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Activist investors and boards of directors in the semiconductor industry

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2012 was an exceptional year for activist investors, as they ousted boards, pushed for corporate breakups and challenged management teams. Many activists succeeded in pressing companies to return cash or do a deal, and some of the biggest brand names in the United States came under siege. According to The Wall Street Journal, several activist funds produced investor returns of more than 20% for the year, and cash flooded into the sector as a result.

In 2013, Heidrick & Struggles had planned to update its 2002 study of boards of directors within the semiconductor industry. Since that original study the industry had undergone significant change, and we saw the need to revisit old issues and explore some new ones. One of the topics that received the most comments from board members and generated the most intense discussions in 2013 was activist investors. With that in mind, we sought to understand how boards of semiconductor firms met the challenges from activist investors and how they are preparing for future engagements.

This paper is a summary of our findings from the 2013 study. While it focused on the semiconductor industry, we believe it has value for any corporate boards that may be dealing with similar issues.