“Quieting the Shareholders’ Voice: Empirical Evidence of Pervasive Bundling in Proxy Situations” (89 Southern California Law Review, 2016), co-authored by Randall Thomas with James D. Cox, Fabrizio Ferri and Colleen Honigsberg, has been selected among the top 10 corporate and securities articles published in legal journals during 2017.
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The article reports the results of what Thomas, Cox, Ferri and Honigsburg term “the first large-scale empirical study” of bundling of separate items into a single proxy proposal. This is problematic, according to the authors, because “Bundling deprives shareholders of the right to convey their views on each separate matter being put to a vote and forces them to either reject the entire proposal or approve items they might not otherwise want implemented.”
To conduct the study, the authors defined four definitions of “impermissible bundling” and then examined over 1,300 management proposals to determine how often such bundling occurs in proxy proposals. Depending on the definition of “impermissible bundling” they applied, their results varied from 6.2 percent to 28.8 percent. “It is apparent that bundling occurs far more frequently than indicated by prior studies,” they concluded.
Their article concludes with recommendations for the Securities and Exchange Commission, proxy advisors and institutional investors to help each detect and deter “impermissible bundling” of issues that should be voted upon separately rather than bundled.
Citation: James D. Cox, Fabrizio Ferri, Colleen Honigsberg and Randall Thomas, “Quieting the Shareholders’ Voice: Empirical Evidence of Pervasive Bundling in Proxy Solicitations,” 89 S. Cal. L. Rev. 1175-1238 (2016)
