The Deal: Universal Proxy Battle Fight Gathers Steam at SEC
During that insurgency the dissident investment manager also launched another unsuccessful battle -- one to have the mega-retailer use a so-called universal proxy ballot for the director competition.
This approach, which was not employed at Target, would give shareholders greater flexibility to pick and choose among management and dissident nominees.
Specifically, it would replace today's cumbersome system in which shareholders who are not in attendance at annual meetings can only choose from nominees that appear on either management's or a dissident's ballot -- but not both. A universal proxy system would allow both sides to send out universal ballots listing all candidates from management and dissident slates, allowing shareholders to "split their vote" and pick a few dissidents but not the entire slate.
Any change that would either mandate or provide for the option of setting up a universal ballot in the U.S. would need to start at the nation's securities regulator. That's why Pershing and other advocates are taking their campaign to the Securities and Exchange Commission. If such a system is approved by the SEC it could dramatically transform the "all or nothing" way big proxy contests featuring high-profile activist investors such as Ackman, Carl Icahn or Dan Loeb are conducted.
Nevertheless, in the four years since the Target contest, regulators haven't taken any steps to implement a universal proxy card regime. However, a few recent events have raised the profile of the issue at the commission, leading many to believe that its time has finally come.
First, in July, an influential investor advisory group (of which Pershing Square chief legal officer Roy Katzovicz is a member) that meets at the SEC voted to recommend that the agency give corporations and dissident activist hedge funds the option of employing a universal proxy. The recommendation isn't binding on the SEC, but the advisory group carries significant weight with the agency and many of their suggestions transform into government initiatives.