M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Monday, November 16, 2009

Reimbursement Policies for Shareholder Proxy Nominations

HealthSouth Corp. recently announced a policy to reimburse shareholder initiatives relating to shareholder nominations for the election of directors:

Board of Directors has authorized the Company to amend its bylaws to adopt procedures relating to shareholder nominations for the election of directors. At its October 22, 2009 regular meeting, the Board approved the general terms of an amendment to the Company's Bylaws that will provide for reimbursement of shareholder expenses in connection with a proxy solicitation campaign, subject to certain conditions including the Board's determination that reimbursement is consistent with its fiduciary duties. The Board expects to adopt the final form of this Bylaw amendment this week. The final amendment will be included in a Form 8-K to be filed with the Securities and Exchange Commission when approved.

HealthSouth's move is one of the first following Delaware's adoption of the new section 113 that permits bylaws to be amended to provide for reimbursement a successful shareholder proxy with respect to the election of directors.   Movement in this area, combined with Delaware's new section 112 relating to shareholder proxy access shows how Delaware is highly sensitive to Federal competition.  



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