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Hedge fund ValueAct forces way onto Armstrong’s board

A San Francisco investment firm that forced its way onto Microsoft’s board of directors has an agreement to do something similar with a Lancaster County company.

ValueAct Group, made up of several related companies including ValueAct Capital Management, has a nomination and shareholder agreement with Armstrong World Industries Inc., according to a Monday filing with the Securities and Exchange Commission.

ValueAct beneficially owns 17 percent of Armstrong’s outstanding common stock, according to the filing. The agreement makes Gregory P. Spivy, a partner at ValueAct Capital, a member of Armstrong’s board of directors, effective immediately.

Spivy’s term will continue until Armstong’s 2015 annual meeting of shareholders, which likely will be in June, at which time the company has agreed to nominate Spivy for election to the board, according to the filing.

ValueAct must own at least 7.5 percent of outstanding common stock in the company, or Spivy will be required to resign and the agreement to nominate him will no longer be required at the shareholders meeting.

Spivy will be considered for appointment to each of the board’s standing committees, except for the audit committee. However, he has not been appointed to any yet. If Spivy is no longer able to serve on the board, ValueAct is able to nominate a mutually acceptable replacement.

In exchange for the appointment, ValueAct agreed, among other things, not to “in any way participate in any ‘solicitation’ of proxies, or advise, encourage or influence any person with respect to the voting of any securities of the company with respect to the election of individuals to the board or approval of any shareholder proposals,” according to the filing.

A similar agreement was announced in late August 2013, when Microsoft said ValueAct Capital Management President G. Mason Morfit would be on the software giant’s board of directors, despite the hedge fund owning only about 0.8 percent of the company’s outstanding stock at the time. The move came days after former Microsoft CEO Steve Ballmer announced he was resigning.

Though the firm padded its total shares in Microsoft to about 74.2 million shares in May, it still holds less than 1 percent of the company’s outstanding shares, according to the Wall Street Journal.

Joseph Deinlein

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