Dow Chemical and Dan Loeb's hedge fund Third Point struck a deal on Friday to add four new directors to Dow's board.
Third Point agreed to a one-year standstill on Dow shares as part of the arrangement.
The firm had been considering a proxy contest over board seats.
Three of the directors will join the board Jan. 1 and the fourth will join in May. Dow will also reduce the size of its board from 13 directors at the 2015 annual meeting to 12 at the 2016 meeting.