Insights From Two Recent Successful Proxy Contest Defenses


In most recent situations in which activist shareholders have sought board representation, the activist has achieved its objective – either by negotiation and settlement with the issuer or by taking the matter to a vote and winning the support of fellow shareholders.1 However, in two recent cases – Alere’s defense against Coppersmith Capital Management and Walter Energy’s defense against Audley Capital Advisors – the issuer prevailed. While we are loathe to draw sweeping conclusions from only two situations, and note that every situation is different, there are noteworthy observations to be made:

It helps to have fresh, independent, members of the board

- In Alere, all four of the board’s nominees were new independent persons (two affiliated with an existing shareholder) and the issuer agreed pre-annual meeting to expand the board post-annual meeting to include one additional new director affiliated with another shareholder. Nine of the eleven board members (including the issuer’s nominees) were independent.

- In Walter Energy, four of the board members were new in the last two years, and nine of the ten directors were independent.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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