how proxy fights work
shareholders may appeal to a company s board of directors if they re dissatisfied with a specific management decision but if board members refuse to listen disgruntled shareholders may attempt to persuade other shareholders to let them use their proxy votes in a campaign to replace unyielding board members with candidates more receptive to implementing the shareholders proposed changes in this scenario the acquirer and the target company typically use various solicitation methods to influence shareholder votes for replacement board members shareholders may be sent a form def 14a also called a proxy statement which contains financial information and other data on the target company if the proxy fight involves the sale of the company the proxy statement will also include a more granular version of the proposed acquisition the acquiring company usually contacts shareholders through a third party proxy solicitor who compiles a list of stakeholders in a further attempt to influence their voting positions the proxy solicitor may reach out to each stakeholder individually and state the acquirer s case if shares are registered in the names of stock brokerage firms proxy solicitors consult with shareholders of that firm in order to influence their voting positions in either case individual shareholders or stock brokerages then submit their votes to a designated entity such as a stock transfer agent who aggregates the information in most cases proxy solicitors may scrutinize or challenge unclear votes and they may flag situations where shareholders voted multiple times or neglected to sign their votes the acquiring company then forwards the results to the target company s corporate secretary before the shareholders meeting finally prospective board members are approved or rejected based on the final vote count special considerationssometimes shareholders are uninterested or apathetic about reviewing options for new senior management positions and it can be difficult to arouse their interest in these matters shareholders often absently go along with the recommendations mailed to them without examining the potential director s qualifications or the takeover s key underlying issues while the same level of disinterest often applies to acquisition votes a proxy fight may favor the acquirer if the target company s poor financial results negatively impact shareholders especially if the acquirer has strong ideas for making the company profitable to shareholders for example the acquirer may propose selling off some of the business underperforming assets or increasing stock dividends example of a proxy fightin february 2008 microsoft corporation made an unsolicited offer to buy yahoo for 31 per share the board of directors at yahoo believed the offer by microsoft under valued the company and consequently the board stalled any negotiations between microsoft and yahoo executives on may 3 2008 microsoft withdrew its offer and less than two weeks later billionaire carl icahn launched an effort to replace yahoo s board of directors through a proxy contest 