A corporate decision to install new management-backed directors when an activist is agitating is troubling, said Richard Mansouri, who recently joined activist-focused investor and real estate company Arkhouse Management Co. LP.

“A company’s board, when they learn that an activist has bought stock, often unilaterally and reflexively adds a number of new directors,” Mansouri told the Activist Investing Today Podcast. “This is troubling and illustrates a pattern that many underperforming companies demonstrate. They’re being reactive to a situation and probably have been oblivious to some other problems that attracted the activist in the first place.”

Mansouri, who worked previously at activist firms Elliott Management Corp. and Sandell Asset Management Corp., also discussed prospects for activism at Arkhouse, why many directors that meet listing rules for independence really aren’t that independent and how companies can use investor money against shareholders.

Mansouri pointed out that activists must time their campaigns appropriately, as companies often replace problematic directors ahead of proxy contests.

“If an activist nominates directors too early, a company can have an advantage and replace directors to those who ostensibly might compare more favorable to the activist’s nominees,” he said. “By appointing new directors in this defensive refresh, a company can change the average board tenure and cosmetically give the appearance they are embracing good governance. A good functioning board would have addressed issues long before the activist showed up.”

Check out the podcast with Richard Mansouri below:

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