Proxy battles have abated in Canada and management teams are winning more of the contests that do take place after a strong performance by executives amid tough conditions, according to a study by business litigation firm Fasken Martineau.
Last year saw only 15 proxy battles, down slightly from 16 the previous year and below the average of 20 recorded over the past six years, according to the study. Only 12 of the contests last year were board-related, compared with 15 in 2013.
‘While there was only one contest fewer than in 2013, many other findings depart dramatically from the trends of recent years,’ the study authors write. ‘It remains to be seen whether 2014 was an anomaly or a sign of things to come.’
The study shows that management won the majority of proxy contests for the first time since 2011 and for only the second time since the financial crisis of 2008. Management won 58 percent of board-related proxy battles last year and 66 percent of transaction-related contests.
All the companies that lost proxy battles last year were micro-caps, with small, medium and large companies winning all of their contests. The study shows dissidents won 34 percent of the contests overall and racked up partial wins in another 8 percent of cases. At the same time, only 8 percent of the contests reached a settlement.
Retail investors, who were a significant force in proxy battles in recent years in Canada, virtually disappeared from the scene last year, with only one launching a contest in 2014. Half of the contests were launched by founders or managers.
Fasken Martineau says that, as in past years, dissident shareholders that sought a full slate had a greater chance of success than those seeking only partial changes. Half of those seeking a full slate change were successful, compared with only a quarter of those backing a short slate.
