Large U.S. corporations are continuing to bolster their defenses against proxy fights and other forms of shareholder activism, according to a study by the Investor Responsibility Research Center, Washington.
While the traditional defenses - such as such as poison pills, classified boards and blank check preferred stock - remain popular, new tactics have sprung up, notes Patrick S. McGurn, director of IRRC's corporate governance service.
For example, advance notice requirements, which set rules for presenting director nominations or other business at shareholder meetings, were virtually non-existent five years ago. Now nearly 44% of the 1,500 firms analyzed by IRRC have such requirements.
Also, attempts by companies to limit shareholders rights to call special meetings have spread from 23.9% of the 1,500 companies in 1990 to 31.1% now. And that same number of companies also has imposed limits on shareholders to act by written consent instead of meetings, up from 23.7% in 1990.
Companies also have continued to chip away at cumulative voting, which makes it easier for minority shareholders to get seats on a board. More than 100 firms that once allowed it have banned the practice in recent years.
"Constraints on shareholder activism - advance notice requirements for board nominations, limits on shareholders' rights to call special meetings or act by written consent, the elimination of cumulative voting - are the hot growth areas in the 1990s," Mr. McGurn notes.