Activism in the Age of the New “Universal Proxy Card” Rules
Thursday, June 8, 2023 | 2:00PM
- 2:50PM | Room: Chicago 6
|
Education Session
| Christopher R. Drewry | Daniel Moore | Jillian Alsheimer | Geoffrey Weinberg |
The Securities and Exchange Commission’s (SEC’s) new universal proxy rules, which took effect for meetings after August 31, 2022, require the use of “universal” proxy cards in all director election contests, except for elections held by registered investment companies and business development companies.
Prior to the rules going into effect, the company and the dissident stockholder distributed separate and different proxy cards. Stockholders not attending the meeting in person and voting by proxy could only vote on a single card, limiting their choices to either the nominees on the company card or the dissident card, with no option to “mix and match.” Those stockholders attending and voting at the meeting in person could select any combination of candidates nominated by either side.
The new rules are designed to bridge this gap by giving shareholders voting by proxy the ability to “cherry pick” voting instructions between the company and dissident’s slate of nominees as all candidates up for election are listed on both sides’ cards — the “universal” proxy card.
Although the new rules are in the early days, this panel will explore the observed implications to date:
- Whether there has been an increase in activist shareholders launching proxy fights, given that the barrier of entry for activists has been lowered
- Enhanced focus on qualifications of individual directors; activism campaigns becoming more personal
- Possibility of an increase in settlement agreements due to the increased influence of proxy advisors & likelihood of an “unpredictable” outcome
- What companies can do to prepare for potential activist campaigns
Learning Objectives:
- Discuss how companies should approach potential activist campaigns
- Assess the implications of the UPC Proxy card to date