Proxy fight
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Proxy fight is an event that may occur when opposition develops to a corporation management among its stockholders. Corporate activists may attempt to persuade shareholders to use their proxy votes (i.e. votes by one individual or institution as the authorized representative of another) to install new management for any of a variety of reasons.
In a proxy fight, incumbent directors and management have the odds stacked in their favor over those trying to force the corporate change. Many tactics are used by these incumbents to stay in power; including staggering the boards (i.e. having different election years for different officers or directors), access to the corporation's money, and creating restrictive requirements in the bylaws. As a result, most proxy fights are unsuccessful.
For example:
A would-be acquiring company, frustrated by the takeover defenses of the management, may initiate a proxy fight to install a more compliant management of the target.
Or stockholder dissidents opposed to an impending takeover in the view that it will dilute value may use a proxy fight to stop it. An example of a proxy vote took place within Hewlett-Packard, when the management of that company sought to takeover Compaq. Opponents of the Compaq takeover lost the fight. The management, under Carly Fiorina, remained in place, and the merger went ahead.
In the absence of any looming takeover, proxy fights can come about because dissidents are unhappy with management, as with Carl Icahn's effort in 2005-2006 to oust a majority of the board of Time Warner.
