Considerations regarding the defensive health of newly public companies

As discussed in this December 2016 Cooley Alert, this proxy season, the policies of ISS and Glass Lewis provide that they will recommend voting against the re-election of directors of “newly public” companies that, prior to or in connection with their IPOs, adopted bylaw or charter provisions that these proxy advisory firms consider adverse to stockholder rights, such as supermajority vote requirements to amend the company’s charter or bylaws, classified board structures or multi-class capital structures.

Nevertheless, these protective measures were adopted for a reason:  to protect the company from unsolicited takeover attempts, to deter other forms of activism and to support the company’s general “defensive health.” For an excellent analysis of factors that companies — faced with negative recommendations for director as a result of these policies — should consider before making any changes, see “New Pubcos Should Consider Defensive Health in Light of ISS/GL Recommendations,”  just posted on Cooley M&A.

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