Action by Written Consent: A New Focus for Shareholder Activism

Shareholder proposals advocating that corporations provide shareholders with the right to act by written consent in lieu of a meeting reappeared on ballots this proxy season after a hiatus of several years and have won average shareholder support of over 54%. While the number of companies with written consent proposals on the ballot in 2010 is relatively small, the level of shareholder support is striking and will likely encourage proponents to advance proposals at more companies next year. All public companies, whether or not they received a written consent proposal this proxy season, should understand the issues involved and prepare for the possibility of future proposals. This brief memorandum outlines these issues and advisable next steps for companies and their boards to take.