Activist hedge fund Engaged to give director fees to corporate employees

SunOpta

17/04/2020 12:00

By Svea Herbst-Bayliss
    BOSTON, April 17 (Reuters) - Activist investor Engaged
Capital will donate roughly $500,000 in fees its executives
would have earned for serving on public companies' boards this
year to those corporations' employees, the hedge fund's founder
Glenn Welling told Reuters.
    Traditionally corporate agitators including Engaged ask
companies to do something for shareholders such as selling
divisions, cutting costs, or buying back stock, to help boost
the stock price.
    Now Welling, who founded $1 billion Engaged eight years ago,
said he wants to give rather than take as companies steel
themselves for the deepest recession since the 1930s era Great
Depression in the wake of the novel coronavirus outbreak.
    "Our partners have asked that all remaining 2020 board fees
be redirected to support those employees that are most
impacted," Welling said. The money is earmarked to help
"individuals and their families struggling through this volatile
period," he said.
    U.S. unemployment claims surged to 22 million in the last
four weeks, wiping out a decade of job gains, as layoffs mounted
in industries spanning retail to restaurants.
    While Americans are meant to receive payments of $1,200 or
more from the U.S. government as part of a $2 trillion relief
package, economists warn there won't be a quick recovery.
    Engaged Capital executives currently serve as directors at
four companies. Welling sits on the boards at food company Hain
Celestial  HAIN.O  and technology company TiVo  TIVO.O .
Christopher Hetrick, Engaged's director of research, sits on
furniture and electronics rental company Rent-A-Center's
 RCII.O  board and analyst Brendan Springstubb is a director at
food company SunOpta  SOY.TO .
    Directors' fees can vary widely depending on the size and
wealth of a company but often average around $125,000 a year.
    Although Welling often pushes for companies to sell
themselves, he also has a reputation for taking a constructive
approach with management at the small to mid-sized American
companies he targets. He often holds their stock for years.
    Activists have largely moved to the sidelines as the virus
has wreaked havoc on the economy and financial markets with just
16 campaigns started in March, data from investment bank Lazard
showed. Many fund managers worry about the optics of agitating
during the pandemic and are trying to keep a lower profile. It
is not clear whether others may have made gifts to their target
companies or helped in other ways.

 (Reporting by Svea Herbst-Bayliss; editing by Grant McCool)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))