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A proxy fight or proxy battle is an event that may occur when a corporation's stockholders develop opposition to some aspect of the corporate governance, often focusing on directorial and management positions. Corporate activists may attempt to persuade shareholders to use their proxy votes (i.e. votes by one individual or institution as the authorized representative of another) to install new management for any of a variety of reasons. In a proxy fight, incumbent directors and management have the odds stacked in their favor over those trying to force the corporate change. Many tactics are used by these incumbents to stay in power; including staggering the boards (i.e. having different election years for different directors), access to the corporation's money, and creating restrictive requirements in the bylaws. As a result, most proxy fights are unsuccessful. However, it has been recently noted that proxy fights waged by hedge funds, which are virtually unregulated, are successful more than 60% of the time. It should be noted that the use of proxies is highly regulated by both federal (through the oversight of the SEC) and state law, often resulting in serious concerns of federalism. An acquiring company, frustrated by the takeover defenses of the management, may initiate a proxy fight to install a more compliant management of the target.
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