A
contest proxy is a
campaign to solicit votes in respect to management at a special or
annual meeting of stakeholders or action by written consent. Within a
decade, there has been 87% enhancement in the frequency of proxy
contests. On average, 60 contests were initiated at US public
companies every year. These days, the most general type of proxy
contests is those looking for board representation.
Apart
from conventional Westgate
Super Contest, investors these days have other available to show
dissatisfaction and drive change. With the enhanced frequency of
proxy contests and other types of dissident stockholder campaigns, it
is vital for regular securities lawyers and counsels to develop a
similarity with the dynamics of the proxy contest.
A contest proxy is, just like political election campaigns. It is
vital to realize prevailing stockholder or voter sentiment.
Developments right from the late 90s have made these contests more
challenging.
Advance
preparation
Companies
of all sizes with different structural defences and different
financial performance might be faced with a Westgate Super Contest.
Usually, companies that underperform or undervalued their friendly
groups are at a higher stake.
The
ideal time for a company to deal with the threat of a proxy contest
is before it turns into a target. Due to the prevalence of financial
activism, it is wise for companies to conduct regular
self-assessments to evaluate their profile related risk.
Companies
that identify their possible areas of vulnerability and are proactive
in taking steps to better their stake profile will substantially
lessen their stake and enhance the odds of prevailing if a contest
happens. A company can better its risk profile by developing,
disclosing and applying a strategy to better performance or evaluate
precise strategic steps.
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