From the Harvard Law School Corporate Governance Blog,
this
item about the lessons learned from the
recent
proxy contest at Motorola Inc. says companies should take heart that
shareholders defeated Carl Icahn when he tried to win a seat on
Motorola's board. The blog cites a memo from the law firm Wachtell, Lipton,
Rosen & Katz stating that Icahn's defeat "serves as a reminder, in a
time of ever-increasing shareholder activism, that the dissident does not
always prevail."
Moreover, it notes that shareholders may likely give an incumbent board the
benefit of the doubt, even when the company is producing disappointing
operating results.
If companies then should not just surrender in the face of a dissident attack,
what should they do?
Wachtell Lipton suggests a few things, most of them having to do with
communicating effectively. The law firm says the company should meet with
institutional shareholders, who really do listen and make up their own minds
rather than following the advice of a proxy adviser group. It should also meet
directly with the dissident so both clearly understand each other's position.
Finally, make defeating the dissident a team effort. Wachtell Lipton advises
that a company under attack by a dissident should assemble a team of finance
and strategic development, investment banking, legal, investor relations,
public relations and proxy solicitation personnel to meet regularly, review
developments and plan proactively. —Andrea Orr
See
Harvard Law School Corporate Governance Blog
See
May 8, 2007 story on Motorola proxy battle from TheDeal.com
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