Activist battles are about to get a lot more personal
Here’s a Forbes article by Bruce Goldfarb about the possible coming impact of universal proxy. Here’s an excerpt:
It is a near-certainty that future proxy campaigns are going to focus more on the personal attributes of the individual candidates. Each side will need to make a strong case for the qualifications of each person nominated for a board seat. This process may lead to each side publicly “dissing” the capabilities, experience, and perhaps even the integrity of the other side’s nominees.
In addition to a barrage of direct shareholder letters, press releases, and social media posts, I predict that both sides will need to present their candidates in front of institutional shareholders and influential proxy advisers such as ISS and Glass Lewis. To prepare for these sessions, candidates need to be coached on their messages, talking points, delivery and demeanor – giving the proxy campaign more of a flavor of a political campaign. (Think Robert Redford in The Candidate.)
Considerable good may come of this change. The heightened scrutiny of nominees may produce more highly qualified candidates on both the company and activist sides. The threat of a future “down and dirty” activist campaign may lead companies to proactively reconstitute their boards, adding directors whose resumes are more relevant to changing economic and business conditions, and hopefully creating a diverse and knowledgeable board. Public companies also are likely to amp up investor relations, increasing the visibility and engagement of the board, in an effort to solidify relationships with shareholders well in advance of any proxy contest.
Winning a proxy fight under the new universal proxy rules is hardly a “slam dunk” for either activists or companies. What we do know is that the process will require more strategic, intensive and frequent communications from both sides and their nominees. Truly the chum will be in the water starting in September and the sharks are circling. Remember the tagline from the 1987 movie Jaws: The Revenge, “This Time It’s Personal.”