acquired a roughly 1 percent stake in Genzyme?
RW: That certainly wasn’t the intent of it from our perspective. It really was focused on improving the company’s performance. Our intent was to keep an appropriate amount of pressure on the management team, and it gives us the flexibility to step into more of an activist role if necessary.
X: Do you think Icahn could help Genzyme improve its business?
RW: We wouldn’t begrudge any shareholder their right to speak out on a company’s performance. [Icahn’s investment firms] certainly have their share of smart people with a great investment track record.
X: How did your interest and expertise in corporate governance evolve?
RW: As with any pursuit, our interest in corporate governance has become more nuanced and refined over the years. My interest began in 1982 when I took a class at Georgetown in corporate governance. [Whitworth holds a Juris Doctor degree from Georgetown University Law Center.] Since then I have been involved with the subject as a public policy advocate, a practitioner (as a member of nine public company boards and chairman of two), and as an investor seeking to reform governance at our portfolio companies.
X: How does your corporate governance background factor into your investment decisions at Relational?
RW: Corporate governance is a major factor in our investment decisions for two overarching reasons. First, we are convinced that corporate governance practices and policies, as well as those of executive compensation, materially impact the performance and, therefore, the value of corporations. Second, since each of our investments involve an engagement plan to influence change, we must understand how the particular governance features of our portfolio companies will impact our efforts. For example, our job is more challenging if a board and management are heavily insulated from influence and resistant to change.
X: Is there much difference in pushing for such changes at a biotechnology (or technology) oriented company like Genzyme, compared to a company like Home Depot or Sprint?
W: Not really. We are still addressing the same underlying human nature in terms of our persuasive efforts, and, broadly speaking, we are addressing the same issues and phenomena. Also, we understand our limitations. We are not there to do the science. We stick to the matters for which we have expertise: Strategic planning, executive incentives, corporate governance, communications, and capital allocation.
