Activist investor shook up companies
Ralph Whitworth, an activist investor who forced leadership changes at International Business Machines Inc., Home Depot and other U.S. corporations with a hands-on approach he honed working with T. Boone Pickens, has died. He was 60.
Mr. Whitworth died Thursday at UC San Diego Medical Center, said David Batchelder, who co-founded Relational Investors LLC with him. Mr. Whitworth resigned as chairman of Hewlett-Packard Co. in July 2014 and took a leave of absence from his money-management firm to focus on his health. He later said he had HPV-related squamous cell carcinoma. The San Diego-based firm closed at the end of 2015.
When Hewlett-Packard named Mr. Whitworth to its board of directors in 2011 — amid complaints about its declining stock value, and after Mr. Whitworth had accumulated an almost 1 percent stake — the computer maker joined a list of companies that found it advisable to invite his strong opinions inside the tent.
A stickler on corporategovernance issues, he fought proxy battles from the outside or pushed on the inside — a type of activism known as relationship investing — to tie executive compensation to performance, and for boards to be independent from management.
“We have become more sophisticated and refined at what we do as activist investors,” the Financial Times quoted him saying in 2008. “We don’t go and argue over strategy and the business plan.”
His critiques helped bring about the replacement of chief executive officers John Akers at IBM, Robert Nardelli at Home Depot, Gary Forsee at Sprint Nextel Corp. and Jay Sidhu at Sovereign Bancorp Inc. As chairman of Waste Management Inc. from 1999 to 2004, Mr. Whitworth oversaw a turnaround at the Houstonbased company after an accounting scandal.
BusinessWeek magazine, in 1993, called him “the Ross Perot of investor rights” for “his populist attacks on entrenched management.” In his aggressive public campaigns, he often was allied with institutional investors, including the California Public Employees’ Retirement System, Calpers.
“He plays the role of the bad cop,” Richard H. Koppes, then-general counsel of Calpers, told BusinessWeek. “That allows us to be the good cop.”
Early in his career, Mr. Whitworth pushed for rule changes that helped make his later activism possible.
As head of the Pickensfounded United Shareholders Association in 1990, he petitioned the U.S. Securities and Exchange Commission to overhaul proxy voting so shareholders had more say in corporate affairs. In 1992, the SEC gave investors enhanced power to nominate and elect directors and required companies to be clearer in disclosing executive compensation.
“This gives us about 90 percent of what we expected,” Mr. Whitworth said at the time.
In 1996, Mr. Whitworth teamed with another Pickens protege, Mr. Batchelder, head of Batchelder & Partners Inc., to form Relational Investors, an activist fund targeting companies with lagging stock prices. Calpers invested $200 million.