Beyond the Boardroom
Vice-chairs of Olshan’s Shareholder Activism practice Elizabeth Gonzalez-Sussman and Ryan Nebel discussed The Shareholder Activism Annual Review 2023 as featured speakers on the February 16 episode of Insightia’s “Beyond the Boardroom” podcast entitled “How Is 2023 Shaping Up?” Elizabeth and Ryan explored the first universal proxy fights and what effect the new regime will have on activism going forward. Elizabeth predicts more settlement offers earlier in a campaign’s lifespan, with activists having to decide whether to agree to a settlement for a board seat or whether it is worth running a full contest. Ryan emphasized that establishing a case for change is still a prerequisite for a successful campaign in the universal proxy era, even if an activist puts forth stellar candidates. On the aggressive defense tactics that certain companies employed in 2022, like burdensome advance notice bylaw amendments, Ryan suggests that directors should proceed with caution before adopting these changes because it ultimately amounts to an attempt to disenfranchise shareholders. Elizabeth points out that these tactics are especially problematic for shareholders at small- and micro-cap companies and may serve as a barrier to entry for some smaller activists. Looking back at 2022, Ryan mentions the increase in ESG-focused campaigns and activists launching control fights prior to the effectiveness of the universal proxy rules, while Elizabeth adds that nominating control slates was the tactic activists employed to hold companies’ feet to the fire but she foresees fewer control slates in the future, given the current state of markets as well as the impact of the universal proxy. Listen to the entire episode on iTunes and Spotify.
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