Activist Hedge Funds, Golden Leash Special Compensation Arrangements, and Advance Notice Bylaws

The tactics used by activist hedge funds to target companies continue to command the attention of corporate executives and board members. This report discusses recent cases highlighting activist efforts to replace directors at target companies. It also examines the use of controversial special compensation arrangements sometimes referred to as “golden leashes,” the arguments for and against such payments, their prevalence, and the parallel evolution of advance notification bylaws (ANBs) to require disclosure of third-party payments to directors.