September 29, 2010
Adventures in Shareholder Democracy
It's been an exciting couple of weeks on the proxy fight side. Yesterday, Barnes & Noble announced the results of the proxy contest instigated by Ron Burkle of Yucaipa. Management board members were returned and the dissidents lost (WSJ). But here's the thing - management directors got 44% of the vote and Yucaipa's slate got only 39%. OK, that's still a win for management under current voting rules for a company without a majority voting provision in its bylaws. However, given that Riggio undoubtedly voted the 30% or so that he controls in his favor, the fact that management could only come back with 44% of the quorum (not the total shares outstanding) is pretty pathetic. And Burkle doesn't off easy either - apparently Aletheia sat on the sidelines, not voting a large percentage of its stock (FT.com). Turns out when Burkle's legal team was arguing at trial over the summer that they hadn't made an agreement - even a wink and a nod - with Aletheia that they were right! Sorry I ever doubted them. But I bet you Burkle is wishing he might winked and nodded a bit more.
Over at Airgas, the parties are going to court next week to argue over the question of the validity of the bylaw amendment that calls for a shareholder meeting in January 2011. Air Products won that vote. Air Products was also successful in getting their slate of directors elected ousting three incumbent Airgas directors, including Peter McCausland, the CEO and Chairman. Not but a couple of days later the Airgas rump board expanded its size by one and reappointed McCausland to the board. Sure, I know, the board has the authority to expand or decrease its size and that it's perfectly within its rights to reappoint McCausland. But, c'mon.
All in all, it's been a couple of interesting weeks on the proxy contest front. I suspect that neither the Barnes & Noble fight nor the Airgas/Air Products contest are near over.
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