August 9, 2017
Activism: Disclosure Lawsuit Turns the Tide in Proxy Fight
This Hunton & Williams memo discusses how a dissident was able to effectively use disclosure litigation to flip ISS’s recommendation & turn the tide in a proxy fight. Here’s the intro:
In a recent proxy contest, a dissident stockholder brought a lawsuit against the company claiming that the company’s disclosures about certain incumbent directors were deficient. The court agreed, and enjoined the company’s annual stockholders meeting until at least 10 days after the company supplemented its disclosures. As a result of the court’s ruling, Institutional Shareholder Services (“ISS”) reevaluated its support for the company’s nominees and changed its voting recommendation in favor of the dissident, who ultimately prevailed at the stockholders meeting.
Litigation is a common tactic in proxy fights, but the memo points out that the case illustrates how dissidents can use disclosure litigation as an offensive weapon to influence proxy advisors’ recommendations and help win the proxy contest.
– John Jenkins