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Wolosky Quoted in Wall Street Journal Article on Growing Debate Over Activist Compensation to Director Nominees

November 25, 2013

Partner Steve Wolosky was quoted in The Wall Street Journal on a hot-button topic involving activist investor compensation to director candidates in proxy contests. Since May, more than 30 public companies have unilaterally adopted bylaw amendments aimed at disqualifying director candidates who receive any compensation from third parties. Such bylaws effectively make it quite difficult, if not impossible, for activist investors to recruit top-tier director candidates for proxy contests. The issue has come to light in recent weeks as ISS, the largest U.S. proxy advisory firm, recommended against the election of certain directors of Provident Financial Holdings, who had approved such a bylaw. ISS took serious issue with the unilaterally adopted bylaw noting that, “the provision may thus act as an entrenchment device by restricting investors’ right to select the individuals they deem suitable for board service.” According to Wolosky, “The recent attempts to eliminate all compensation wholesale were entirely overreaching, and the companies and their counsel knew exactly what they were doing.”

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