Maybe because this M&A defense provision doesn’t enjoy a colorful name like a “poison pill”, the recent battle waged over proxy rules for selecting board members and determining many critical M&A corporate governance provisions went largely unnoticed except by a small band of M&A specialists.
The side of this battle, described as defense, would likely claim victory because it succeeded in judicially thwarting a measure by the SEC to mandate a set of procedures to clarify and standardize the proxy proposal submission rules known as “advanced notice bylaw and proxy access rules”.
See what I mean about the catchy name?
What was left standing after the fierce battle were provisions which permit shareholders to submit proposed proxy provisions for a vote by shareholders. Shareholders, therefore, can propose proxy proposal submission rules to address what was in the thwarted SEC mandate.
So the question is, in the next several years, will shareholders seize this opportunity to vote into place proxy proposal submission provisions which are more aggressor friendly than those in the thwarted SEC mandate?
Will slow to no growth in corporate performance trigger more shareholder impatience and activism and, guided by proxy advisory firms like ISS, translate into proxy proposal submission provisions which facilitate changes in underperforming companies’ boards?
Will we look back and see that “the defense” declared victory by defeating the SEC mandates and completely missed what turns out to be a more dangerous development?
The attached post from the law firm of Latham & Watkins provides an excellent discussion of the topic and suggests potential corporate responses. Please click on the link below to download the pdf document.
Many thanks to Latham & Watkins (www.lw.com) for this valuable article.