A:

A proxy fight occurs when a group of shareholders in a particular company attempts to join together to effect change in a particular area of corporate governance within that company.

Each individual proxy fight has the potential to be unique, but most proxy fights follow a common thread. The typical way that a proxy fight works is that shareholder activists are dissatisfied with a particular aspect of the company, and seek to effect change in that area; however, they often run into resistance from the company's current board members. The dissatisfied shareholders then attempt to persuade other shareholders to allow them to use their proxy votes on a proposed change to the company's board positions.

The shareholder activists typically attempt to remove board members that oppose their desired changes and install their own board member candidates. The new board members will be receptive to the changes proposed by the shareholder activists, making it easier for the activists to make those changes happen.

To learn more about proxy voting, check out How Your Vote Can Change Corporate Policy and Proxy Voting Gives Fund Shareholders A Say.

RELATED FAQS

  1. What is the difference between a hostile takeover and a friendly takeover?

    Learn about the difference between a hostile takeover and a friendly takeover, and understand how proxy fights and tender ...
  2. Why should investors research the C-suite executives of a company?

    Learn how C-suite officers affect shareholders; discover how the CEO impacts financial performance and why governance is ...
  3. What is the difference between a direct and an indirect distribution channel?

    Learn about the primary differences between direct and indirect distribution channels, and under what circumstances a company ...
  4. How can an investor determine a company's annual return from looking at its financial ...

    Understand what a share premium account is, what funds go into the account and the specific purposes for which the funds ...
RELATED TERMS
  1. Value Of Risk (VOR)

    The financial benefit that a risk-taking activity will bring ...
  2. Business Judgment Rule

    A legal principle which grants directors, officers, and agents ...
  3. Separation Of Powers

    An organizational structure in which responsibilities, authorities, ...
  4. Protected Cell Company (PCC)

    A corporate structure in which a single legal entity is comprised ...
  5. Registered Holder

    Shareholders who hold their shares directly with a company.
  6. Duty Of Loyalty

    A director's responsibility to act at all times in the best interests ...

You May Also Like

Related Articles
  1. Investing Basics

    What is the difference between a hostile ...

  2. Stock Analysis

    Google Stock: A Tale of Two Share Classes

  3. Investing News

    A New Corporate Governance Initiative ...

  4. Stock Analysis

    Intel Doesn't Need New Management

  5. Stock Analysis

    Will Spinoffs Give American Capital ...

Trading Center