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 investor rights movement?

    The investor rights movement, also called shareholder activism, refers to the efforts of shareholders of publicly traded ... Read Answer >>
  2. Under what circumstances might a company decide to do a hostile takeover?

    Learn about why companies use a hostile takeover to gain control of another company, and understand the different methods ... Read Answer >>
  3. What are some characteristics of ordinary shares?

    Read about some of the primary characteristics of ordinary shares, also known as common shares, including voting rights and ... Read Answer >>
  4. If I own a stock in a company, do I get a say in the company's operations?

    You don't get a direct say in a company's day-to-day operations, but, depending on whether you own voting or non-voting stock, ... Read Answer >>
  5. What does it signify about the state of a company if it has unusually high shareholders' ...

    Understand the meaning and calculation of shareholder equity and what a high level of shareholder equity signifies about ... Read Answer >>
  6. If a company offers a buyback of its shares, how do I decide whether to accept the ...

    Learn why it may often be in the best interest of a shareholder to accept a tender offer made at a premium to the market ... Read Answer >>
Related Articles
  1. Investing Basics

    How To Profit From The Rise in Proxy Fights

    A proxy vote is a vote cast by an entity or person on behalf of another. This sets the stage for a proxy fight between the current management and directors and the group trying to usher in change.
  2. Mutual Funds & ETFs

    Proxy Voting Gives Fund Shareholders A Say

    You have the right to take part in important company decisions - even if you cannot attend the meetings.
  3. Investing News

    Proxy Season 2016: Most Wonderful Time of the Year

    Each year, public companies hold shareholder meetings where individual and institutional investors vote on the future. Here is what to watch in 2016.
  4. Investing Basics

    Shareholders: Vote Your Proxy and Be Heard

    Voting shares, in person or via proxy ballot, is a right every shareholder should exercise. Here's why.
  5. Personal Finance

    How To Become A Corporate Board Member

    We look at how corporate boards are constructed, and how investors can get involved.
  6. Mutual Funds & ETFs

    What Does Your Mutual Fund Say About You?

    How your fund votes on proxy issues will reveal whether it's acting in your best interest and according to your beliefs.
  7. Investing

    Strategies Activist Shareholders Follow

    Activist shareholders, also called activist investors, are large-scale investors who use their investment power to influence public companies. While their goals can vary widely, the strategies ...
  8. Options & Futures

    Putting Management Under The Microscope

    We tell you where to find the telltale signs of corporate misdeeds.
  9. Investing News

    Chipotle's Board Members Survived E.coli, For Now (CMG)

    Chipotle investors owning a certain number of shares can now hold board member's feet to the fire or nominate their own board candidates.
  10. Investing Basics

    Who is a Shareholder?

    A shareholder is a person, company or other entity that owns at least one share of a company’s stock.
RELATED TERMS
  1. Proxy Fight

    When a group of shareholders are persuaded to join forces and ...
  2. Proxy

    1. An agent legally authorized to act on behalf of another party. ...
  3. Proxy Materials

    Documents regulated by the Securities & Exchange Commission ...
  4. Proxy Tax

    A tax on lobbying or political expenses that exceed an allowable ...
  5. Voting Right

    The right of a stockholder to vote on matters of corporate policy ...
  6. Shareholder Activist

    A person who attempts to use his or her rights as a shareholder ...
Hot Definitions
  1. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  2. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  3. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  4. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  6. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
Trading Center