Proactive engagement with shareholders may mitigate risk against hostile take-overs: survey

“There is an exception to this requirement, available only to dissidents, if (among other things) the solicitation takes place exclusively via public broadcast. It allows for a low-cost route to solicit proxies in favour of the dissident’s nominees.”

The universal proxy card

Other key trends described in the study include the rising focus of proxy contests on mid- or large-cap issuers, shifting away from on micro-cap issuers, and the increasing use of the universal proxy card, mostly by dissidents.

The study’s co-authors note that there was a similar pattern present in the three contests in 2019 where a universal proxy card was used. “Management put out their own non-universal proxy, and then the dissident released a universal proxy. In one of the three cases, management then released a new, universal proxy card.”

Both management and dissidents want shareholders to vote using their own proxy card, Freelan and Gregoire say, because this allows them to track support levels. “At the risk of generalizing from a small sample size, we are starting to see proxy advisors recommend split tickets more often, finding that dissidents have valid criticisms but not going so far as to recommend full board turnover. Shareholders looking to split their ticket may find a universal proxy more convenient.”

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