Sun Microsystems' largest shareholder, which has been agitating for change at the company, has reached an agreement with Sun to appoint two new independent directors to Sun's board, the companies announced Monday.

Southeastern Asset Management, which holds about 22 percent of Sun's common stock, will be permitted to nominate the directors, who will then be jointly approved by the two companies. The directors will be appointed "as soon as is reasonably practicable," the agreement states.

Like other Sun investors, Southeastern has been unhappy with Sun's performance of late. Its stock price has sunk from more than US$20 about a year ago to a close of $3.49 last Friday, as the company struggles to grow revenue and maintain a profit.

In October Southeastern upped its stake in Sun and changed its ownership status in a way that allows it to play a more active role in Sun's management. It also said it had been meeting with Sun's management about ways to "maximize the value of the company."

That fueled speculation that big changes could be in store for Sun, including potentially a sale of part of its business or a change in its leadership. None of those changes have materialized, and Southeastern now says publicly at least that it supports Sun's strategy and top executives.

"We fully support Sun's CEO, Jonathan Schwartz, and his leadership team in their efforts to continue driving near-term efficiencies and long-term growth," Southeastern said in a joint statement with Sun.

It pointed to Sun's more than $3 billion in cash, and said products like its Open Storage line-up, MySQL database and new Niagara servers represent big growth opportunities.

Sun reported a loss of $1.68 billion for its most recent fiscal quarter, blaming the global economic crisis and the chaos on Wall Street in particular, where it does much of its business. Last month it announced a plan to lay off up to 6,000 workers, or 18 percent of its workforce, in an effort to slash costs.

Southeastern invests in companies that it believes are trading at "a big discount to their intrinsic worth," Jason Dunn, Southeastern's vice president and principal, said in a podcast posted to Sun's investor Web site.

"We're buying these companies when their assets aren't recognized by the market," Dunn said. "We find such an example of this in Sun."

The news gave Sun's stock a lift. Its shares were changing hands for $3.85 Monday afternoon, up 10 percent from Friday's close.

The IDG News Service is a Network World affiliate.