A proxy fight is akin to a political campaign and getting the message out and the votes in are tantamount to shoring up a win, says Stuart Morrow, senior partner at the law firm Davis LLP in Vancouver, who specializes in disputed shareholder meetings and proxy campaigns.
"Proxy contests are ultimately won and lost at the ballot box:Whoever has the most shareholder support gets the prize at the end of the day.
"It is very much an exercise in persuading shareholders that the dissidents have a more effective plan for maximizing shareholder value than do incumbent management."
Or visa-versa.
Mr. Morrow wrote a paper outlining the fine points of conduct and related case law surrounding proxy contests and shareholder meetings and offers up the following five, sure-fire ways that can see an otherwise worthy proxy challenge go off the rails:
1. Fail to sell your vision and message A message needs to be clear, forward-thinking in its outlook and disseminated to as many shareholders as possible.
2. Lack of financial resources The formalities associated with a proxy battle can be very expensive, Mr. Morrow said. Parties rarely want a protracted battle so most proxy campaigns are settled prior to the shareholders' meeting, when the parties either reach a compromise or a negotiated settlement.
3. Underes timate your opponent Never underestimate the dissidents and don't take major shareholder loyalty for granted. Your opponents may be more credible than you anticipate. Parties rarely want a protracted battle so most proxy campaigns are settled prior to the shareholders' meeting, when the parties either reach a compromise or a negotiated settlement.
4. Distress, distraction and disorganization A sudden challenge to the incumbent management and board can result in shock, panic and an inability to mount a rapid and credible counter-attack, contributing to a market perception of weakness, adding momentum to the dissidents' campaign.
5 . Ignore the technical details The devil is in the detail. Slip up and you can be on the wrong end of a proxy fight. Count on rigorous scrutiny of technical details related to your campaign and shareholders' meeting, including the overlay of applicable corporate and securities laws, stock exchange rules, company bylaws, articles. Overlook one little detail and you will create a compliance minefield for opposing counsel to exploit and undermine your campaign.
24 September 2008
Five ways to lose a proxy fight
23 September 2008
CSX Capitulates In TCI Proxy Fight
Ending a long-running and ugly battle, U.S. railroad CSX Corp. will seat two director nominees whose victory over management candidates it had disputed.
The move to add the second pair of nominees proffered by activist hedge funds The Children’s Investment Fund and 3G Capital Partners comes after a federal appeals court upheld a lower court decision allowing the two funds to vote their 6.4% stake in CSX. The Second Circuit Court of Appeals refused to overturn the June decision which found that late disclosures by the hedge funds did not cause the irreparable harm to CSX shareholders necessary to strip them of their rights.
CSX said TCI chief Christopher Hohn and London Underground managing director Timothy O’Toole will join the company’s 12-member board on Sept. 24. Two other hedge fund nominees, including 3G’s Alexandre Behring, were seated in July. The Jacksonville-based company refused to seat Hohn and O’Toole at the time because their margin of victory was small enough that a CSX court victory could have kept them off the board.
22 September 2008
Miner Gets Proxy Nod in HF Battle
Proxy advisory firm PROXY Governance Inc. (PGI) is siding with the management of mining company Cleveland-Cliffs in its battle with hedge fund Harbinger Capital Partners.
Harbinger, which owns about 15.6 percent of Cleveland-Cliffs, has sought permission to increase its stake to more than 20 percent of the company. Even if the fund does get approval, it will still not be allowed to hold more than a third of the company.
Last month, however, Cleveland-Cliffs asked shareholders to reject the proposal. Management has clashed with Harbinger over the company's bid to acquire Alpha Natural Resources, a move Harbinger opposes. Instead, the fund has suggested Cleveland-Cliffs should consider putting itself up for sale.
On Friday, PGI backed management, issuing an 11-page report on the matter. The proxy advisor noted Harbinger has not proposed to pay any control premium as part of its acquisition of more shares, and yet the fund would effectively gain the ability to block the Alpha deal.
"Because the proposed control share acquisition could give Harbinger effective veto power over certain corporate strategies and strategic transactions, but offers shareholders neither a control premium not a discernable economic or strategic advantage they would not otherwise realize, we recommend shareholders reject the proposal," the PGI report concluded.
In its own letter to shareholders on Friday, Harbinger in essence agreed with the idea that its proposal is about the Alpha takeover. Harbinger called the deal with Alpha "too much, too fast." The issue will be resolved at the company's shareholders meeting on Oct. 3.
Legendary investor Philip Falcone founded Harbinger in 2001. The fund has more than $21 billion in assets under management. It has recently disclosed stakes in RTI International, AK Steel Holding Corp. and Media General Inc.
13 August 2008
Internet as primary demands
Are we live on a small world? No we don’t, the earth is as big as we know it contains 5 continent and 7 seas. Is it hard to communicate over the seas? No, it is not, because of advance communication technology we have, communication between 2 person no matter how far they are, can be established as they are facing each other. Maybe most of you know this and maybe each of you have been surfing the Internet via mobile broadband, and maybe you have a cell phone on each of your pocket. For a personal need cell phone or communication gadget main function is to communication, but as businessman communication is a vital that can be denied at any cost.
When money is involved, a businessman will fulfill any requirements to enhance their performance and of course their credibility. Fast service, minimum claims and good marketing can be achieved through good communication. But today, a businessman doesn’t have to stay in the office to do their work. Just take the laptop, plug the mobile broadband, finding the hotspot that provides 3G signal and voila…they have the world in front of their vey eyes. Conduct a speed test to make sure your connection is stable and trustworthy.
Having a sophisticated gadgets make our lives easy. Download or stream a movie is just like playing from local computer. Broadband connection is providing us a high speed connection, that won’t make you wait any longer to open some web site. If you are dial-up users, migrating to broadband is recommended. Faster connection potential will stands out when:
- Playing game Online
- Upload or download a big file
- Streaming a video online
- Chatting and using a real time webcam
- And still many more…
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