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Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Rules and Regulations business combinations made up the rest of the dissidents.212
Approximately 30% of the contests with competing slates were contests for majority control of the board.213
However, because less than a majority of board seats were up for election in approximately 31% of the contests due to staggered board structures, dissidents sought majority control in 43% of contests where it was possible to do so 30 out of 70 cases. Among the 31 cases where less than a majority of seats were up for election, dissidents nominated candidates for all of the seats that were up for election in 48% of contests 15
cases. Overall, dissidents nominated candidates for all of the seats that were
up for election in approximately 25% of contests 25 cases out of 101.
b. Notice, Solicitation, and Costs of Proxy Contests The Commissions proxy rules do not currently require dissidents to provide notice to registrants of their intention to solicit votes for their nominees.
However, as discussed, advance notice bylaws are common among registrants.
For example, at the end of 2020, 99%
of S&P 500 registrants had advance notice provisions, and 95% of the Russell 3000 had such provisions.214
We understand that the latest date on which notice may be provided under advance notice bylaws typically ranges from 90 to 120 days before the anniversary of the meeting date.215

Among the 101 director election contests initiated in years 20172020, approximately 90% of dissidents either publicly announced or communicated their intent to nominate directors to the registrant at least 60 days before the anniversary of the previous years annual meeting date or 60 days before the annual meeting date if the registrant did not hold an annual meeting during the previous year, or if the date of the meeting had changed by more than 30
calendar days from the previous year.216 Further statistics on the distribution of the timing for initial nomination communications and filing of preliminary proxy statements are shown in Table 2 below.

TABLE 2TIMING OF INITIATION OF ELECTION CONTESTS AND FILING OF PRELIMINARY PROXY STATEMENTS RELATIVE TO
ANNIVERSARY OF PREVIOUS YEARS MEETING DATES, IN 20172020 217
Percentage At least 45 days
lotter on DSK11XQN23PROD with RULES2

Days between first announcement or communication of election contest intent and anniversary of previous years meeting date
Days between dissident filing preliminary proxy statement and anniversary of previous years meeting date

At least 60 days
At least 90 days
Mean
Median
Min
Max
93

90

65

108

93

16

377

75

43

13

65

56

7

369

For the contests where dissidents ultimately file a definitive proxy statement 74 cases, approximately 80% of dissident definitive statements are filed at most 50 days before the anniversary of the previous years annual meeting date or 50 days before the annual meeting date if the registrant did not hold an annual meeting during the previous year, or if the date of the meeting had changed by more than 30
calendar days from the previous year.218 In addition, more than 82% of dissidents definitive statements are filed 25 days or more before the actual annual meeting date.219
While dissidents in proxy contests are required to make their proxy statements publicly available via the EDGAR

system, they are not currently subject to any requirements as to how many shareholders they must solicit. When dissidents actively solicit shareholders they have the choice of sending shareholders a full package of proxy materials full set or sending only a one-page notice informing them of the online availability of proxy materials notice and access or notice-only.
We estimate that approximately 52% of dissidents solicited all shareholders in a sample of recent proxy contests.220
Furthermore, the dissidents in this sample of contests sent full sets of proxy materials to each of the shareholders solicited.221 The use of the full set delivery method may be driven by findings that such solicitations are
associated with a higher rate of voting than notice-only solicitations.222 Among those contests in which dissidents did not solicit all shareholders, the average median percentage of shares held by solicited shareholders was approximately 95% 96% of the outstanding shares of the registrant eligible to vote, and the minimum maximum percentage of the outstanding shares eligible to vote held by solicited shareholders was approximately 83% 99.9%.223 The average median percentage of shareholder accounts solicited in these contests was approximately 20% 14%, and the minimum maximum percentage of accounts solicited was 1%
71%.224

212 Based on information from Factsets SharkRepellent database and staffs review of EDGAR filings.
213 This percentage is somewhat larger than the 26% reported in the Proposing Release for 72 board contests initiated in years 2014 and 2015.
214 See WilmerHale M&A Report. An advance notice bylaw can generally be waived by a registrants board of directors at their discretion, though we do not have data that would allow us to determine the frequency with which such bylaws are waived. If not waived, such bylaws may also be challenged in court such as in the case of inequitable circumstances. See, e.g., AB Value Partners, L.P. v. Kreisler Mfg. Corp., No. 10434
VCP, 2014 WL 7150465 Del Ch. Dec. 16, 2015.
215 See S&C 2015 Report.
216 Based on information from Factsets SharkRepellent database and staffs analysis of
EDGAR filings. When available, staff gathered information on the timing of dissidents direct communications to registrants of their intent to nominate directors from the parties proxy filings, which frequently list such information as part of the solicitation background descriptions. Such communications are not always immediately publicly disclosed.
217 Id. For 37 of the 101 director contests initiated in 20172020, the announcement and filing days are measured relative to the annual meeting date rather than the anniversary of the previous years meeting date, because either the registrant did not hold an annual meeting during the previous year or the date of the meeting changed by more than 30
calendar days from the previous year.
218 Based on data from Factsets SharkRepellent database and staff analysis of EDGAR filings.
219 Id.

220 Based on industry data provided by a proxy services provider for a sample of 31 proxy contests for annual meetings held between July 1, 2018 and June 30, 2019.
221 Id.
222 See, e.g., Broadridge, Analysis of Traditional and Notice & Access Issuers: Issuer Adoption, Distribution and Voting for Fiscal Year Ending June 30, 2013 Oct. 2013, available at http
media.broadridge.com/documents/Broadridge-6-YrNA-Stats-Report-2013.pdf.
223 Based on industry data provided by a proxy services provider for a sample of 31 proxy contests for annual meetings held between July 1, 2018 and June 30, 2019.
224 Id.

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