Proxy contests have reemerged recently as an important part of the market for corporate control. After years of indifference to corporate elections, dissident shareholders have turned once again to the ballot box as a means of removing unwanted management. In a surprisingly large number of these battles, the challengers have succeeded in getting all or much of what they wanted.
The resurgence of proxy contests has sparked renewed interest by incumbent managements in developing powerful new defensive tactics in corporate elections. Incumbents\u27 time-honored campaign strategies, such as switching the annual shareholders\u27 meeting date, or restricting the potential candidates who can run for office, are no longer sufficient to ensure a management victory. In their place incumbents have substituted more drastic measures, such as Rights Plans,\u27 popularly referred rate elections, dissident shareholders have turned once again to the ballot box as a means of removing unwanted management. In a surprisingly large number of these battles, the challengers have succeeded in getting all or much of what they wanted.
The resurgence of proxy contests has sparked renewed interest by incumbent managements in developing powerful new defensive tactics in corporate elections. Incumbents\u27 time-honored campaign strategies, such as switching the annual shareholders\u27 meeting date, or restricting the potential candidates who can run for office, are no longer sufficient to ensure a management victory. In their place incumbents have substituted more drastic measures, such as Rights Plans,\u27 popularly referred to as poison pills, that sharply limit, or even eliminate, shareholders\u27 ability to elect the directors of their choice.
Should judges permit incumbents to use these powerful defensive tactics to thwart dissident shareholders\u27 efforts to unseat existing managers? This Article argues that the courts have mistakenly favored incumbents in resolving conflicts between incumbents\u27 desire to use defensive tactics to protect themselves and target company shareholders from harmful proxy contests, and the shareholders\u27 need to have an effective mechanism for replacing unwanted (and inefficient) managers
