Proxy fight

Proxy fight

A proxy fight or proxy battle is an event that may occur when a corporation's stockholders develop opposition to some aspect of the corporate governance, often focusing on directorial and management positions. Corporate activists may attempt to persuade shareholders to use their "proxy votes" (i.e. votes by one individual or institution as the authorized representative of another) to install new management for any of a variety of reasons.

In a proxy fight, incumbent directors and management have the odds stacked in their favor over those trying to force the corporate change. Many tactics are used by these incumbents to stay in power; including staggering the boards (i.e. having different election years for different directors), access to the corporation's money, and creating restrictive requirements in the bylaws. As a result, most proxy fights are unsuccessful. However, it has been recently noted that proxy fights waged by hedge funds, which are virtually unregulated, are successful more than 60% of the timeFact|date=May 2008.

It should be noted that the use of proxies is highly regulated by both federal law (through the oversight of the SEC) and state law, often resulting in serious concerns of federalism.

"For example:"

An acquiring company, frustrated by the takeover defenses of the management, may initiate a proxy fight to install a more compliant management of the target.

Or stockholder dissidents opposed to an impending takeover in the view that it will dilute value may use a proxy fight to stop it. An example of a proxy vote took place within Hewlett-Packard, when the management of that company sought to take over Compaq. Opponents of the Compaq takeover lost the fight. The management, under Carly Fiorina, remained in place, and the merger went ahead.

In the absence of any looming takeover, proxy fights can come about because dissidents are unhappy with management, as with Carl Icahn's effort in 2005-2006 to oust a majority of the board of Time Warner.

ee also

*Mergers and acquisitions
*White knight


Wikimedia Foundation. 2010.

Игры ⚽ Нужен реферат?

Look at other dictionaries:

  • proxy fight — + proxy contest/proxy fight USA A tactic used by a party attempting a hostile takeover or a dissident group of stockholders to replace a company s existing board of directors with new directors that support the potential acquirer s or dissident… …   Law dictionary

  • proxy fight — 1) Often used in risk arbitrage. Technique used by an acquiring company to attempt to gain control of a takeover target. The acquirer tries to persuade the shareholders of the target company that the present management of the firm should be… …   Financial and business terms

  • proxy fight — a contest between factions of stockholders in a company, in which each group attempts to gain control by soliciting signed proxy statements for sufficient votes. Also called proxy battle. * * * …   Universalium

  • proxy fight — noun a measure used by an acquirer to gain control of a takeover target; acquirer tries to persuade other shareholders that the management of the target should be replaced • Hypernyms: ↑takeover attempt * * * a contest between factions of… …   Useful english dictionary

  • Proxy Fight — When a group of shareholders are persuaded to join forces and gather enough shareholder proxies to win a corporate vote. This is referred to also as a proxy battle. This term is used mainly in the context of takeovers. The acquirer will persuade… …   Investment dictionary

  • proxy contest — n: a shareholder s challenge to an action or the control of corporate management accomplished through the solicitation of proxies from other shareholders – called also proxy fight; Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. proxy …   Law dictionary

  • Proxy — may refer to something which acts on behalf of something else, as in:* Proxy (statistics), a measured variable used to infer the value of a variable of interest * Proxy (climate), a measured variable used to infer the value of a variable of… …   Wikipedia

  • Proxy contest — A battle for the control of a firm in which the dissident group seeks, from the firm s other shareholders, the right to vote those shareholder s shares in favor of the dissident group s slate of directors. Also called proxy fight. The New York… …   Financial and business terms

  • Proxy war — A proxy war is the war that results when two powers use third parties as substitutes for fighting each other directly.While powers have sometimes used whole governments as proxies, terrorist groups, mercenaries, or other third parties are more… …   Wikipedia

  • Proxy Armies in the 20th Century — Various nations have used proxy armies to fight their wars and to protect their interestsProxy Armies of the former Soviet UnionVarious Marxist rebels were proxy armies for the Soviet Union ranging from Angola to Vietnam. These organizations were …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”