December 6, 2017

Proxy Contests: Vote Counting Stories

Given the success of our recent “M&A Stories: Practical Guidance (Enjoyably Digested)” webcast, I thought this story pulled from this Bloomberg article was worth sharing:

Your mention of clay tablets and abacuses in election counting reminded me of an eRaider proxy fight in Florida. The independent election guy showed up with a wooden table, a bit smaller than a dining room table, divided into bins; much like the counting boards used in ancient Mesopotamia. In it were blocks of proxies held together by rubber bands, and also wooden blocks with symbols on them (they would have been clay figurines in Akkad, but they didn’t have a lot of wood there).

The guy had tabulated things but there were lots of problems. He would pull out blocks of proxies and explain them: these are multiple votes of the same shares (often for different candidates), these are shares with both shareholder and broker votes, these are altered proxies, these are proxies from last year’s election, these are unsigned, and so on. The CEO and I would trade back and forth until the three of us agreed on a total we could all live with. That number was announced at the meeting which took place immediately afterwards, although the official total a few weeks later differed in inconsequential ways.

The advantage of this process that the blockchain or a modern database would eliminate is the bonding process between activist and CEO. There’s no alternative but to go out for beers after the meeting and swap stories about how stupid shareholders are; and how ridiculous the legal process of corporate governance is. You start out with big differences on business policy and governance, you end up allies against the uncaring world.

Broc Romanek