Photo: Adobe Stock Federalism and Proxy Contests: What Should Be the Balance Between the State and Federal Roles?
Is it (or when is it) legitimate for corporate management to reject a nomination in a director election (given that management is usually self-interested)? This column's answer will be that an independent corporate board is entitled to take actions (including through bylaws amendments) that generate greater transparency and material information—subject to judicial review.
November 16, 2022 at 10:00 AM
10 minute read
Proxy contests are expected to increase soon, as a result of three factors: (1) the massive de-staggering of corporate boards, (2) the increasing concentration of share ownership among a small group of institutional holders, and (3) the adoption of SEC Rule 14a-19, which mandates the use of universal proxy cards. That last rule just became effective, and many predict that smaller firms will particularly experience increased proxy activism, as Rule 14a-9 will significantly reduce the costs to insurgents in these cases.
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