Definition of Proxy Solicitation


A proxy solicitation is the "attempt by a group to obtain the authorization of other members to vote on their behalf in an organizational ballot," according to More particularly in business, it is the attempt by a stockholder group to influence other stockholders to vote a certain way on specific matters of corporate governance.

General Definition

Under U.S. corporate law, stockholders are required to vote on certain matters, such as the election of directors. All or some portion (one-third) of the board is up for election annually, depending on corporate by-laws. In addition, matters of corporate governance that could affect the rights of individual stockholders are presented for stockholder vote; these matters include recapitalizations, restructurings such as reincorporation in a different state and mergers and acquisitions where stockholder interests could be diluted.

Proxy Statement

Matters being presented to stockholders for a vote are detailed in a proxy statement. Since most stockholders do not actually attend a stockholder meeting for purposes of voting (usually on the basis of one vote for each common share held), votes are generally cast by means of a proxy (a substitute), where a stockholder has given the substitute the right to cast a ballot a certain way.


All matters presented to stockholders in larger corporations are subject to proxy solicitations. Smaller companies are more likely to draw their shareholders from a regional base and might expect all stockholders to appear in person at a meeting for a vote. Management in larger corporations typically engages a proxy solicitation firm in advance of the annual meeting to request authorization to vote the stockholders' shares for the management slate of directors, or, in the cases of exceptional matters, according to management's recommendation. Usually, there is no opposition to management's position, and the stockholders vote as management recommends. It is when there is opposition or contention in shareholder ranks that the "proxy solicitation" takes on a more ominous tone.

Proxy Fight

When a stockholder group opposes management's recommendation, the words proxy solicitation are used by the parties representing the different sides and the press to invoke a sense of conflict. This sense is also imparted in the alternative phrase, proxy fight. Disgruntled shareholder groups will often wage a proxy fight when they are unhappy with management policies or feel that management has not done enough to maximize shareholder value, and they seek to have their position represented on the board. A proxy fight may also erupt as part of a hostile takeover, where the acquiring group has purchased stock in the target company, entitling the acquiring group to vote, and management has recommended that stockholders reject the acquisition proposal.

Solicitation: Normal and Exceptional

A proxy solicitation is a normal function for the ordinary exercise of corporate governance in the U.S., particularly for larger stock companies, when it is not practical for all stockholders representing a majority or a quorum of shares outstanding to attend a meeting at which matters would be subject to a vote. A proxy solicitation takes on a more contentious note when a stockholder group decides to present a position in opposition to the recommendation of management.

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