What Is a Proxy Solicitor and What Do They Do?

A proxy solicitor is a specialized firm or individual retained by a company or shareholder to assist in gathering shareholder votes for various corporate matters. They help companies or investors achieve their objectives by effectively communicating with the shareholder base and facilitating the voting process.

Core Functions

A primary responsibility of a proxy solicitor involves the solicitation of proxies, which means requesting shareholders to appoint them or another individual to vote on their behalf at a corporate meeting. This process is crucial for ensuring that companies reach the required quorum—the minimum number of voters—at shareholder meetings, enabling corporate decisions to proceed. Proxy solicitors are instrumental in gathering support for proposals such as electing directors, approving executive compensation, or ratifying auditors.

Another significant function is shareholder identification and analysis. Proxy solicitors help clients understand the composition of their shareholder base, including identifying institutional investors and beneficial owners. This analysis provides insights into voting patterns and potential challenges, allowing for targeted communication strategies.

Proxy solicitors also offer corporate governance consulting, advising clients on best practices and regulatory compliance. They help companies align their governance practices with shareholder expectations and interpret voting trends from proxy advisory firms. This advisory role extends to ensuring that proxy statements, such as the SEC form DEF 14A, and other soliciting materials comply with regulations like Rule 14a of the Securities Exchange Act of 1934.

Proxy solicitors provide specialized advisory services for mergers and acquisitions (M&A) transactions. They assist in securing shareholder approval for significant corporate actions, such as mergers, acquisitions, or other strategic changes. Their involvement helps in managing the complexities of these transactions by identifying potential opposition and positioning the client to gain the necessary shareholder support.

Key Engagements

Companies frequently engage proxy solicitors in preparation for their annual general meetings (AGMs), where shareholders vote on routine matters like director elections and executive compensation. Solicitors help ensure a high participation rate and secure approvals for management-supported proposals. They provide strategic advice and logistical support to navigate the complexities of these yearly shareholder gatherings.

Contested proxy solicitations, or proxy fights, represent another common scenario for retaining a proxy solicitor. These situations arise when an activist investor or a group of shareholders seeks to influence corporate control or policy, potentially by nominating alternative board candidates or proposing resolutions. Proxy solicitors are engaged by either the incumbent management or the activist group to garner votes, providing an advantage.

Mergers and acquisitions (M&A) transactions also necessitate the services of proxy solicitors, particularly when shareholder approval is required. Solicitors assist in securing the votes needed for successful completion and help manage potential shareholder opposition.

Proxy solicitors are routinely engaged during activist investor campaigns, which involve efforts by shareholders to influence a company’s strategic direction, financial performance, or governance practices. Whether the company is defending against an activist or an activist is seeking to initiate change, solicitors provide crucial support in shaping the narrative, promoting awareness of the issues, and securing votes. Their expertise becomes particularly relevant when there is anticipated investor opposition or supermajority vote requirements.

How They Engage with Shareholders

Proxy solicitors employ various methods for investor outreach, including direct communications such as phone calls, emails, and direct mail. These personalized communications are designed to provide shareholders with essential information about proposals and encourage them to exercise their voting rights. Solicitors often engage in outbound calling campaigns to directly reach and influence investors.

A significant aspect of their work involves detailed data analysis of the shareholder base. Proxy solicitors analyze shareholder ownership data to identify key stakeholders, understand voting patterns, and anticipate potential challenges. This analysis helps them segment shareholders and tailor communication strategies to different investor groups, including institutional investors and retail shareholders. They can also track real-time vote projections to monitor progress and adjust their strategies as needed.

Proxy solicitors also work closely with a company’s investor relations (IR) teams and legal counsel to develop and execute comprehensive proxy campaigns. This collaboration ensures that the company’s message is consistent and effectively conveyed to shareholders while adhering to all regulatory requirements. They assist in preparing and reviewing proxy materials, ensuring accuracy and compliance with SEC regulations before distribution to shareholders.

Solicitors coordinate engagements with proxy advisory firms, such as Institutional Shareholder Services (ISS) and Glass Lewis, which provide voting recommendations to institutional investors. Understanding these firms’ policies and recommendations is important, as their advice can significantly influence how large institutional investors vote. By engaging with these advisors, proxy solicitors help ensure that the company’s position is accurately represented and understood.