Fighting a Better Fight – Proxy Contest Websites That Work for You
Fighting a Better Fight – Proxy Contest Websites That Work for You
This proxy season has shown that proxy contest websites can be effective weapons for activist investors who know how to use them. Proxy contest websites may become even more relevant next season if the SEC’s May 20th, 2009 proposed rule amendments to facilitate the rights of shareholders to nominate directors on corporate boards goes into effect. When another SEC rule, Notice and Access, went into full effect in January 2009 electronic distribution of proxy material officially replaced traditional paper mailings as the default method of distribution. As investors and corporations adjust to the change and realize the effectiveness of communicating with shareholders online the quality of online investor materials, including the rapidly evolving proxy contest website, is improving. Whether published by shareholders fighting for improvements at a company or company management defending itself from a shareholder looking for changes, the more effective the proxy contest website the more influence it will have on shareholder votes.
If you’re an investor preparing to wage a proxy battle how can you stay ahead of the curve and make your proxy contest website work for you?
Here are a few tips to get you started.
Know the Rules It would not look good for a shareholder company to be investigated by the SEC while trying to fight for company change. Before launching a proxy contest website it’s important to make sure the website is in compliance with the SEC and FINRA’s rules. For example, according to the SEC the proxy material website may not track the identity of persons accessing that Website to view the proxy material. In addition, the Website cannot require the installation of any “cookies” or other software that might collect information about the accessing person. All content on the website should be thoroughly reviewed by your legal and/or compliance team prior to launch. Plan on budgeting time for this critical, and often lengthy, pre-launch step.
What’s in a Name A carefully crafted domain name will make your site easier for people to access, either through a Google search or by typing the name in from memory. The domain name is the address of the site minus the www, i.e. “shareholder-proxy-contest.com”. Incorporate relevant keywords into the domain name. Words like “proxy”, “shareholder”, “change”, “vote” and the name or ticker symbol of the company are all good words to include in the domain name. Don’t make the domain name too long — it should be easy to remember. Shareholders for CTO Home Page
Keep it Simple The site should be simple. That means making it as easy to read and easy to navigate as possible. If your proxy site is confusing or difficult to use, you’ll immediately be alienating your visitors.
Organization is Key The purpose of the site is to inform shareholders about your position. Page titles and text hierarchy should help clarify and define the page information. To keep site visitors from missing important content the site’s navigation should tell them, at a glance, where they are and where they’ve been so they can easily navigate to where they still want to go.
Form and Function Page layout and design can make or break a site’s effectiveness. Legible text size, line length and line height will also make proxy contest websites easier for shareholders to use. If your proxy site is excessively wide or the paragraphs run into each other, or the text is barely big enough to read, you’re giving site visitors too many reasons to reject or not bother learning about your position or message.
The bottom line, there’s no need to complicate your site with fancy bells and whistles or crazy colors and animations. Make your proxy contest site simple and easy to use so you can focus your effort on crafting a compelling and persuasive argument that wins shareholder votes.
Resources:
SEC, INTERNET AVAILABILITY OF PROXY MATERIALS
SEC Votes to Propose Rule Amendments to Facilitate Rights of Shareholders to Nominate Directors
THE OFFICIAL ACTIVIST INVESTING BLOG (TM)
3 Senseless Steps in a Proxy Contest – Carl Icahn
Revisiting the Proxy Contest – NY Times
Follow Eisenman Associates 