The Dos & Don’ts of Proxy Contests: Lessons from an Activist

Episode Summary

Nobody gets excited about a proxy contest. They are expensive for both sides; company performance is typically impacted by months of management distractions; and reputations on both sides are often harmed — even subject to personal accusations. As active investment managers and hedge funds continue to grow their piece of the shareholder pie, the threat of proxy contests will likely only increase.

Greg Taxin, managing member of Spotlight Advisors, LLC, is no stranger to shareholder activism. A co-founder of the proxy advisor Glass Lewis, Taxin has participated in over 100 proxy battle scenarios during his career, either as an activist or an advisor for companies under attack. In this episode, he joins host TK Kerstetter to discuss the mistakes that boards and management too-commonly make when confronted with a proxy contest.

Often the activist is saying something about the performance of the business, or the management team, or the CEO. The best antidote is to have the directors step up and say: ‘We’re here to protect the shareholder interests. We’ve heard these issues and complaints. We’re working on them, and we have a plan. We’re overseeing management carefully, and we’re not afraid to be here as your fiduciary…’
— Greg Taxin, Managing Member, Spotlight Advisors, LLC

In addition to outlining common mistakes, Taxin shares several steps that boards can take to enhance the effectiveness of their communication and ultimately come out on top of activist interactions. Don’t miss other episodes with Greg Taxin.

Related Episode: How Boards Can Avoid a Disruptive Shareholder Activist

greg taxin

In this episode, Taxin outlines several steps that boards can take to minimize their risk of activist attention. He also explains why board composition is at the heart of the problem (and also the solution).

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