nominated director, constituency director, nominee director, representative director