Chesapeake, Virginia-based Dollar Tree, which is valued at roughly $31 billion, is expanding the size of its board to 12 people and is seating Richard Dreiling, a former Dollar General chief executive, as executive chairman. Mantle Ridge founder Paul Hilal will join the board as vice chair.

Five current directors, including the CEO, are staying and another five people independent of Mantle Ridge will also join. Dollar Tree is also adding a new finance committee and restructuring existing committees to create a new committee to focus on Sustainability and Corporate Social Responsibility.

"Dollar Tree has a powerful legacy to build on in the years ahead," CEO Michael Witynski said in a statement.

The settlement comes at a time when several retailers, including Kohl's and Bed Bath & Beyond are facing activist investors who are pushing management to consider alternatives including possible sales.

Mantle Ridge, which owns 5.7% of Dollar Tree's common stock and ranks as its third-largest investor, sought to take over the entire board when it nominated 11 directors in December, arguing that the company's stock price was lagging and to push for a review of the retailer's business strategy.

Mantle Ridge has an economic interest of 9.85%, including 4.19% in cash-settled derivatives.

Dollar Tree's share price is roughly flat this year while the S&P 500 General Merchandise Stores Index has climbed 22%.

In premarket trading, shares climbed 1.5%, signaling investors welcome the settlement.

Dollar Tree traditionally sold items for one dollar but said last year that it would raise prices of most goods to $1.25 by

the end of April in the wake of spiraling freight costs and

other COVID-19 pandemic-driven challenges.

The retailer faced off against another activist investment firm in 2019 when Starboard Value urged it to consider raising its prices.

For Mantle Ridge's Hilal, this marks the third time he has won board seats at a target company since founding his firm in 2016. Both railroad CSX Corp and food services company Aramark appointed new chief executives soon after Mantle Ridge began pushing for changes.

(Reporting by Svea Herbst-Bayliss in Boston, Deborah Sophia and Ananya Mariam Rajesh in Bengaluru; Editing by Krishna Chandra Eluri and Will Dunham)