Meson Capital: Tribute to Ralph Whitworth and Gentleman Activism
The term activist investor is by no means a uniform character – there are as many tactical and personality differences as with the label entrepreneur. While we work to build our own unique approach, there are certain figures whom I greatly admire and who have shaped my thinking. The investing world lost one of those figures in Ralph Whitworth who tragically passed away last month at age 60, succumbing to cancer. Whitworth founded Relational Investors with David Batchelder in 1996, whom I had the pleasure to meet earlier this year. Whitworth was able to drive leadership changes at large cap, highly politicized companies including IBM, Home Depot, Waste Management, and in his final act – Hewlett Packard as Chairman of the Board.
Headlines about highly public activist campaigns over the last couple years have, in my view, led to a great number of pretenders entering the activist arena. Hedge Fund Research (HFR) lists only 71 out of 8,000 funds as activist but of those perhaps only a dozen have leaders that go to the lengths of going into a board leadership role with chairman responsibility as Whitworth did. Leading through tumultuous change and chaos is dramatically more challenging than simply highlighting the failures of management. Business is hard – there are rarely, if ever, simple linear A B solutions at underperforming companies. There are nuanced reasons why a state exists that need to be appreciated for a viable path for change to be implemented. Whitworth took the time to understand the situation, never raising his voice in the boardroom and listening to those he may have disagreed with. Waste Management had successfully acquired hundreds of companies to rationalize municipal garbage disposal markets.
As with virtually all roll ups – there was a bump in the road and in 1999 the company found itself in an insider trading and accounting scandal. Whitworth stepped up and into the unenviable role of Chairman during the crisis and helped lead the company through. In late 2011 after the $10bb Autonomy acquisition debacle and the third CEO in as many years – Whitworth joined the board of HP and stepped up to the Chairman role. He managed to navigate the brains and egos of Silicon Valley to help HP get out of its tailspin and back on track. “We’re thought of as the quiet activist, although some of our projects have become contentious,” said Whitworth in a 2013 interview with the Union-Tribune. “We’ve found that it is more effective if we can convince the management of our case. Then they can go do the work and get the credit.” While I sadly never had a chance to work with Whitworth, I hope I can honor his work by perpetuating his ideals and leadership style.