Shareholder Voting

Question 1

SHs have rational apathy meaning that it’s rational for them not to ___

Answer 1

spend time/resources learning about complex issues at stake

Question 2

Proxy advisory firms have emerged to help _____ overcome the costs ____

Answer 2

institutional investors, gathering info necessary to make decisions on SH votes

Question 3

A proxy statement informs SH about ___

Answer 3

terms of a business to be voted on

Question 4

Proxy is the power of attorney to __

Answer 4

allow company’s designee to vote the shares owned by a SH

Question 5

3 reasons the BOD solicits and pays for proxies

Answer 5

• ensure a quorum
• prevent a “coup” from minority SH
• SEC requires it

Question 6

The BOD decies which _____ appear on company’s proxy card with the exception of ___

Answer 6

proposals/nominees, 14(a)(8)

Question 7

What does 14a8 allow

Answer 7

SH to submit certain proposals

Question 8

Under 14a8, a SH must have ___

Answer 8

certain number of shares for certain amount of time

Question 9

14a8 does not cover in particular ___

Answer 9

director elections or anything directly affecting upcoming election

Question 10

The only means for a dissident SH to propose alternative board candidate is to ___

Answer 10

file separate proxy statement to initiate a proxy fight

Question 11

Proxy fights are rare because ___

Answer 11

so costly (only reimbursed if you win)

Question 12

Proxy access can enable dissident SHs to __

Answer 12

nominate own nominees without proxy contest

Question 13

Proxy access depends on

Answer 13

corps bylaws/charters

Question 14

SH proposals are ___

Answer 14

requests made by SH included in the company’s annual meeting agenda

Question 15

___ generally have agenda control

Answer 15

Directors

Question 16

SH proposals increased driven by rise in ___

Answer 16

executive compensation proposals and environ/social proposals

Question 17

Policy behind director agenda control is that SHs can __

Answer 17

exit if they don’t like something

Question 18

Under the new Unocal, the BOD has broad discretion over most decisions but not so much with ___

Answer 18

SH voting

Question 19

Interfering with SH voting is frowned upon because it ___

Answer 19

changes allocation of power between BOD and SHs

Question 20

Unocal is no longer exclusively tied to __

Answer 20

takeover threats

Question 21

Under the new Unocal it can also be used to asses the legality of __

Answer 21

interfering with SH enterprises

Question 22

New Unocal cases

Answer 22

• Blasius
• Schnell
• Coster

Question 23

Under the new Unocal saying price is too low is not __

Answer 23

forever defense for keeping pill in place

Question 24

Williams says that 5% trigger for a pill ___

Answer 24

is no-start, SH activism

Question 25

Williams altered proportionality by moving towards ___ as crucial factor even if defense measures not __

Answer 25

range of reasonableness, preclusive/coercive

Question 26

Williams rejected idea that directors could justify actions by claiming ___

Answer 26

knew better than SH about board composition

Question 27

Williams decision is a substantial shift away from __

Answer 27

concept of substantive coercion

Question 28

Blasius required that directors provide ___

Answer 28

compelling justificatio nfor defensive tactics when primarily interfering with SH

Question 29

Coster impact on Unocal

Answer 29

folded Blasius standard (compelling justification) into Unocal analysis

Question 30

Schnell key facts

Answer 30

BOD invoked new provision to move annual meeting to thwart proxy fight

Question 31

Schnell rule is that directors may not act with ___

Answer 31

sole purpose of obstructing SH action even if methods legally permissible

Question 32

DGCL 211 says that directors determine ___

Answer 32

when and where to hold annual meeting

Question 33

Schnell held that directors may not take steps designed to ___ even if ___

Answer 33

perpetuate power at SH expense, permitted by statute

Question 34

Schnell held that ___ are particularly important

Answer 34

SH elections

Question 35

In Schnell, changing the date was inequitable because __

Answer 35

in effect total obstruction of dissident SH efforts

Question 36

Unocal standard vs. Blasius standard

Answer 36

reasonably perceived threat vs. compelling justification

Question 37

Blasius (Atlas SH) proposed that Atlas __

Answer 37

sell assets and distribute large one-time dividend

Question 38

Atlas directors thought __

Answer 38

Blasius plan would genuinely harm corporation

Question 39

When Atlas BOD expressed didn't like Blasius proposal, Blasius ___

Answer 39

formalized proposal + requested election 8 new BOD

Question 40

In response to Blasius BOD election proposal, Atlas BOD __

Answer 40

amended bylaws to add two more BOD

Question 41

Blasius held that BOD cannot take action with ___

Answer 41

primary purpose of interfering with SH even if good faith pursuit of corporate interest

Question 42

Atlas decision to expand BOD was statutorily allowed but inequitable because __

Answer 42

express motive to prevent Blasius from getting control of BOD in immediate future

Question 43

What should Atlas BOD done instead?

Answer 43

use corporate $ to educate SH on Blasius negative effects

Question 44

Coster was mad because the UIP BOD responded by __

Answer 44

issuing stock to long-time employee diluting Coster's ownership

Question 45

Coster held that entire fairness was ___

Answer 45

insufficient given large interference with Coster voting rights as half owner

Question 46

Coster holds that Unocal is __

Answer 46

applicable because response to a threat

Question 47

What was the threat in Coster?

Answer 47

Custodian would give rise to termination rights in Ks and threaten revenue stream

Question 48

Coster held that UIP board did not act inequitably because it ___

Answer 48

had compelling justification

Question 49

What were the reasons for compelling justification in Coster

Answer 49

- issue stock cemented relationship with critical employee - custodian would threaten revenue and Ks

Question 50

What was Williams ground for 5% pill?

Answer 50

generalized concern about stockholder activism in market uncertainty

Question 51

The pill in WIlliams was designed to deal with ___ NOT ___

Answer 51

stockholder activism, takeover threat

Question 52

What was WIlliams BOD concern about SH activism?

Answer 52

SHs would pursue short-term agendas without caring about long-term company health

Question 53

Trinity v. Walmart proposal rejected was that Walmart ___

Answer 53

adopt policy not to sell guns with high capacity magazines

Question 54

A company can generally exclude SH proposal if relates to ___

Answer 54

ordinary business operations

Question 55

Trinity case held that Walmart could exclude because __

Answer 55

heart of retailer business to decide which products to sell

Question 56

Trinity held that sale of high-capacity guns is ____ BUT ___

Answer 56

significant social policy, doesn't transcend day to day operations

Question 57

Under 14a8 company cannot exclude proposal if its focus is a matter __

Answer 57

of significant social policy + goes beyond day to day business