Sachem Head’s Ferguson says replacing CEO among tough jobs for activists

By Svea Herbst-Bayliss

NEW YORK (Reuters) – Investor Scott Ferguson, who runs Sachem Head Capital Management, said one of the toughest tasks faced by activist investors may be to replace a company’s chief executive, but that the fight had been worth it at three companies where it owns stakes.

Sachem Head invests with chemicals company Olin (NYSE:) Corporation, flavors and fragrance company IFF and food service distributor US Foods Holding (NYSE:) and each one replaced its chief executive officer after Sachem Head became involved.

US Foods is still looking for a permanent replacement but appears to be close, Ferguson said while discussing the three names at the 13D Monitor Active-Passive Investor Summit on Tuesday.

He singled out Olin CEO Scott Sutton, who took over the top job in 2020, as being particularly skillful, calling him the best CEO he has seen and praising his high impact in a short period of time.

He praised the company’s plan for share buybacks, saying it was eyeing buying back 20% of outstanding shares a year. Earlier this year, the company announced a $2 billion buyback program.

Ferguson has scored a string of wins including a settlement earlier this year with US Foods Holding Corp where his firm won three seats in exchange for dropping a proxy fight. The company’s CEO Pietro Satriano also left the company.

Activists often try to push for changes by influencing the board, sometimes by trying to get seats on the board. Boards are ultimately responsible for hiring and overseeing a chief executive.

In a recent regulatory filing, Sachem Head said that it had made investments in FedEx (NYSE:) and Hasbro (NASDAQ:), both of which have had activist investors pushing for changes this year.

Ferguson was speaking at the annual 13D Monitor Active-Passive Investor Summit.

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