Voting and Shareholder Activism – State law – Reimbursement for Shareholder Activism Flashcards
In a proxy contest over policy, corporate directors have the right to make reasonable and proper ____________ from the corporate treasury for the purpose of persuading the stockholders of the ___________ of their position and soliciting their support for policies which the directors believe are in the best interests of the corporation.
In a proxy contest over policy, corporate directors have the right to make reasonable and proper EXPENDITURES from the corporate treasury for the purpose of persuading the stockholders of the CORRECTNESS of their position and soliciting their support for policies which the directors believe are in the best interests of the corporation.
In a proxy contest over policy, may directors make expenditures from the corporate treasury in order to solicit stockholders’ support?
Yes. In a proxy contest over policy, corporate directors have the right to make reasonable and proper expenditures from the corporate treasury for the purpose of persuading the stockholders of the correctness of their position and soliciting their support for policies which the directors believe are in the best interests of the corporation. The stockholders may also reimburse new directors for costs that the new directors incur in their policy campaign. Because corporations have so many stockholders, if directors were not able to use corporate funds for solicitation of proxies, it is very possible that corporate business would be “seriously interfered with.” There are so many stockholders that each individual stockholder cannot make much of a difference in a vote. Use of proxies is a way to pool stockholders’ votes, making corporate business conductible. And proxies would likely not be used as much as they are if the directors had to pay for their solicitation out of their own pockets. Consequently, directors, if acting in good faith, may incur reasonable expenses in the solicitation of proxies in a policy-related proxy contest
