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Federal Register / Vol. 86, No. 228 / Wednesday, December 1, 2021 / Rules and Regulations in market capitalization, and approximately $13,100 at companies with market capitalization above $10
billion.387 Not surprisingly, increasing the threshold to 75% would increase the expected average costs of nominal contests compared to the 67% threshold we are adopting, even if the increase is modest for the smaller registrant categories.
As discussed above, it is our understanding that dissidents in very few typical contests in recent years solicit shareholders representing less than 75% of the voting power.388
However, based on the few cases we have observed, we estimate the average additional cost those dissidents would have incurred, beyond their actual incurred solicitation expenses, to meet the 75% requirement using the least expensive approach through an intermediary to be approximately $20,000.389 This estimated additional cost is approximately four times the additional cost we estimated for the 67% threshold we are adopting. This indicates that increasing the threshold to 75% or beyond would materially increase costs for dissidents in typical contests.
As an alternative to a solicitation requirement based on voting power, one commenter recommended a minimum solicitation threshold of a majority of shareholder accounts entitled to vote on director nominations, asserting that this would help ensure meaningful dissident solicitation efforts.390 Repeating our estimations using a 50% of shareholder accounts threshold, we estimate that the average cost for a dissident soliciting all
shareholders using the least expensive approach 391 in a nominal contest would be approximately $10,900 at companies with less than $300 million in market capitalization, approximately $17,100 at companies with between $300 million and $2 billion in market capitalization, approximately $33,200 at companies with between $2 billion and $10 billion in market capitalization, and approximately $270,600 at companies with market capitalization above $10
billion.392 Thus, the increase in costs of nominal contests under this alternative solicitation requirement is significantly greater than the increase in costs we expect under the 67% of the voting power threshold we are adopting, which we estimate would be on average approximately $5,300 to $9,800
depending on the size of the registrant.393
For the recent typical contests discussed above in which dissidents solicited a number of shareholders fewer than all of the shareholders eligible to vote,394 dissidents solicited less than 50% of accounts in 13 out of 15 contests. We estimate that the alternative of requiring solicitation of at least 50% of shareholder accounts in these 13 cases would have cost approximately an additional $3,000 to $1.9 million, with a median of approximately $28,000,395 beyond the costs they already incurred, to increase their level of solicitation to meet this threshold, using the least expensive approach.396 Even though this alternative would increase solicitation costs of typical contests less than the 391 See
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387 These
estimates were derived by staff based on the NYSE Rule 451 fee schedule and industry data provided by a proxy services provider. See supra note 273 providing assumptions for the estimation of the average costs of solicitation at a registrant in each of four different market capitalization categories. In this case, staff estimated the costs of NYSE Rule 451 fees and postage for soliciting the minimum number of accounts representing at least 75% of the voting power in each size category estimated at 79, 149, 256, and 898, respectively using notice and access delivery, and assumed that the number of brokers and banks involved for the purpose of determination of the nominee coordination fee is equal to 20, 50, 85, and 299, respectively.
388 See supra Section IV.B.2.b.
389 These estimates were derived by staff based on the NYSE Rule 451 fee schedule and industry data provided by a proxy services provider. See supra note 263 providing assumptions for the estimation of the average costs of solicitation in a typical contest. In this case, staff estimated the average additional costs of NYSE Rule 451 fees and postage needed to meet a minimum solicitation requirement of 75% of the voting power, using the two cases out of the 35 contests from June 30, 2015 through April 15, 2016 provided by a proxy services provider in which less than 75% of the shares eligible to vote were originally solicited by the dissident.
390 See letter from Elliott.

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supra note 262.
estimates were derived by staff based on the NYSE Rule 451 fee schedule and industry data provided by a proxy services provider. See supra note 273 providing assumptions for the estimation of the average costs of solicitation at a registrant in each of four different market capitalization categories. In this case, staff estimated the costs of NYSE Rule 451 fees and postage for soliciting the average total number of accounts in each size category estimated at 79, 149, 256, and 898, respectively using notice and access delivery, and assumed that the number of brokers and banks involved for the purpose of determination of the nominee coordination fee is equal to 20, 50, 85, and 299, respectively.
393 See supra Section IV.C.2.b.
394 See supra Section IV.B.2.
395 These estimates were derived by staff based on the NYSE Rule 451 fee schedule and industry data provided by a proxy services provider. See supra note 384 providing assumptions for the estimation of the average costs of solicitation in a typical contest in which the dissident does not solicit all shareholders. In this case, staff estimated the average increase in costs of NYSE Rule 451 fees and postage based on the number of additional accounts that would have to be solicited to reach 50% of accounts based on the sub-sample of 13 proxy contests in which the dissident solicited less than 50% of accounts.
396 See supra note 262.
392 These
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alternative of requiring solicitation of all shareholders, it still represents a significant increase compared to the current rules and also compared to the increase in costs we expect under the 67% of the voting power threshold we are adopting, which we estimate would be zero for most typical contests and on average approximately $5,400 for the infrequent typical contests soliciting less than 67% of the voting power.397
In general, any solicitation requirement that imposes a very low cost on the dissident may increase the risks discussed above that are associated with permitting the dissident to obtain exposure for its nominees on the registrants card with minimal expenditure of its own resources in the solicitation, while a solicitation requirement that imposes a very high cost may deter value-enhancing proxy contests. Based on the estimated dissident solicitation costs for both nominal and typical contests under different alternative minimum solicitation requirements, we think the 67% of the voting power solicitation requirement we are adopting achieves a reasonable balance of reducing the risk of frivolous contests without materially impeding legitimate contests.
One concern raised by several commenters related to the proposed minimum solicitation requirement is that retail shareholders would not receive solicitation materials from dissidents soliciting the minimum required.398 One of these commenters indicated that shareholders omitted from the dissidents solicitation would be at an informational disadvantage, making it difficult for those shareholders to make informed voting decisions, which would potentially discourage shareholders from participating in the election.399
We acknowledge that any approach that requires the dissident to solicit less than all of the shareholders entitled to vote such as under the final amendments may result in many shareholders, especially those with relatively few shares in their accounts such as many retail investors, not receiving proxy material directly from the dissident. As noted in the Proposing Release, any shareholders not solicited by the dissident will still see the names of the dissidents nominees on the registrants proxy card but would have to seek out the dissidents proxy statement in the EDGAR system as directed by the registrants proxy 397 See
supra Section IV.C.2.a.
letters from BM; SIFMA; ABC; BR; CCMC;
CGCIV; Davis Polk.
399 See letter from BR.
398 See
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