Mellanox, Starboard settle on new board members

By Liana B. Baker and Svea Herbst-Bayliss NEW YORK (Reuters) - Chipmaker Mellanox Technologies Ltd struck a settlement with activist investor Starboard Value LP to appoint new board members and name a director if the company fails to meet certain operating goals. Mellanox, based in Israel and the United States, said on Tuesday that three newcomers will join its 11-member board, reaching a negotiated settlement five months after Starboard said it planned to oust all sitting directors. The company said the New York-based hedge fund, which owns a 10.5 percent stake, will be allowed to appoint a direct representative to the board if certain performance thresholds are not met. This is an unusual step, handing more power to an activist investor that has pushed for changes at a variety of companies ranging from Darden Restaurants Inc to Verizon Communications Inc's Yahoo in the last years. Reuters earlier on Tuesday reported the names of the three new board members after reporting on Sunday that a settlement was near. Mellanox will add two directors from Starboard's proposed nominees including Greg Waters, the chief executive officer of semiconductor company Integrated Device Technology Inc and Jon Olson, a former chief financial officer at programmable chipmaker Xilinx Inc, the company said. The two sides also agreed to add another independent director, Jack Lazar, a former chief financial officer at camera maker GoPro Inc, the company confirmed. "Jack, Jon and Greg will bring valuable experience and perspectives to the Board, and we look forward to working closely with them," board Chairman Irwin Federman said. The newcomers replace Dov Baharav, Shai Cohen and Tom Riordan who are stepping down. Thom Weatherford will serve as chair of the audit committee until March 2019 when he will step down from the board. In January Starboard took the unusual step of nominating its two co-founders, Jeffrey Smith and Peter Feld, and seven other executives with experience in the semi-conductor industry after criticizing the company for being too reserved when it announced its 2018 margin targets. The hedge fund said it would add back two sitting directors for continuity. "We are pleased to have worked constructively with the Board and management team," Feld said. J.P. Morgan Securities LLC and Credit Suisse acted as financial advisers to Mellanox while Latham & Watkins LLP and Herzog Fox & Neeman provided legal counsel. Olshan Frome Wolosky LLP advised Starboard. (Reporting by Liana B. Baker and Svea Herbst-Bayliss in New York; Editing by Lisa Shumaker)