No CEO is safe.
Among the most popular tactics being used by activist investors of late is to oust companies' chief executive officers — an approach so prevalent that there have been several developments in the last week alone.
In some cases, activist investors are arriving on the scene with their own replacement CEOs at the ready. In others, they're encouraging chief executives to retire, and then placing themselves in the middle of the search process for the next leader.
The trend may also be related to the recent rally in the markets, according to Josh Black of the research firm Activist Insight. He said that breakups and buybacks – the more traditional activist plays – have less upside at the top of the market than at the bottom, so seeking operational changes, such as getting rid of the CEO, makes more sense right now.
Take Arconic, for example. Activist firm Elliott Management seeks to overthrow Klaus Kleinfeld, current CEO of Arconic, which sells metal products to the transportation and energy industries. Elliott revealed it is the largest holder of Arconic, with a stake of more than 13 percent in the $13 billion company.
Elliott teamed up with Larry Lawson, former CEO of Spirit AeroSystems, saying in a letter this month that Lawson has the skills to "lead a turnaround of Arconic's woefully underperforming business." Arconic has defended Kleinfeld and questioned Elliott's "shifting numbers, data sources and valuations" related to the investor's diligence of the company.