During the deal decade of the 1980s, a phone call from T. Boone Pickens would send chills down the spines of Fortune 500 CEOs. Pickens considered himself a shareholder activist; CEOs thought he was the devil.
Pickens' thesis was simple -- managements were running companies for themselves, not shareholders. The solution: Make a hostile bid.
With the implosion of Enron and WorldCom, it seems strange that -- in light of the new stringent regulations such as Sarbanes-Oxley -- there has not been much hostile activity lately. Well, this may change.
Take yesterday's deal, in which General Electric
A firm called Relational Investors LLC purchased a significant stake in SPX (about 5.7%) and recently launched a proxy fight to throw out management. The firm alleges in an SEC statement that management improperly altered its compensation structure.
Ralph Whitworth co-founded Relational Investors in 1996 with an infusion of capital from the California Public Employees' Retirement System. He is an expert in corporate governance and crisis management. For example, he was hired onto the board when Waste Management
Some of the recent positions from Relational Investors include CNF
And, ironically enough, its main tool for change is the ever-powerful Sarbanes-Oxley Act.
Fool contributor Tom Taulli does not own shares mentioned in this article.