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Archive for December, 2013

I warned against so-called “shareholder activists” who represent short-term shareholders to the detriment of businesses and their broad population of additional stakeholders here, here and here. To combat “shareholder activists” who pay or otherwise compensate people to run for boards of directors in activist-initiated proxy fights, Provident Financial Holdings, Inc. adopted a by-law that prohibited its directors from being paid by anyone other than Provident for being a director or running for the board. As a result, for Provident’s next shareholder meeting Institutional Shareholder Services (ISS) recommended that shareholders withhold votes for the directors who supported the amendment. The board survived the challenge, but an unusually high number of shareholders withheld votes. Details are reported on the Harvard Law School Corporate Governance blog in an article by Berl Nadler of Davies, Ward, Phillips & Vineberg LLP

ISS may not oppose these measures in all circumstances, but corporations considering adopting similar provisions should review the Nadler article and ISS’s objections before adopting similar provisions.

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