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The Proxy Vote Penalty Kill




Capital Markets / Investor Relations in Two Minutes or Less

How the Penalty Kill Translates to hashtag#CorporateGovernance and hashtag#investorrelations


One of the most difficult situations in hockey is the penalty kill (PK).


The team draws a penalty and for the next two minutes or more faces the opponent who now benefits from an advantage of having one, and sometimes two, extra attacker(s).


Killing the penalty revolves around a defensive mindset and constantly clearing the puck out of the defensive zone.


A bad kill usually results when the defense allows the opposition to set up and cycle the puck to find the best shot.


In game four of the Western Conference Finals, the Edmonton Oilers found themselves in a penalty kill situation.


Ultimately, the team benefitted from a breakaway goal, miraculous in playoff hockey, changing the momentum of the series in favor of Edmonton.



What Is The Proxy Vote Penalty Kill?


For most IROs, the most defensive scenario in Investor Relations revolves around Corporate Governance and Proxy Voting.


Essentially, the IRO and company is constantly trying to clear the zone from different attacks.


Some attacks come from activist investors.


The toughest attacks come from Proxy Advisors.


The IRO and Company often find themselves short handed on the PK trying to convince investors why they should vote affirmatively for management’s proxy proposals.



The Proxy Voting Penalty Kill Three Step Process


Proxy Voting situations put you on defense because you know you need to hit at least a simple majority to gain approval, 50%+ votes.


The penalty occurs when a Proxy Advisor advises investors to vote against management’s proposals.


The Corporate Governance PK Involves:


1.     IRO calling all of his or her buy-side contacts to have initial discussions.


2.     IRO asks the buy-side during these meetings to introduce the stewardship representative at their firm.


3.     IRO then sets about calling each of the stewardship professionals he or she identified from the buy-side calls.


The process can take countless hours and weeks to complete, and is a function of resources available to do outreach to stewardship professionals and calendars!



How Does IR Score a Breakaway on the Proxy Voting Penalty Kill?


The IRO and Company always has an opportunity to score a short-handed breakaway goal while on the Proxy Voting Penalty Kill.


How?


Investors approve management’s proposals in spite of Proxy Advisor opposition to said proposals.


Do you have an IRO that can successfully adjudicate the Proxy Voting Penalty Kill?


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