Proxy fights are not the norm but can occur in three situations.
- 1) change management - a challenge to the current directors by replacing them with new directors.
- 2) change directors to facilitate an acquisition - changing the directors with new directors who will support an acquisition of the corporation.
- 3) change policy - not challenging the election of directors but seeking shareholder votes on a policy issue or corporate governance rules that the directors oppose.
At times, directors have tried to thwart voting by shareholders by limiting or precluding the vote in a contest for control (proxy fight or hostile tender offer). The actions taken are usually unilateral by the directors. In a series of Delaware cases, the courts have shown a willingness to treat voting rights cases with greater scrutiny. In Schnell v. Chris-Craft Industries, Inc, incumbet management, fearing a proxy challenge, changed the date of the annual meeting to an earlier time which would .... A proxy content or a proxy fight; mounting a proxy fight in a publicly held coropration is expensive, in part because of costs imposed by SEC regulation. Printing, paper, and mailing costs may be extensive. Legal representation must be relatively sophisticated.
Navigating various regulatory obstacles is difficult and expensive.
- The regulations define very broadly the terms "solicit" and "solicitation" to include "[a]ny request for a proxy," "[a]ny request to execute or not to execute, or to revoke, a proxy," and "[t]he furnishing of a form ... or other communication under circumstances reasonable calculated to result in the procurement, withholding or revocation of a proxy.
- In turn, proxy is defined to include "every proxy, consent, or authorization" relating to shares.