National Express and rebel investor Elliott Advisors said they had reached a truce which will prevent Elliott from challenging the company's board publicly for at least a year.
US hedge fund Elliott Advisors, the British transport group's biggest shareholder with a 17.5 per cent stake, had called for a boardroom shakeup and accused the company of failing to compete for new opportunities and damaging shareholder value.
Elliott previously said it wanted National Express investors to elect three new independent directors to push for changes at the firm at its annual general meeting (AGM) on Tuesday.
National Express said it would appoint former DHL UK boss Chris Muntwyler, a candidate proposed by Elliott, to its board, as well as two other international non-executives.
In return Elliott said it would withdraw its AGM resolutions and promise not to challenge National Express' board publicly until after its 2012 AGM at the earliest.
"With this behind us, the board and management can focus wholly on the important task of developing the business," National Express Chairman John Devaney said in a statement.
The transport group said Muntwyler has been offered a role as an independent non-executive director, with effect from May 11, 2011.
Sources familiar to the matter told Reuters on Monday that National Express and Elliott Advisors had reached a truce after a six week dispute.
The compromise saves face for Elliott, which suffered an AGM defeat when shareholders of Swiss biotech Actelion threw their weight behind management, rejecting a bid for control by Elliott.
National Express on Friday said growing first-quarter profit showed it did not need the radical change of strategy called for by Elliott.
Legal & General Investment Management, the fourth-largest investor in National Express, on Friday said it would not join a push for a boardroom shake-up at the firm, despite Elliott saying it had the backing of the transport group's second-largest investor, Spain's Cosmen family.
Devaney thanked the Cosmen family for helping to resolve the situation "to everyone's satisfaction."